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USS faces pressure over Sudan

UK - The €44bn UK Universities Superannuation Scheme (USS) is facing pressure from campaigners to divest its shareholding in Chinese oil firm Petrochina over its state-owned parent company's Sudan operations.

USS equities manager Jason Fletcher ruled out screening Petrochina - or any other company - from the fund, arguing "our policy is has one of engagement, not exclusion". 

However, Hamish Falconer, director of the UK-based Sudan Divestment Group, told IPE pension funds with engagement policies should be prepared to divest and dismissed Petrochina's claim it is "independent from [parent China National Petroleum Corporation] in all aspects".

"The separation just isn't rigorous enough and the claims don't stand up to scrutiny," said Falconer.

USS is the latest institutional investor to face public pressure to disassociate itself from companies that do business with a government alleged to be responsible for genocide and mass rape. Earlier this year, insurer Fidelity sold its 38% holding in the firm.

Harvard University divested its holding in Petrochina two years ago, citing "deep concerns about the grievous crisis that persists in the Darfur region of Sudan and about the extensive role of PetroChina's closely affiliated parent company". Yale divested the following year.

Jiang Jiemin, the company's president, told a recent AGM decisions on divestment were a matter for individual investors.

In separate news, USS has invested €148m in a hedge fund-type financial instrument as part of its commitment to allocate 5% of its assets to alternatives by 2008 and 20% in the medium term.

The investment, in Swiss-based Partners Group's alternative beta strategies programme, will give the pension fund exposure to a portfolio designed synthetically to replicate several hedge fund strategies.

The scheme this week also doubled its mandate with First Property Group's Managed Property Portfolio to €148m.

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