US business gears up to derail Sudan delisting law
"The Sudan bill would be bad for capital markets, bad for investors and bad for business,
and would encourage companies to seek listings outside the US."
David Strongin, director of international finance for the Securities Industry Association
Financial Times, June 20
US business gears up to derail Sudan delisting law
By Edward Alden in Washington and Ken Warn in Toronto
US business groups and the Bush administration are gearing up to try to derail legislation that would for the first time deprive some foreign companies of access to US stock markets if they run foul of US foreign policy.
The heightened concern comes after Talisman Energy, the Canadian oil company, warned this week it would sell its controversial stake in a Sudan oil project if the US Congress pushed forward with threats to de-list the company from the New York Stock Exchange.
Jim Buckee, Talisman chief executive, said in Calgary on Monday that the Sudan Peace Act, passed by the House of Representatives last week on a 422-2 vote, could force the company to pull out of Sudan rather than risk losing access to US capital markets.
Mr Buckee said the bill was "dangerous" and would "send a big chill through all other foreign investors who potentially want to list in the US".
US companies are barred from Sudan, and there is growing support in Congress for measures that would in effect block foreign companies as well. US legislators hope that depriving the Khartoum government of oil revenues would end the civil war in Sudan, which has claimed about 2m lives during two decades.
The Bush administration opposes two measures in the bill. The stronger language would prohibit any company engaged in oil or gas development in Sudan from raising capital in the US or trading its securities on US exchanges. These could include not only Talisman but Petro-China, China's national oil company, and Sweden's Lundin Oil.
A second, milder provision would simply require that all companies doing business in Sudan disclose that to the Securities and Exchange Commission.
The bill must still be taken up by the Senate, which last year defeated attempts to include capital markets sanctions in a bill on Chinese weapons proliferation.
David Strongin, director of international finance for the Securities Industry Association, said the Sudan bill would be "bad for capital markets, bad for investors and bad for business", and would encourage companies to seek listings outside the US.
The Sudan effort, however, is the most concrete sign yet that a capital markets sanction provision could be enacted into US law.
President George W. Bush has said he wants to help curb the war in Sudan, and faces pressure from Christian groups with strong ties to Republican conservatives. The Sudanese war has pitted a succession of governments in the north against rebels in the south, where US evangelical groups are active, who are seeking autonomy.
"Given the truly extraordinary political profile of Sudan in Washington, President Bush simply can't afford to veto any version of a Sudan Peace Act," said Eric Reeves, a Smith College professor who has spearheaded the campaign for sanctions against oil companies in Sudan.
The issue could easily spread beyond Sudan, however. The SEC last month, under congressional pressure, said it would now require companies to disclose operations in any country under US sanctions, including North Korea, Cuba, Iran, Iraq and Libya. Human rights and religious activists hope the new measure will provide an opening to target any company doing business in these states.
"This is a comprehensive effort to impose capital markets sanctions on a broad range of issues," said a Washington lobbyist. "The idea that this is just confined to Sudan is barmy." Despite its warning Monday, Talisman Energy says it still believed the Sudan Peace Act will not pass with the sanctions provision intact.
But Talisman spokesman Barry Nelson said several offers for the company's Sudan operations "are on the table".
"Sudan accounts for about 10 per cent of Talisman's production, but most of their headaches, so you could see them looking for an out," said one Calgary analyst. |
