Fidelity has proven its ability to make sound investments. But, activists
wonder, how sound are its morals?
by Steven Stycos
For millions of Americans, Fidelity Investments is synonymous with impressive
growth in their savings and retirement plans. Represented by genial
white-haired investment guru Peter Lynch, Boston-based Fidelity has maximized
returns from mutual funds and other holdings, operating under the comforting
slogan "We help you invest responsibly."
But the Rainforest Action Network (RAN) and Project Underground, two San
Francisco-based environmental-advocacy groups that helped lead Seattle's World
Trade Organization protests, are mobilizing against Fidelity, charging that the
company's support of a controversial oil-drilling project in the Colombian rain
forest is anything but responsible. The project involves exploring for an
estimated 1.5 billion barrels of oil just outside the borders of the U'wa
native people's reservation.
In November, on the eve of the WTO gathering in Seattle, anarchists added
Fidelity to a list of protest targets including NikeTown, McDonald's, and
Starbucks, according to A-Infos, an online anarchist news service. And in
December, RAN, Project Underground, and five other West Coast environmental
groups wrote to Fidelity, setting a March 1 deadline for the company to
meet their demands. The activists want Fidelity to either sell its stock in the
Los Angeles-based oil and chemical giant Occidental Petroleum Corporation --
the company that, working in cooperation with the Colombian government, is at
the head of the disputed project -- or persuade Occidental to halt plans for
the drilling altogether.
Fidelity -- which did not return the Phoenix's calls -- has yet to
answer the letter, says Patrick Reinsborough, RAN's national grassroots
coordinator. But RAN and Project Underground planned a string of protests for
February 3 at dozens of the company's 80 offices nationwide -- including
locations in Boston, Providence, and Portland, Maine -- as a not-so-subtle
reminder to the investment giant that the deadline is approaching. RAN
activists also launched an effort last month to challenge Democratic
presidential candidate Al Gore about his links with Occidental. Gore, whose
record has won him the backing of many environmental groups, holds Occidental
stock valued in a 1998 filing at between $250,000 and $500,000, according to
the Financial Times.
Project Underground and RAN hope that Fidelity -- a high-profile investment
firm with a positive public image -- will serve as a crowbar to pry Occidental
away from its Colombian drilling plans. Fidelity manages more than
$1 trillion in customer assets and, according to its Web site, is the
largest privately held investment manager in the world. And with more than
30 million shares in Occidental, valued at about $700 million,
Fidelity is one of the company's three largest shareholders. Fidelity controls
about 10 percent of the company, says Carwil James, Project Underground's
Occidental's image, after all, is a far cry from the one Fidelity tries to
promote for itself. The Occidental Petroleum Corporation became a major company
in the late '60s and early '70s, according to Edward Jay Epstein's Dossier:
The Secret History of Armand Hammer (Random House, 1996), when Hammer
bribed foreign government officials in order to obtain oil concessions in
Libya, Nigeria, and elsewhere. Probably best known for making an illegal
$54,000 contribution to Richard Nixon's 1972 re-election campaign, Hammer built
his initial personal fortune by delivering payments from the Soviet Union to
its agents in the US, according to Epstein. (It was through Hammer that the Al
Gore connection took shape: the vice-president's father, former US senator Al
Gore Sr., was chairman of an Occidental coal-producing subsidiary and a partner
in a cattle-breeding business with the former Occidental CEO. When the elder
Gore died, the vice-president inherited his Occidental stock. On a related
note, Occidental's current chairman, Ray Irani, has contributed thousands of
dollars to Gore's campaigns; he also gave the Democratic National Committee
$100,000 in the early '90s, the Times reports, after staying in the
Lincoln room of the White House.)
Occidental has a history of putting unsavory characters on the company payroll.
According to Epstein, the company paid Colombian guerrillas an estimated
$3 million in 1985 to protect its Caño Limón pipeline. And
in 1996, in response to an article in the New York Times, Occidental
admitted paying the Colombian military millions of dollars to provide security
for company projects.
Occidental was the parent company of Hooker Chemical, the corporation
responsible for Love Canal, perhaps America's most infamous toxic-dumping
disaster. It was also named one of the 10 worst corporations of 1997 by
Multinational Monitor, a magazine started by consumer activist Ralph
Nader. And last year a group of Dominican nuns sponsored a shareholders'
resolution ordering the company to re-examine its plans to drill near the U'wa
reservation. (Surprisingly, the resolution collected 13 percent of the
vote at Occidental's annual meeting in June.)
The U'wa (pronounced oo-wah) are a tribe of about 5000, living in the
cloud forest in northeast Colombia. In August 1999, responding to a
recommendation from the Organization of American States, the Colombian
government more than tripled the tribe's reservation to 220,275 hectares (or
about one-tenth the size of Massachusetts). The new reservation's border stops
a mile short of the location where Occidental wants to drill.
A month after expanding the reservation, Colombia granted Occidental an
environmental license to drill in partnership with the government's oil
company, Ecopetrol. Burdened with debts to American-dominated financial
institutions such as the World Bank, Colombia is under intense pressure to
exploit its natural resources.
Because the drilling site is not on the U'wa reservation, the Colombian
government insists it has no responsibility to secure the tribe's approval. The
government also says that the license includes adequate environmental
protections: exploratory drilling is prohibited in environmentally sensitive
areas, the Colombian Ministry of Foreign Affairs notes, and is limited to only
five hectares of land. Furthermore, the government argues, oil exports are key
to Colombia's economic development.
But the U'wa fear the project will result in spiritual and environmental
damage. The tribe claims the exploration site is part of its ancestral area.
(That contention, Occidental executive Lawrence Meriage told the Wall Street
Journal, is "a concoction of certain activists up in the [San Francisco]
Bay Area.") The U'wa believe that oil is the earth's blood, and that removing
it will destroy life. Collective suicide would be better than watching their
homeland and culture ruined, they contend. In 1996, in fact, the U'wa
threatened to commit mass suicide by jumping off a cliff should the drilling,
which was already in the works, begin.
The U'wa also worry that they will increasingly be exposed to the bloody civil
war between the Colombian government and guerrilla groups. The conflict, marked
by right-wing death squads, kidnappings, and disappearances, resembles the wars
that terrorized Guatemala and El Salvador in the '80s. Amnesty International
USA estimates that as many as 2000 political murders and disappearances may
have occurred in Colombia last year alone. Catholic priests, human-rights
advocates, trade unionists, and journalists are among the dead. Citing
"extensive collusion" between the Colombian Army and paramilitary groups,
Amnesty announced its opposition to a $1.28 billion aid package proposed
for Colombia earlier this month by President Bill Clinton. "US military aid is
tantamount to underwriting the Colombian `dirty war,' " says Carlos
Salinas, Amnesty's director for Latin America and the Caribbean.
The U'wa have good reason to link oil exploration with violence and
environmental destruction. Last year, guerrilla groups bombed Occidental's
Caño Limón pipeline, located 100 miles east of the U'wa
reservation, more than 60 times, according to an industry publication, the
Oil Daily. The resulting oil spills spoiled nearby lakes and streams.
One October attack, which the National Liberation Army (ELN), a guerrilla
group, later called a "grave error," caused a fire to engulf the village of
Machuca, killing 70 people.
During a 1997 press conference at Occidental's headquarters, Robert
Cobaría, president of the Traditional U'wa Authority, said that his life
had been threatened by hooded gunmen who sought his approval for the drilling
agreement. When he refused, Cobaría was beaten and thrown into a river.
And in March 1999, the guerrilla group Revolutionary Armed Forces of Colombia
(FARC) kidnapped and executed an organizer with Project Underground and two
Native American activists who were helping the U'wa with their battle against
oil exploration. Guerrilla leaders later blamed the attack on an errant
Last November, after Occidental received final government approval to start
exploration, several hundred U'wa launched an occupation of the proposed
drilling site. Last week the Colombian Army evicted them, according to Project
Underground, and three people are missing.
Roger Gillott, a spokesman for Occidental, refused to comment on the dispute,
other than to say that a timetable for drilling at the Colombian site has not
been announced. According to the Financial Times, however, Occidental
indicated last month that it planned to start building roads to the test site
at the end of January and to sink the first test well at the site in May.
Road-building equipment was recently moved into the area, but last week,
reports Project Underground, the ELN pushed the four backhoes, four bulldozers,
and four trucks over a cliff.
Referring to Fidelity's slogan, Project Underground's James says the standoff
with the U'wa "is a litmus test for them to see if they can invest in a way
that's truly responsible." Although it's only in recent months that supporters
of the U'wa have turned their attention to the investment company, Fidelity
should command much more attention locally than Occidental, which has no
presence in Massachusetts. Fidelity maintains its headquarters on Devonshire
Street in Boston and has regional operating centers in Marlborough,
Massachusetts, and Merrimack, New Hampshire. It also has storefront investor
centers on Congress and Boylston Streets in Boston, as well as in Braintree,
Burlington, and Worcester.
In recent years, Fidelity has become adept at wringing special tax breaks out
of local governments. In 1996, after Raytheon and other manufacturers persuaded
the legislature to give them an income-tax break in exchange for keeping jobs
in the Bay State, Fidelity also demanded and received the same tax break. The
provision, which exempts mutual funds' out-of-state sales from state taxes,
costs the Commonwealth $46 million a year, according to the Massachusetts
Department of Economic Development. The lion's share of that money, says James
St. George, executive director of the liberal tax-reform group Tax Equity
Alliance for Massachusetts, goes to Fidelity.
In the mid '90s, the company also received $25 million in land, roads, and
utility connections from the state of Rhode Island in exchange for constructing
two new buildings for its institutional-investments division in Smithfield. And
in 1998, Fidelity received tax breaks in return for locating a $75 million
campus in West Lake, Texas, according to the Forth Worth Star-Telegram.
Although mutual funds that exclude investments in tobacco companies, polluters,
or makers of sexually explicit films have grown increasingly popular, Fidelity
offers no "socially responsible" investment options, according to Jack Bowers,
editor of Fidelity Monitor, an independent California-based newsletter
for Fidelity investors. He finds criticism of Fidelity's involvement with
Occidental to be absurd. "When they say [they're investing] responsibly,
they're talking about risk, not social responsibility," Bowers says.
But according to Carwil James, Fidelity's ongoing tax breaks give Bay Staters a
special responsibility. Instead of just celebrating the presence of Fidelity
jobs, he says, Massachusetts citizens need to ask themselves if they would
"seek to profit from the exploitation of indigenous people."
PROJECT UNDERGROUND and RAN see the conflict between the needs of the U'wa and
the quest for higher profits as part of a larger picture. The two environmental
groups are among 200 organizations from 50 countries that are calling for a
moratorium on drilling in indigenous homelands and environmentally fragile
areas, and for increased investment in safe, renewable energy.
Environmental activists hope that this week's protests at Fidelity offices will
yield results for U'wa. If there's no action, says RAN's Reinsborough, protests
will continue at Fidelity offices, as well as on the campaign trail with Gore.
"There could be nonviolent civil disobedience or things along that line," he
says, "to draw the public's attention to this very, very important issue."
Steven Stycos is a freelance writer living in Rhode Island.