The Advisory Committee on Darfur was formed by President Barry Mills “in response to the important concerns on this campus and among our alumni about acts of genocide and human rights violations in the Darfur region of Sudan.” President Mills has directed the committee to review this disturbing situation and to recommend to himself and the Board of Trustees a meaningful course of action for the College. This committee is comprised of trustees, students, faculty, and staff. We have examined the history of the conflict in Sudan, investigated academic institutional responses, debated possible courses for a meaningful Bowdoin policy, and provided opportunities to engage the wider Bowdoin community in a discussion of methods to address the crisis.
Sudan is a country that has been in intermittent turmoil since their independence from Britain in 1956. Until the crisis in Darfur, a civil war between the predominantly Arab north and the religiously and ethnically diverse south was the nexus of violence. The unstable political situation led to millions of deaths, millions displaced, widespread famine, and opportunities for the germination of terrorist activity (including harboring Osama bin Laden).
Since 2003, the conflict between north and south Sudanese has waned, giving Arab Muslim elements an opportunity to direct violence toward non-Arab Muslims in the western Darfur region. While the government in Khartoum denies supporting the “janjaweed” (the name given to the loose grouping of Arab tribesmen who are conducting the murderous and destructive raids through Darfur’s villages), international observers see a direct and obvious complicity. The world community has been slow to put pressure on the ruling interests in Khartoum. Countries interested in exploiting Sudan’s petroleum reserves, such as China and Russia, have made intervention through the United Nations nearly impossible. The United States has imposed strict sanctions against Sudan—prohibiting nearly all economic interaction that is not humanitarian. However, there are non-U.S. companies conducting business in Sudan. U.S. and international observers are concerned that the revenue from these foreign interests is paying for the Khartoum government’s military endeavors.
In July of 2004, the United States Senate and House passed a joint resolution declaring the conflict genocide. A United Nations report detailed crimes against humanity but did not declare genocide. Recent estimates place the number of dead in the hundreds of thousands and the displaced in the millions. As the people of Darfur fled into neighboring Chad, the janjaweed have followed, bringing murder and mayhem. Troops from the African Union have not been able to provide safe haven. This month has provided a glimmer of hope. Rebel groups are trying to negotiate peace with Khartoum; though, years of distrust have made the terms of a peace treaty difficult to settle.
A number of U.S. colleges and universities have already announced plans to amend their investment policies in response to the humanitarian crisis in Sudan. However, the range of Sudan policies established by other state and educational investment pools varies broadly. Some state funds will use a pan-divestment approach, through which all companies with any Sudanese activities would be avoided. At the other extreme, some universities have taken a tactical approach, identifying certain specific stocks to be prohibited, without a clear statement of the rationale. Still, it is clear that educational institutions overwhelmingly recognize that the pan-divestment approach is indiscriminate and disproportionate; they are setting up procedures to avoid those companies with direct Sudanese operations which are doing more harm than good in the country, while not penalizing companies which are not contributing to the problem. Below is a summary of responses from other academic institutions.
April 6, 2005 – Harvard Corporation announced it would divest of its direct holdings in PetroChina, a subsidiary of China National Petroleum Company. In March 2006, Harvard announced it would divest all holdings of Sinopec as a result of ongoing business interests in Sudan.
June 7, 2005 - Recommendation by the Special Committee on Investment Responsibility (SCIR) to divest all direct holdings in PetroChina, ABB, Sinopec, and Tatneft because of business operations supporting the Sudanese government. SCIR made up of trustees and acting on the recommendation of the Advisory Panel on Investment Responsibility, whose members include faculty, staff, students, and alumni approved by the President of the University.
November 12, 2005 – Dartmouth College board of trustees votes to avoid investing in six oil companies deemed to be directly complicit in support of the Sudanese government. Companies that will be excluded from investment: ABB; Greater Nile Petroleum Operating Company; PetroChina; Sudanese White Nile Petroluem Company; Petronas; Sinopec.
March 8, 2006 – Following a report on investing in the Sudan released by the Advisory Committee on Investor Responsibility, President Richard C. Levin announced that Yale University will bar investments of its endowment assets in obligations of the Sudanese Government, as well as seven oil companies currently operating in Sudan as a response to the genocide being committed with support from the government of Sudan in the Darfur region. Yale Investment office directs all investment managers to refrain from any acquisitions in Sudanese Government obligations or the following companies: Bentini, Higleig, Hi-Tech Petroleum, Nam Fatt, Oil & Natural Gas Corporation, PetroChina, and Sinopec.
March 16, 2006 – Summary recommendation from President to the Regents:
Pursuant to a report by the Sudan Divestment Study Group, divest all shares within an 18 month period and prohibit future purchase of the following nine companies: Bharat Heavy ElectricalsLtd., China Petroleum and Chemical Corp. (Sinopec), Nam Fatt Co. Bhd., Oil & Natural Gas Co. Ltd., PECD Bhd., PetroChina Company Ltd., Sudan Telecom Co. Ltd. (Sudatel), Tatneft OAO, and Videocon Industries Ltd., held within separately managed equity portfolios of the University of California Retirement Plan (UCRP) and the General Endowment Pool (GEP). The proposed policy would apply to both indexed and actively managed, publicly-traded equity portfolios. Further recommend to communicate the decision to divest shares held in the nine companies to the managers of commingled accounts in which assets of the UCRP and GEP are invested, with a request that they consider the University’s stand on this issue as they make their investment decisions. Instruct the Office of the Treasurer to contact the management of several other companies identified by the Sudan Divestment Study Group to ask them to ensure that their business operations in Sudan, while providing beneficial effects for the people of Sudan, do not inadvertently contribute to the campaign of genocide.
March 17, 2006 – Advisory and Executive Committee approved the recommendation of President Ruth J. Simmons that the University exclude from its direct investments the shares of six companies: ABB, Alcatel, PetroChina, Siemens, Sinopec, and Tatneft. The Investment Office will inform Brown’s investment managers of the University’s desire not to be invested in these companies.
April 10, 2006 – Executive committee unanimously endorsed a statement to keep the university’s endowment free of any holdings in companies doing business in Sudan. The endowment does not hold any investments with ties to Sudan. The committee said it would exclude from the ban companies that contribute to the economic or humanitarian welfare of the people of Sudan.
The goal of the endowment is to generate the highest risk-adjusted returns possible to support the mission of the College. The endowment is composed of allocations to a variety of asset classes, including fixed income, domestic equity, international equity, real estate, and private equity, combining non-correlated asset classes together to create a diversified portfolio of investments that will best achieve the College’s financial goals. Bowdoin’s endowment does not directly invest in publicly-traded equity or debt obligations. Rather the endowment is invested in a diversified portfolio of commingled funds or Limited Partnerships managed by skilled outside investment managers. As a member of a commingled pool or Limited Partnership, Bowdoin benefits by having access to a variety of investment strategies and managers that would otherwise be closed to the College due to the relatively small size of the endowment pool in the institutional market place. Although often lower in fees than separately managed accounts or direct investments, in these investment structures the College forfeits the ability to impose investment constraints on the fund manager. Should Bowdoin disagree with the investment strategy or the individual holdings of the managed portfolio in a commingled fund or Limited Partnership, the College can choose to exit the fund.
Prior to the hiring of any fund for the endowment, the Investment staff at the College undertakes a rigorous due diligence process involving quantitative and qualitative analysis of the specific fund’s investment approach and performance track record as well as a careful review of investment firm culture, professional staffing, firm-wide ethics, and professional integrity. Recommendations for potential investments are presented to the Investment Committee for approval.
The Investment Office actively monitors each investment on an ongoing basis, monitoring investment strategies, changes in key personnel, and investment performance.
Throughout the process of the discussion on the situation in the Darfur and Bowdoin’s best response to the issues, the Investment staff has carried out a careful review of the endowment’s investment holdings across funds. As of April 30, 2006 Bowdoin’s endowment has no exposure to any of the companies identified by peer institutions (Harvard, Yale, Brown, Dartmouth, USC, and others) as being complicit in their support of the Sudanese government.
The College’s endowment is fundamentally important to the institution’s well-being. We have a fiduciary responsibility to maintain and enhance the endowment so that it will provide essential financial support for the College’s mission for many generations to come. The endowment is not a place for expression of social or political activism. The decision of when to allow matters unrelated to prudent investment management to intrude on policy must be extraordinary and not subjective.
That being said, establishing a policy on investments related to Darfur and the Sudan does not represent simple activism. Instead, this is a requirement of conscience, because the genocide occurring there far surpasses any threshold of acceptable moral behavior. The genocide and human rights abuses occurring there are clearly and unambiguously in conflict with what the College stands for. Developing such a policy under these circumstances supercedes the consideration of investment return, and reflects on the College’s willingness to practice what it preaches. This is an appropriate conversation for us to have.
As a general statement, we recommend that Bowdoin should avoid companies with Sudanese operations which support the government’s policy of genocide there. As an example, companies providing important financial support to the government, such as some energy companies, should be prohibited, while companies providing products and services unrelated to the government should not. Important questions to be determined include: 1. the criteria used in distinguishing between acceptable and unacceptable investments; 2. how the list of prohibited investments will be developed; 3. who will be responsible for the list; 4. what communications will take place with our managers; and 5. how Bowdoin will terminate a manager who is disregarding our list of prohibited holdings.
This policy should be subject to periodic review and should be ended when the U. S. Government withdraws its sanctions on investments in Sudan.
The committee made several efforts to engage the greater campus community in thinking about the crisis in Darfur and the College’s response to it. In the comments and recommendations received by the committee, the nearly unanimous response was that regardless of the committee’s decision on an investment policy, Bowdoin should actively engage all constituencies of the Bowdoin community in taking action to help solve the situation in Darfur and other similar crises in the future.
In late April, the committee created a web site to provide the Bowdoin community with information about the committee, links to news pieces about the conflict in Darfur, and an email address giving the community a means to contact the committee with comment. In addition, we organized a public forum to solicit comments from faculty, staff, and students on what the College should do in response to the disturbing conditions in Sudan. In this forum, the committee conducted a short presentation outlining the current state of affairs in Darfur, divestment actions taken by other colleges, and the current position of Bowdoin’s endowment. Following the presentation, the committee listened to public comment. Our aim was to be open to ideas and not to debate.
Nearly all members of the Bowdoin community who chose to contribute their thoughts to the committee were supportive of some form of divestment policy. Considering the uncertain effect of a divestment policy at Bowdoin—especially in light of the fact that the College does not have significant holdings in the companies most often cited as the culpable in the conflict—respondents argued that a potentially “symbolic” investment policy could have significant positive effects in raising awareness about investment in Sudan and in the crisis in general. However, respondents felt that in addition to a decision to divest, the College could take other meaningful actions to help address the situation. These comments acknowledged that the endowment was only one of the many academic, financial, and political resources that Bowdoin could direct toward improving the situation in Darfur.
Resulting from committee discussion and public suggestion, the committee recommends that the College consider the following responses in addition to the investment policy described above:
Institutions of higher learning must be engaged in current and world events. When our inspection of these events, even if they are distant, provides evidence that crimes are being committed, we are obligated to stand as moral witnesses to the atrocity. Bowdoin College must always be guided by, as President Mills stated, “[our] commitment to ethical behavior and our tradition of service to the common good.” It is with great honor that the Advisory Committee on Darfur submits this report to the President and the Trustees in the sincere hope of bringing positive change to the crisis in Sudan.
James D. Baumberger '06
Jorunn J. Buckley, assistant professor of religion
Gerald Chertavian ’87 trustee (Chair)
Emma Cooper-Mullin '07
Kevin M. Johnson, academic department coordinator, philosophy
Mary Lou Kennedy, director of dining and bookstore services
Henry C.W. Laurence, associate professor of government and Asian studies
James MacAllen '66, trustee
Paula J. Volent, vice president for investments
Message posted May 10, 2006