(The following press release from the Office of the New York State Comptroller
Thomas P. DiNapoli was received by e-mail. The sender verified the statement.)
Contact: Eric Sumberg, 212-681-4840
March 21, 2013
SEC ACTION PUTS CATERPILLAR RESOLUTION ON SUDAN UP FOR SHAREHOLDER VOTE
The New York State Common Retirement Fund’s shareholder resolution calling
upon Caterpillar Inc. to take steps to ensure that the company’s foreign
subsidiaries are not doing business with the government of Sudan will go
before shareholders on June 12, New York State Comptroller Thomas P.
DiNapoli announced today. Caterpillar had attempted to block the
resolution from appearing on its shareholder proxy statement to be voted
upon at its annual meeting by petitioning the Securities and Exchange
Commission (SEC) to allow its exclusion from the meeting agenda.
“Caterpillar’s shareholders have a right to know that the company is
taking all necessary steps to ensure that its products have not been sold
to the Sudanese government, a state sponsor of international terrorism,
through its foreign subsidiaries,” DiNapoli said. “Caterpillar hasn’t
adequately addressed this issue, which presents significant risk to the
Fund’s investment and Caterpillar’s reputation. Caterpillar must become
more transparent in how it intends to monitor its relationships with its
buyers and distributors. ”
As a member of the Conflict Risk Network, over the past six months
DiNapoli engaged with Caterpillar to determine if the company had met the
conditions of the resolution. The Network is a group of over 80
governmental entities, institutional investors and asset management firms
that tracks the impact of investment on human rights in countries affected
by genocide and mass atrocities, including Sudan.
“Conflict Risk Network and several of our investor members have made
repeated attempts to engage with Caterpillar about its ‘Scrutinized’
classification and steps the company can take to fulfill its
responsibility to respect human rights in Sudan,” said Network Director
Kathy Mulvey. “Caterpillar has failed to respond meaningfully to our
inquiries and we are concerned that its potential association with
violence and human rights violations poses risks to civilians, and to
Caterpillar’s business and reputation.”
The resolution, which will be voted upon at the company’s annual
shareholder meeting, cites several risk factors:
· Human rights abuses by the Sudanese government in the country’s
Darfur region and state sponsorship of international terrorism which have
led the U.S. government and other entities to impose sanctions and enact
divestment legislation to limit trade and corporate business with the
· Caterpillar admitting to sales in Sudan by its foreign
subsidiaries totaling more than $265.5 million from fiscal year 2008
through the first quarter of fiscal year 2011;
· The company’s acknowledgement in filings with the SEC that
‘dealers and distributors of Caterpillar’s non-U.S. subsidiaries have in
some cases sold products to the government of Sudan or entities controlled
· Caterpillar’s acknowledgement that such sales would be in
violation of U.S. sanctions if conducted directly by the U.S.-based parent
· The Conflict Risk Network’s adding of the company to its list of
‘Scrutinized’ companies which may subject it to divestment or a
prohibition on investment under Sudan divestment legislation enacted by a
number of U.S. states and cities.
The SEC, in a ruling dated March 7, 2013, denied Caterpillar’s request to
exclude the proposal from its proxy materials because they:
…are unable to concur in your view that Caterpillar may exclude the
proposal…Based on the information you have presented, it does not appear
that Caterpillar’s public disclosures compare favorably with the
guidelines of the proposal.
Accordingly, we do not believe that Caterpillar may omit the proposal from
its proxy materials in reliance on rule 14a-8(i)(10).
In 2009, DiNapoli announced that the pension fund had divested $86 million
in investments from nine companies and froze investments in seven
companies doing business in Iran and Sudan.
As of March 15, 2013 the Fund owned 1,991,699 shares of Caterpillar Inc
valued at approximately $176.9 million.
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