U.S. pension fund dumps its stake in Talisman, "but not on moral grounds"
'Right time to sell'
By Charlie Gillis
Financial Post, December 9
The largest pension fund in the United States has unloaded its stock
in Talisman Energy Inc., following reports that civilians have been
displaced, enslaved and killed to make way for the Calgary
company's oil operations in southern Sudan.
TIAA-CREF, a college teachers' fund based in New York City,
has become the third institutional investor to withdraw its interest in
Talisman under intense lobbying from human rights and anti-slavery
groups, which have accused the Sudanese government of
sponsoring slavery and genocide.
In November, the Texas Teachers Retirement Fund sold its
100,000 shares in Talisman, citing financial reasons, while the U.S.
investment house of Manning and Napier recently unloaded 1.2
million shares in the company.
TIAA-CREF officials would not disclose how many shares they
sold and when, but the fund's June 31 report shows it held 261,715
Talisman shares at the time, a stake TIAA-CREF would in most
circumstances have retained.
"We consider ourselves a long-term investor," said Claire Sheehan,
spokeswoman for the fund in New York. "But in this case we
decided the time was right to sell our shares and move on."
Talisman, Canada's largest oil exploration company, has been the
focus of heavy criticism for joining with Chinese, Malaysian and
Sudanese partners to tap the oilfields in Sudan's Greater Nile
region.
Three weeks ago, a UN report found Sudan's government had used
scorched-earth tactics in order to clear a 100-kilometre zone
around the oilfields, using soldiers, bombs and helicopter gunships.
And relief workers in the region fear revenues from the project will
help fund the Muslim-led government's 10-year-old holy war
against Christians in the south, where aid workers have reported
burned-out villages, starvation and the mass movement of refugees
to the cover of mountain areas.
Yesterday, a TIAA-CREF official stressed that its decision was
based on "an assessment of the company's long-term earnings
prospects" -- not on ethical or moral grounds.
But those calling on Talisman to get out of Sudan hailed the fund's
sale as a symbolic victory. With assets exceeding $270-billion (US),
TIAA-CREF is one of the world's most influential investors.
Whether its move was motivated by conscience or fiscal probity
didn't matter to the students and anti-slavery groups leading the
protests.
"The fact is, at this point Talisman is looking like a bad investment,"
said Tommy Calvert, a student representative who sits on the
finance committee of Tufts University's board of trustees.
"It doesn't take a rocket scientist to figure out that when the price is
going down and is about to hit rock bottom, you need to get out."
Mr. Calvert and some of his colleagues had specifically targeted
TIAA-CREF as part of a continuing campaign to drive down
Talisman's stock price. Last week, he led a protest at Tufts
University in Massachusetts, urging colleagues to make their
displeasure with Talisman known to their pension fund managers.
His lobbying -- along with negative reports like the one from the
UN -- appear to be taking a toll: Talisman's stock closed yesterday
at $35.85, up 75½ from Tuesday's close, but far below its high of
$49 just three months ago.
The TIAA-CREF sale drew little reaction from Talisman's major
investors in Canada.
Claude Lamoureux, chief executive of the Ontario Teachers'
Pension Plan Board, said the U.S. funds' move will not influence his
fund's investment in Talisman, last counted at 4.5 million, or 4% of
the company's publicly traded shares.
Teachers has steadfastly maintained that it will buy or sell based on
nothing but financial considerations.
"What do you think would happen if we sold now?" he said. "We
would lose a lot of money. It's easy for someone with 5,000 shares
to do these things, but when you've got as large a stake as we have
you have to be more careful."
Mr. Lamoureux added Teachers has a better chance of influencing
Talisman's activities by remaining a major shareholder and retaining
a presence on its board.
But Barbara Sargent, president of the Ontario Teachers Federation,
said many of the fund's contributors are awaiting the result of a
fact-finding mission to Sudan by John Harker, the federal
government's envoy.
Mr. Harker is expected to return before Christmas, and the pension
fund's board may face tough questions if his report confirms
atrocities already chronicled by the UN, media and relief agencies,
Ms. Sargent said.
"We may have to ask ourselves, do we put pressure on the fund
through our members on the board, knowing it could result in a loss
that we would be legally responsible? Or do we bite the bullet and
try to put pressure on Talisman? These are the questions we're facing."
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