As a former accountant and stockbroker, Father Paul Spellman knows money talks. So when he found out last month that his retirement funds could be contributing to bloodshed in Sudan, he decided to send a message.
His target: Fidelity Investments, which manages the retirement plan for the 350 priests in the Archdiocese of Los Angeles and is one of the leading U.S. shareholders in PetroChina Co., part of a company involved in one of Sudan's largest oil projects. Oil revenues fund Sudan's military, which is accused of arming militias whose four-year battle against rebels has killed more than 200,000 people and left millions homeless.
Spellman persuaded the archdiocese's Council of Priests to write a letter urging Fidelity to sell its shares in PetroChina as well as in Sinopec Corp., another Chinese firm doing business in Sudan. The council hasn't completely severed its ties with Fidelity, but has advised priests to switch to Fidelity funds without Sudan-invested companies.
"Whether it's $60,000 or $60 million, to me it's the voice more than the money," said Spellman, 52, who has asked the church to send $1 of his $200 monthly retirement contribution to Fidelity and give the remainder to Catholic Relief Services, a church charity. "I couldn't let my money go to Fidelity."
Spurred on by celebrities including Mia Farrow, Don Cheadle and George Clooney, the grass-roots campaign to use America's economic heft to help halt the violence in Sudan is gathering steam. The divestment movement is expanding from college campuses to Jewish organizations, evangelical Christians, African American leaders and security-minded conservatives.
Forty-two colleges and universities, including the University of California, Stanford and Harvard, have restricted their holdings in companies with links to Sudan, said the Sudan Divestment Task Force, a Washington-based umbrella group. California and seven other states have begun selling off Sudan-related investments and 17 more are considering doing so.
"This is the most extraordinary outpouring of American citizen interest and activism on an African issue since the anti-apartheid issue" in South Africa, said John Prendergast, an Africa expert with the International Crisis Group in Washington.
The violence in western Sudan's Darfur region has long been a concern for firms involved in so-called socially responsible investing. But now they are being joined by mainstream firms such as Chicago's Northern Trust Corp., which has attracted $16 billion to the seven Sudan-free investment vehicles it launched in 2005.
Conflict Securities Advisory Group, a Washington-based firm, is helping its portfolio managers screen out companies operating in Sudan as well as nations such as Iran, Syria and North Korea -- countries that the U.S. has designated as state sponsors of terrorism. The Burton G. Bettingen Corp., a philanthropic group set up by a prominent Beverly Hills family to work on children's issues, recently made its $15-million portfolio "terror-free."
U.S. companies are, with a few exceptions for humanitarian purposes, barred from doing business in Sudan because of its widespread human rights violations and terrorism connections. However, it is not illegal for Americans to invest in foreign firms operating there.
Congress is threatening new restrictions. Rep. Barbara Lee (D-Oakland) recently reintroduced legislation that would require the Securities and Exchange Commission to compile a list of all companies on the New York Stock Exchange with ties to Sudan and prohibit them from receiving federal contracts. The bill, which has 83 co-sponsors from both parties, would also make it legal for states to divest from such companies.
"History is going to record that these companies have blood on their hands," Lee said.
Business leaders say such measures, however well-meaning, are ineffective because other countries will simply fill the void left by U.S. firms.
Moreover, they argue, state and local Sudan divestment measures are unconstitutional because they encroach on the federal government's right to set foreign economic policy and its responsibility to determine where and how the U.S. should use its economic leverage. In Illinois, a federal judge recently ruled that the state's divestment law was illegal.
"This isn't just about Sudan," said William Reinsch, president of the National Foreign Trade Council, a Washington-based business group that filed the Illinois court challenge. "This is about the next four countries to come down the road."
But activists argue the economic pressure is working. In the last year, two of Europe's biggest firms, German engineering giant Siemens and Switzerland-based energy company ABB Ltd., announced plans to withdraw from Sudan. In 2003, Canada's Talisman Energy Co. pulled out after a divestment campaign.