Doing well, doing good

October 19, 2007

Social activists claiming victory at mega-investor Warren E. Buffett's recent sell-off of shares in the Chinese oil company believed to be financing genocide in Darfur may be overestimating their influence.

Mr. Buffett became the second-richest person in the world because he has excellent business instincts. Selling most of his holdings in PetroChina last week was good business - he got out in time to make a handsome profit.

But if market acumen alone dictated Mr. Buffett's decision, that may send an even stronger signal than a protest - and one likely to draw more attention from Chinese officials, who should be more aggressively using their oil trade influence with the Sudanese regime in Khartoum to bring the murderous violence in Darfur to an end.

PetroChina's share price has been buoyed over the past few days by the surge in the oil market. Mr. Buffett's sell-off suggests, though, that he believes the stocks to be overvalued. In quickly following his lead, other investors could also do well by doing good.

Mr. Buffett doesn't believe in divestment for social purposes. He headed off a move in May by shareholders in his investment company, Berkshire Hathaway, to pull out of PetroChina as a pressure tactic. He said at the time the government-owned oil company had no influence over Chinese policy in Sudan.

He hasn't yet explained whether dumping his highest-profile investment in China last week represents a change of view. But the move was far more consistent with his newly burnished image as a major donor to humanitarian causes than seeking profit at any cost.

With the Beijing Olympics not far off, China has proved quite sensitive to outside pressure and has already used its influence to help ease the arrival of peacekeepers in Darfur. A sledgehammer may not be necessary, just a nudge here and squeeze there by an American of enormous influence.

That may be what Mr. Buffett has provided, perhaps in spite of himself.

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