Warren Buffett, Petrochina, and Sudan part 2

A resolution that would require Berkshire Hathaway, run by Warren Buffett, to divest its stake in Petrochina, was handily defeated at the shareholders' meeting, receiving only 2% of the vote. Petrochina's parent company, China National Petroleum Corp, has a significant stake in oil production in Sudan, whose royalties fund the Sudanese government. The Sudanese government has directly funded the Janjaweed militia groups. Buffett argued that a) Petrochina has no influence over the behavior of its parent, b) and that if CNPC were to have to divest its stake in Petrodar, it would be selling that at a discount to the Sudanese government, resulting in a windfall for the latter.

It's true that Asian corporations are less more responsive than Western ones to shareholder engagement on such issues. Buffett, to his credit, allowed 45 minutes' discussion on Sudan alone, and invited non-shareholders to the meeting for this issue. And Petrochina is not directly involved in genocide. He does raise excellent points.

However, he and Charlie Munger discussed the company's lack of investment in gambling companies, which can be very profitable.

Gambling stocks have seen some nice returns over the past year, whether you're talking about MGM (NYSE: MGM), Wynn (Nasdaq: WYNN), or Las Vegas Sands (NYSE: LVS). One shareholder asked the dynamic duo whether gambling would continue to be a good business.

Buffett figured the industry will have a great future as long as gambling continues to be legal. He said the human desire to gamble is huge and cited how much more exciting a football game, even a boring one, can become just by betting a few dollars on it. Therefore, he believes, the easier it is for people to gamble, the better the gambling industry will do.

As for his personal feelings on the industry, Buffett calls gambling a "tax on ignorance," with the "ignorant" defined as people who continue to put their money on the line when the odds are against them.

Munger followed up: "It's a dirty business, and you won't soon find a casino in Berkshire Hathaway."

I feel better about gambling companies than about Petrochina. Gambling is a dirty business; I once heard a friend describe how she went to a casino just for food, and sat next to someone at the restaurant who had just gambled his kids' college funds away. However, that doesn't compare to genocide.

Wall Street is, frankly, notorious for compartmentalizing. A common response to socially-responsible investing is, "Why not just invest normally, and donate the rest to charity?" Ken Heebner, who runs the CGM Focus fund, said "Schlumberger isn't saying to the Chinese, "We need to know more about your human-rights policies before we take your money.""

One of the that Jesus did for us when He came was to stretch our perceptions of who was our neighbor. We humans are short-sighted. For example, it can be difficult for us to acknowledge how our consumption patterns are harming people in far-away places. This is especially true if we have financial incentive to maintain our consumption patterns: cheap clothes, cheap coffee, cheap chocolate ... or good investments in Sudan.

The exact program on the Day of Judgment is pure speculation. Frankly, I'm not always convinced there is going to be one. However, if there is, I speculate that God will expand our conscisounesses, and show us all the hidden ways we have harmed one another. I imagine Warren Buffett will have to answer to God on that day. He won't be alone, mind you - I want to look good, and I more or less have to buy clothes made under slave-labor conditions. I could get everything tailored, but that begs the question of where the cloth comes from.

However, as I mentioned earlier, a Fortune magazine article suggests another course of action: talk to Petrochina. Ask them to use their influence to get Sudan to allow peacekeepers in. He has a responsibility to his shareholders. His shareholders have a responsibility to demand this of him.