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March 31, 2000
Talisman Challenged over Human Rights in Sudan
by Philip Johansson
The Canadian energy company faces a shareholder resolution regarding the human rights implications
of their operations in war-torn Sudan.
SocialFunds.com --
This year shareholders have filed resolutions with at least 20 U.S. companies concerning the human
rights and labor standards of their overseas operations. But one of the most hotly debated
resolutions concerns a company in Canada, where shareholder activism is still in its infancy.
 Calgary-based Talisman Energy Inc. has been
widely criticized for its operations in Sudan, a country torn by 17 years of civil war and human
rights abuses. The resolution circulated in their proxy statement this year asks the company to
supply an independently verified report on the company's compliance with internationally accepted
standards of human rights.
"Shareholders are asking the Board of Directors to respect
international human rights standards and make transparent the impact of the company's operations in
Sudan," said Tim Ryan of Scarboro Foreign Mission Society, one of the Talisman shareholders. "Those
who raise capital publicly in Canada must be accountable for the conduct of their business."
"We cannot underestimate the urgency of this initiative, given new reports of human rights
abuses on the Sudanese people," said Lee Holland, Africa Secretary of the United Church of Canada.
Talisman is the largest Canadian-based independent oil and natural gas producer, with
operations in Canada, the North Sea, Indonesia, and Sudan. A widely held company listed in Canada
on The Toronto Stock Exchange and in the United States on the New York Stock Exchange, Talisman is
included in the TSE 35 and the S&P/TSE 60 indices.
The company acquired a 25 percent
interest in the Greater Nile Petroleum Operating Company, a joint oil and pipeline development in
southern Sudan, when it purchased Arakis Energy Corp. of Calgary in 1998. Talisman's partners in
the project are the state petroleum companies of Sudan, China, and Malaysia, hardly leaders in
upholding human rights.
Civil war has claimed more than 2 million civilian lives in Sudan
since 1983, and the country's government has an appalling record of human rights abuse. A recent
study by the Canadian government revealed that oil development is intensifying the conflict in
Sudan, and has resulted in large-scale forced displacement and suffering of civilians.
The
International Code of Ethics for Canadian Business was recently adopted by Talisman, under pressure
by the Canadian government. But the code provides no specific standards or prescribed process for
implementation, monitoring or reporting, so shareholders are asking for company compliance with
internationally accepted standards, subject to independent monitoring.
The resolution
also asks that the company take steps to ensure that revenues which are received by the Sudanese
government from Talisman's involvement in the Greater Nile project are not being used to finance
the government's war efforts. If this is not feasible, the shareholders ask the company to pull out
of the operation until such assurance is available.
Twelve religious institutional
shareholders from Canada and the United States sponsored the Talisman resolution, including the
Evangelical Lutheran Church in Canada, the Jesuits of Upper Canada, and the United Methodist
Church. They were joined by the New York City Employees Retirement System and the New York State
Common Retirement Fund, for a total of more than half a million shares of Talisman.
The
Talisman resolution is one of only two shareholder proposals being circulated by Canadian companies
this year, due to a law allowing companies to exclude proposals deemed to have been filed primarily
to promote general social or similar causes. A similar proposal last year by many of the same
shareholders, but without the support of the New York City and State pension funds, was rejected by
Talisman on this basis.
"It seems that the shareholder rights of Canadians are best
protected not by Canadian law but by the support of powerful American investors," said Peter
Chapman, consultant for the Taskforce on the Churches and Corporate Responsibility (TCCR). This
organization is the Canadian equivalent of the Interfaith Center on Corporate Responsibility
(ICCR), and has been instrumental in advancing shareholder activism on social issues.
Talisman defends its record in Sudan, asserting that it had witnessed no human rights
violations associated with its project there, and that it upholds ethical standards in its
operations. The company suggests that the prosperity brought by oil development can help advance
peace, and welcomed Canada's decision in February not to impose economic sanctions against Sudan.
"Renewed Canadian commitment to Sudan and the removal of the threat of sanctions are
certainly good news for our company and the people of Sudan," said Dr. Jim Buckee, President and
CEO of Talisman. "We endorse Minister Axworthy's commitment to enhanced involvement by Canada in
fostering an end to the conflict in Sudan. The needs of this country for both peace and development
are great."
But in addition to the perceived risk of human rights abuse, shareholders
filing the resolution raised the very real specter of declining share value. They asserted that
without credible evidence to show that Talisman is not contributing to continuing civil war or
gross and systematic human rights abuses in Sudan, the company's long-term financial health may be
adversely affected.
"If Talisman cannot operate in Sudan in accord with international
human rights standards, we hope the company will withdraw until such time as it can do so," said
Chapman. "The best information we have about the situation in Sudan is that the company's
operations do not currently meet this test. We are also unaware of actions by the company to
rectify this that are commensurate with the scale of the tragedy unfolding in its midst."
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