By Ross Kerber
BOSTON (Reuters) - A shareholder group scored its first voting victory after five years of urging mutual funds to sell stocks tied to Sudan, but the win underscores the challenges human rights activists often face.
On June 28 investors in ING Emerging Countries Fund
ING's neutrality was key for the measure to get a majority, said Eric Cohen, chair of resolution sponsor Investors Against Genocide.
The nonprofit group aims to pressure oil companies doing business with the government of Sudan, widely accused of rights abuses. The activist group has backed similar efforts at more than 80 other funds run by companies such as Fidelity Investments and Vanguard Group, but had never received above 31 percent support.
"We're very excited and feel the results of this vote really validates what we've been saying all along," Cohen said. "The shareholders really want this, that's why the funds ought to be paying attention."
The fund is run by ING Investments, part of Dutch-based ING Groep N.V.
ING executives declined to be interviewed on questions like whether they plan to sell the Sudan-related shares. A spokeswoman, Annette Bronkesh, conveyed a statement from ING's fund board that it has asked managers for "additional information on these matters for consideration at future board meetings."
The events at ING show how fund investors still play only an indirect role in how their money is managed. Unlike public companies with annual meetings, most mutual funds hold shareholder meetings only occasionally, such as for bylaw changes.
In the ING case, the $71.6 million Emerging Countries Fund held its June special meeting in Scottsdale, Arizona, seeking approval of a plan to merge the fund into the $55.5 million ING Emerging Markets Equity Fund
Cohen said his group had filed the measure at ING Emerging Countries Fund four years ago in hopes the fund would hold a meeting someday.
The activist group still has proposals pending at about 120 other mutual funds, though it withdrew proposals at managers T. Rowe Price Group
The activists aim to pressure the oil companies they blame for helping the Sudanese government in Khartoum finance military actions that led to human rights abuses in places like the country's western Darfur region and in South Sudan.
South Sudan gained independence last July after more than two decades of war between the mostly Christian south and Arab north, but tensions remain high after clashes in contested borderlands and disputes over oil payments.
As of January the activists counted $2.7 million worth of holdings among the two ING funds in PetroChina, Sinopec and a third firm, Oil and Natural Gas Corp
ING initially sought permission from the U.S. Securities and Exchange Commission to leave the shareholder question off of the ballot for the special meeting, but the SEC turned down the request. In a May 10 regulatory filing, the ING fund board said it had decided to stay neutral on the measure.
The letter gave several reasons: the fund would no longer exist after the merger, and it is already prohibited from violating sanctions on Sudan. Those laws do not, however, prohibit investments in the foreign oil companies.
Cohen said his activist group plans to reach out to ING again, to press it to follow shareholder wishes.
"Once the board of the newly merged funds meet, we hope that board members will decide to respond to the clear wishes of the fund shareholders and announce a policy to avoid investments with ties to genocide," Cohen said via e-mail.
(Editing by Leslie Adler)