Sudan: Bill aimed at Talisman faces likely oblivion
'We'll continue to do good work in Sudan'
Financial Post, with files from Reuters
June 15
By Peter Morton and Claudia Cattaneo
Talisman CEO Jim Buckee says the U.S.can be effective in bringing about peace in Sudan.
WASHINGTON - A proposed law that would ban trading in the United States of Talisman Energy Corp. shares is still a long way from being approved by Congress and, even then, would likely be vetoed by George W. Bush, the U.S. President.
The House of Representatives voted overwhelmingly on Wednesday night to prevent Talisman and other foreign companies engaged in the development of oil and gas in Sudan from selling securities in the U.S. market.
In addition, the proposed bill would also prohibit companies that now operate in Sudan outside of the oil industry from marketing securities in the United States unless they have made full disclosures to the U.S. Securities and Exchange Commission.
"The government of Sudan uses its oil revenues not to help its citizens but to buy tanks, jet fighters and gunships to bomb them," said Rep. Spencer Bachus, a Republican from Alabama who managed to attach an amendment to a bill proposed by Rep. Tom Lantos, a Democrat from California.
"We cannot stand idly by and let this horror continue," said Mr. Bachus, who specifically named Calgary-based Talisman, along with China National Petroleum Co., Lundin Oil Corp. of Sweden, Totalfina of France and Petroliam Nasional Berhad of Malaysia. All have operations in war-torn Sudan, although Talisman says it has no direct involvement. As well, the bill could sweep up foreign companies with service stations in the country.
Talisman said it is in compliance with laws in the areas where it operates, including the United States. "We will continue to do good work in Sudan," said Jim Buckee, president and chief executive of Talisman. "I believe U.S. involvement is necessary and can be effective in bringing about peace in Sudan."
Jeff Emerson, a spokesman for Mr. Bachus, said the bill has a number of hurdles to go through before it can be approved by Congress.
The Senate has not yet considered a similar bill proposed by Bill Frist, a Republican senator from Tennessee, and even that does not include the Talisman amendment, Mr. Emerson said. If the Talisman amendment is not added in the Senate when it ultimately votes, the two bills would have to be somehow merged before being presented to Mr. Bush for signing.
"My boss really intends to push to keep this amendment in," said Mr. Emerson, adding he could not predict whether it would survive.
Brian Prokop, an analyst at Peters & Co., said it is unlikely the bill will become law and is "a very low-risk type of bill to put forward.
"You hit five companies, none of which are U.S.-based, and the only significant North American one is Talisman. Plus, how do you vote against slavery, genocide and death and destruction?" he asked. However, the fact it has gone this far gives it significant profile, continuing Talisman's public relations woes, he said.
Talisman stock fell $1.77 yesterday to $59.58 in Toronto. About 17% of the trading in Talisman shares over the past five months has been in New York, according to Bloomberg data.
"The fact is, what Canadian company's name is front and centre again? And ultimately, as a shareholder, how much do I want Talisman to be front and centre with something like this? Is it worth the effort and the energy?"
Mr. Prokop said negative publicity has caused some U.S. public investors to back off holding the stock, but many large U.S. funds continue to support Talisman because "it's a good company with good operations and Sudan is less than 10% of the ops."
The U.S. has Sudan on its list of terrorism-exporting states since 1993. Since 1997, it has been under U.S. sanctions that bar all but humanitarian aid. Bill Clinton, the former president, had frozen Sudanese government assets and bank accounts in the United States.
Despite that, the administration has already said it is opposed to the House bill, especially the SEC disclosure requirements, because they have the "potential to damage U.S. and international capital markets and to undermine the independence and prerogative of the SEC."
The 18-year-long civil war has left at least two million people dead, mainly from war-induced famine, and another three million uprooted. The conflict is between the Arab-dominated, Muslim central government and black African, predominantly Christian or animist southerners.
The bill also includes legislation that authorizes the president to make $10-million available to the rebels in Sudan's south and urges the administration to support peace talks and help deliver humanitarian aid blocked by the government. Observers said the move stirred up outrage among some Arab nations, which regard it as inappropriate U.S. interference.
At the company's annual meeting last month, Mr. Buckee said he has received several offers for the company's operations in Sudan, but decided against selling. At the time, Mr. Buckee said observers were coming around to Talisman's point of view that withdrawal from Sudan would not help solve the conflict.
U.S. Secretary of State Colin Powell, visiting Sudan's southern neighbors in late May, promised to try harder to end the conflict and announced the first U.S. food aid to drought victims in the government-controlled north since 1989. Mr. Powell said a review of Sudan policy by the Bush administration was almost complete and the food aid was part of the new strategy, along with plans to name a special envoy.
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