Wednesday, May 09, 2007

Philanthropy or Profits First ?

Warren Buffett along with Bill Gates have been commended by the media as most generous billionaire benefactors with their charitable contributions and their endeavours to pour cash into alleviating the world's problems . I have before casted a cloud upon Bill Gates halo here , now it is Warren Buffett's time to have his saintdom questioned .

The Guardian carries a report upon the annual shareholders meeting of Berkshire Hathaway , Warren Buffett's conglomerate and if you had put $1,000 into Berkshire in 1965 it is now worth $7m. Last year, the firm achieved an 18% rise in the per-share value of its portfolio, which runs from Fruit of the Loom underwear to Dairy Queen cafeterias, Justin cowboy boots and Yorkshire Electricity.
A resolution criticising Berkshire Hathaway's stake in PetroChina, Berkshire Hathaway, holds 2.3 billion shares , or 1.3% of the foreign ownership of the oil company, a subsidiary of China's state oil company, CNPC, which has extensive interests in Sudan was put to a vote.
"CNPC is by far the most irresponsible and abusive oil investor in Sudan," said Jason Miller of the Sudan Divestment Taskforce. "At least 70% of the funds they provide to Sudan get funnelled into the Sudanese military."

A report in 2000 by a Canadian government commission said an airstrip at Heglig, operated by Sudan's Greater Nile Petroleum Operating Co., was a staging area for military attacks on civilians. CNPC owns 40% of Greater Nile . Chinese-made helicopter gunships, based at CNPC airstrips in the country, to conduct raids on civilians !!

according to the Harvard Corp., which manages Harvard University's endowment funds, oil production has become "essential to the government's capacity to fund military operations" — a view shared by the U.S. Department of Energy. For this reason, Harvard has divested from firms with ties to Sudan.

At Buffett's urging, a proposal that would have required the company to sell its $3.3-billion stake in PetroChina was defeated . Profit before principle .

Of course , this is not an isolated case of Buffett's disregard for social conscience .

According to the L.A. Times and also here , about $56.4 billion, or 87% of Berkshire's stock holdings, is invested in companies criticized by research groups for profiting from environmental irresponsibility, human rights violations and other activities that undermine good works or its goals of improving the lot of humankind that Buffett may intend .

The holdings of Berkshire Hathaway, totaling more than $4.6 billion in eight companies, came in dead last by a wide margin in a ranking of oil and gas holdings among the 100 largest investors in the United States. The ranking was based on social, environmental and governance performance ratings developed by the investment bank Goldman Sachs Group Inc. and a related ownership analysis by Cary Krosinsky of CapitalBridge, a capital markets intelligence firm.More than any other large investor, Berkshire bought into oil companies whose records on greenhouse gas emissions, safety, business ethics, human rights and other issues significantly lagged those of their peers.

Berkshire holds about $64 million in pharmaceutical companies, for example, whose pricing policies have tended to keep antiretroviral drugs out of reach for HIV/AIDS patients in developing nations .

Berkshire also owns shares worth $28.5 billion in companies accused of human rights abuses, including $921 million in the Wal-Mart who have paid fines or lost rulings in regulatory and court cases accusing it of violating laws banning child labor and governing union organizing and adult working conditions.

A few years ago, Buffett said, he considered buying a tobacco company in Tennessee. He said he would invest in such companies in the future if he thought it would be profitable.Berkshire subsidiary General Re Corp. holds a small investment in Altria Group Inc., the nation's leading cigarette maker.

Among Berkshire's top 100 investments, 74 were evaluated for compensation problems by either KLD Research & Analytics, Institutional Shareholder Services Inc., or Goldman Sachs. Of those, 35 were in companies flagged for overpaying chief executives and 50 in companies flagged for excessive rewards for board members.

Berkshire holdings worth more than $21 billion also fared poorly on overall corporate governance, including accounting procedures; transparency on environmental and social policies; and lawsuits or regulatory problems concerning harm to investors, employees, customers or local communities.

Also at that share-holders meeting , a woman from the Karuk Indian reservation in northern California who broke down in tears as she described how two hydroelectric dams operated by a Berkshire subsidiary, PacifiCorp, have destroyed her community's salmon-fishing livelihood.
"My people are a river people. Our entire culture, religion and subsistence is centred around the river," she said

Buffett conceded little ground. "The world runs on electricity and it wants more electricity," he told the Karuk representatives .

Charity for some , a cold-hearted business reply to others.

Buffett's philanthropy is based upon robbing Peter to pay Paul , and it is a policy that Paul is unlikely to decry.

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