As the annual meeting season approaches, Amoco Corp. has asked the Securities and Exchange Commission to allow it to omit an agenda item calling on the company to halt its operations in Burma.
In a lengthy filing with the SEC, Amoco has provided an unusual amount of detail about how an operation in a politically unpopular country such as Burma affects a corporation. Amoco already has been reasonably forthcoming about what it does in Burma, but the SEC filing goes further.
In particular, it discloses that during 1993, Amoco received 211 letters objecting to its operations in Burma, and of that group of writers 48 said they would no longer buy gasoline from Amoco. The company downplayed the importance of such a protest.
“Although Amoco regrets losing even one customer, losing 48 consumers cannot fairly be called a boycott,” it said in the SEC filing, noting it has about 10 million credit card holders. The company said receiving “only” 211 letters showed the limits of the protest.
“Given Amoco’s size and the scope of its worldwide operations, these 211 letters cannot reasonably be construed as evidence of damage to its reputation,” the company said.
“This is not to belittle the genuine concerns of the individuals who wrote to Amoco, but simply to put into perspective the misleading assertion that Amoco’s reputation has been damaged.”
The Coalition for Corporate Withdrawal From Burma, representing various human rights, labor and other groups, filed a proposal Oct. 16 calling for a shareholder vote on the Burma issue. Proposals also were filed with PepsiCo, which also has asked the SEC to allow it to omit the matter, and Texaco and Unocal, which have taken no such action as yet. Unocal has begun meetings with coalition representatives. Amoco’s annual meeting has been scheduled for April 26.
The proposal says Amoco and other Western companies doing business in Burma are helping an “illegitimate” military regime deny democracy to Burma, which elected a civilian government in 1990. The country subsequently was taken over by the military-based State Law and Order Council, or SLORC.
Simon Billenness, a director of the withdrawal coalition, said he was surprised at the length of Amoco’s response to the SEC, which he characterized as “way over the line,” especially considering Amoco has met on several occasions in the past with coalition members to discuss their concerns.
Billenness, who has spoken approvingly in the past of Amoco’s willingness to meet with coalition members, said the company has been far less forthcoming this time, in contrast to Unocal.
James Fair, Amoco’s spokesman, said the company considered the protesters “concerned and sincere people,” but found “many factual inaccuracies” in the proposed resolution.
In its filing with the SEC, Amoco said that among the coalition’s misstatements was a contention the Burmese government was “illegitimate,” an implication that Amoco’s activities were unlawful, and a statement that Amoco financial support helps SLORC repress the Burmese.
“These statements link Amoco with extremely damaging events, and if believed by shareholders reading the proxy statement could damage Amoco’s reputation and impugn its integrity and character, without factual foundation,” the company said.
The U.S. government recognizes the Burmese government, Amoco noted, and has accredited its ambassador to Washington. The U.S. maintains an embassy in Burma, but the Senate Foreign Relations Committee did not act on a Bush administration nomination for ambassador. There is currently no U.S. ambassador there.
One major issue is whether money spent looking for oil in Burma can be seen as direct support for military repression, the sort of question that often confronts business and governmental activities overseas.
The coalition says Amoco has provided direct financial aid for SLORC.
“SLORC maintains financial solvency, in part through its partnership with Amoco,” the shareholder proposal says, citing $22 million in payments to SLORC over the years. It also quotes a former U.S. diplomat who said SLORC pours foreign currency directly into the army.
Amoco has acknowledged the payments, but points out that with the exception of a $5.5 million signing bonus in 1988, the money was almost entirely for services such as electricity, visas, weather reports, fuel, equipment and communications. The money supported those undertakings, not the army, Amoco says.
Amoco told the SEC it actually has spent $115 million over the life of the project, but that included $7 million paid to non-governmental companies in Burma and $86 million to contractors and suppliers outside Burma. These other payments clearly helped companies and individuals rather than the government of Burma, the company said.
“By omitting this total project cost, the proposal in effect misrepresents Amoco’s transactions with government-related entities as comprising the entire project, when in fact they comprised only a minor part of a much larger undertaking.”
Amoco cited other regulations as well that might keep the resolution off its agenda, specifically a rule permitting exclusion of proposals pertaining to operations accounting for less than 5 percent of a company’s assets. Burma accounts for nothing like that for Amoco, which has more than $28 billion in assets.
Michele Bohana of the Institute for Asian Democracy, a human-rights group in Washington, said the U.S. has brought pressure on Burma to return to democratic rule and release political figures taken prisoner after the military coup, in particular opposition leader Aung San Suu Kyi.
The U.S. has suspended aid programs, arms sales and trade preferences, and has urged others to do the same, Bohana said in support of the shareholder proposal.
Amoco says it has faced this situation in other countries, including Argentina, where its exploration efforts have spanned 25 different governments. Amoco says it does business in a politically neutral fashion, and must stay in a country for an extended period to have any hope of success.
The coalition argues that’s not good enough when the government is as anti-democratic as the one now in power in Burma.
