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Students launch divestment effort in response to Sudanese genocide

By
October 27, 2004

Calling the situation in Sudan the “world’s worst current humanitarian disaster,” students Emiliano Rodriguez ’05 and Mark Hanis ’05 have begun a process of education and action aimed at determining what holdings the college owns in companies operating in the Sudan and divesting from them in a way that “would have a direct effect in changing policies on the ground.” The UN estimates that roughly 10,000 people die each month as a result of the genocide, with possibly as many as one million already
dead. US Secretary of State Colin Powell dramatically raised the profile of the issue when he labeled the situation as genocide in testimony before the Senate Foreign Relations Committee in September.

In an increasingly globalized economy, international capital flows are an important source of investment for development. Both Hanis and Rodriguez believe reducing the flow of capital to Sudan is a key step in forcing change in the country. Hanis commented that in his view “the genocidal regime in Khartoum is only able to stay in power because of foreign investments,” while Rodriguez observed that the administration in power is able to use money from foreign investment to purchase
military equipment for janjaweed militias that are engaged in the genocide. Furthermore, he noted that the equipment being purchased includes some “of the most advanced fighter aircraft in the world.”

In addition to the divestment effort, Hanis and Rodriguez hope to engage in efforts to support HR 5061, the Comprehensive Peace in Sudan Act, which has been passed in the House and is awaiting action in the Senate. As passed in the House, the bill includes provisions for sanctions as well as public reporting requirements for businesses engaged in commercial activity in Sudan. One of the challenges of the current campaign, according to Rodriguez, is determining which businesses have operations in Sudan and what they are, a challenge that would be greatly simplified with the passage of the legislation in Congress.

While they have no set timeline, Hanis and Rodriguez hope to get discussions started as soon as possible. They have already begun conversations with Sue Welsh, Vice President for Finance and Treasurer, as well as the student members of the Committee for Socially Responsible Investing which makes recommendations to the Board’s Investment Committee on proxy voting.

According to Welsh, one of the challenges in addressing this issue is the manner in which the college invests in international stocks. Roughly 20% of the college’s endowment is invested in international stocks, but the sum remains small enough that it is not efficient to maintain separate accounts for Swarthmore College with the college’s money managers. Instead the college invests in commingled portfolios in which financial firms pool Swarthmore’s funds with other organizations and then invest the pool of money. Because the investment is in a fund owned by a financial institution rather than owned by the college directly, Welsh wrote in a statement to the Gazette that “we cannot control whether an individual company is held or not.”

While the international nature of the investments may raise some challenges, Welsh noted that Rodriguez will be providing staff in the Investment Office with a list of companies about which he is concerned, after which the staff will open a dialogue with the college’s money managers “and discuss what their policies with respect to Sudanese investments are.”

Rodriguez commented that “the administration and the Board of Managers take these decisions very seriously,” and as the process continues, “[w]e are going to need a very solid case in favor of divestment for this to work out.”

To read the full text of the legislation under consideration in Congress search for HR 5061 at: http://thomas.loc.gov/.