Talisman shaken as Ottawa talks sanctions - Financial Post, Wednesday, October 27
Sudan civil war: Pension funds keep eye on 'disturbing' situation
Claudia Cattaneo
Financial Post, with files from Reuters
CALGARY - Shares of Talisman Energy Inc. dropped
$2.55 yesterday to $40.95, after the federal government said it
would consider applying sanctions if it finds the oil industry is
exacerbating Sudan's civil war or violating human rights.
The announcement by Lloyd Axworthy, the Foreign Affairs minister,
did not make clear who the sanctions would be aimed at.
Mr. Axworthy is expected to meet next week with Jim Buckee, the
president and chief executive of Calgary-based Talisman, which has
a 25% stake in an oil project in the country.
The statement said Canada was deeply concerned by reports of
fighting in the region of oil development and by evidence that oil
development could be contributing to the forced relocation of
people living near oil fields.
"If it becomes evident that oil extraction is exacerbating the conflict
in Sudan, or resulting in violations of human rights or humanitarian
law, the government of Canada may consider, if required, economic
and trade restrictions such as are authorized by the Export and
Import Permits Act, the Special Economic Measures Act, or other
instruments," it said.
The statement said Ottawa would be sending a probe to Sudan to
look into possible human rights violations.
The company downplayed the "hypothetical" potential for sanctions,
and welcomed Ottawa's actions.
"This is the type of positive engagement that we had hoped for when
we entered Sudan a year ago,"Mr. Buckee said. "There is a lot of
misinformation surrounding Sudan, and Talisman will respond
seriously and constructively to these initiatives.
"We believe Canada's limited diplomatic links with Sudan have
hampered a true understanding of the real human tragedy, the civil
war and the tribal dynamics of the South."
The company said it has also been asked by Ottawa to use its
influence in Sudan to help bring peace to the region, for example by
continuing a dialogue with the Sudanese government to dissuade it
to use oil revenues to fund the war.
Talisman got caught in the crossfire of a 16-year civil war when it
acquired a 25% interest in the Greater Nile Oil Project last year.
As the only Western company in the Greater Nile consortium,
which includes Sudan's government, Talisman has been attacked by
church and human rights groups. On the weekend, Madeleine
Albright, the U.S. secretary of state, also criticized the company
while on a visit to Kenya. She said she would "definitely have to talk
to the Canadians" about Talisman.
Sudan has been mired in civil war through much of its history since
becoming independent in 1956, with the exception of the period
from 1972 to 1983. Two million people have died in the fighting.
"Canadian citizens ... want to be assured that Canadian companies,
such as Talisman ... are not contributing to the Sudan conflict at the
same time as donations and tax dollars deliver food to its victims,"
said World Vision Canada, which has been working in the region
since 1972.
The Ontario Teachers' Pension Plan Board, with $60-billion in
assets and 4.5 million Talisman shares, said it has reviewed the
"disturbing" allegations, but concluded "Talisman is a good company
trying to operate in a civil war environment," said spokeswoman
Lee Fullerton. Teachers will sell the stock only if the federal
government takes legal steps such as sanctions, she said.
Suzanne Brochu, a spokeswoman for Caisse de Depot et
Placement du Quebec, which holds 3.9 million shares, said it is
following the situation closely.
The New York City pension fund, with $90-billion (US) in assets
and 186,000 Talisman shares, said recently it was planning to hold
its Talisman investment, but received a warning from the city's
comptroller, Alan Hevesi: "As long-term investors, we believe a
company that is cavalier about its moral and social responsibility
presents an unacceptable investment risk."
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