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Commissioners to divest from SOCO

03 July 2015

iSTOCK

Heritage site: the Rutshuru river's course, in Virunga National Park 

Heritage site: the Rutshuru river's course, in Virunga National Park 

THE Church Commissioners are to dump their £1.6 million holding in the British oil-exploration company SOCO International.

The decision, announced on Wednesday, comes after a protracted campaign by the Commissioners and other investors to persuade the company to clarify its position over a series of allegations of human-rights abuses, and bribery and corruption during its operations in and around Virunga National Park in the Democratic Republic of the Congo.

It comes less than a month after the Commissioners backed a move at SOCO's annual general meeting to sack the chairman, Rui de Sousa, and appoint an independent chairman to examine the company's activities in the World Heritage site.

The Commissioners' Head of Responsible Investment, Edward Mason, accused SOCO of failing to respond "positively or sincerely" to their concerns.

"We have called time because without the changes we sought this is not a sustainable or ethical investment for Church funds," he said. "We take engagement with companies very seriously. The lack of appropriate corporate governance was clear at the AGM, and left us nowhere to go but full divestment. The company has been placed on our restricted list with immediate effect, and all our investment managers have been notified."

 The Commissioners and the Pensions Board first raised concerns with SOCO in November 2013, and increased the pressure last December.

The secretary of the Ethical Investment Advisory Group, Adam Matthews, who led the Commissioners' negotiations with SOCO, said: "We are deeply concerned about the failure of SOCO International to properly and fully address our four concerns - in particular, to ensure that an open and transparent enquiry is held into the allegations of corruption and human-rights abuses.

"The response of the company that has emerged from our engagement, and crystallised at the AGM, has led us to recommend full divestment."

The Commissioners' four main concerns were: the need for a "wide-ranging and transparent" independent inquiry into the allegations of bribery, corruption, and human-rights abuses; a lack of independent and effective corporate governance; the adoption of best practice, and internationally recognised environmental and social standards; and unequivocal respect for park boundaries within a World Heritage Site.

Earlier this year, Global Witness, an anti-corruption watchdog, produced evidence suggesting that SOCO had paid at least £27,440 to a Congolese army officer in charge of its survey team's security. The officer had already been filmed trying to bribe a park warden, and his soldiers were harassing opponents.

An inquiry commissioned by the company found no evidence of intimidation, however, and said that the bribery allegations were "substantially inaccurate".

Among the other institutional shareholders concerned by SOCO's activities are the insurance giant Aviva, and the asset-management group Investec, which has already sold its SOCO shares in what it called "the ultimate expression of discontent".

SOCO declined to comment on the decision. A spokesman said "SOCO does not comment on individual relationships with shareholders".

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