Fidelity won't relent on divestment

Fidelity won't relent on divestment
Board says oil stakes give it sway in Sudan

Fidelity Investments said yesterday it will continue opposing proposals that it sell stakes in oil companies tied to human-rights abuses in Sudan, suggesting that such sales could worsen the situation and its chances to "help bring constructive influence to world issues."

The explanation is Fidelity's most extensive since being targeted last year by activists, who tried to persuade members of the board that oversees Fidelity's mutual funds to back their proposals or at least take a neutral stand.

But at a funds shareholders meeting held downtown yesterday, board member Dennis Dirks said the board will remain opposed and cited a statement now posted on Fidelity.com.

Fidelity also said it has halted further voting on the proposals after seven of 21 pending shareholder votes failed to reach quorums, denying shareholder activists a high-profile forum.

"We have concluded that when it is appropriate to remain actively invested in a company, we will do so, thus retaining the ability to oppose company practices that we do not condone," Fidelity said in its statement. "This, in the long term, may have the greatest chance of ending those practices."

The statement continued: "There is the possibility that driving publicly traded companies out of Sudan may actually make the situation worse, exposing the region to state-owned companies or companies that are not traded on the world's exchanges and, therefore, not subject to any shareholder influence whatsoever."

William Rosenfeld, who helped organize the shareholder campaign Investors Against Genocide, compared Fidelity's approach to the "engagement" tactics used by others involved with questionable companies or regimes. But, he said, the efforts are of little use without at least the threat of divestment, or "engagement has no teeth." A Fidelity spokeswoman wouldn't discuss what talks it might have held with the oil companies such as PetroChina Co., whose parent company's payments to the Sudan regime are widely blamed for helping support violent militants in the country's western Darfur region.

Fidelity didn't lay out its full statement at yesterday's shareholder meeting, which instead focused on whether the board should oppose the proposals or be neutral. The proposals were favored by 28 percent of shares voted within Fidelity's flagship Magellan fund and 27 percent of shares voted in its Growth Company fund.