20 October 2000

U.S. Commission on International Religious Freedom

Commission Recommends SEC Investigate Sinopec’s Disclosure of Interests in Sudan

The U.S. Commission on International Religious Freedom today wrote to the U.S. Securities
and
Exchange Commission (SEC) to recommend the SEC investigate “the accuracy and adequacy of
material disclosures by the China Petroleum & Chemical Corporation (‘Sinopec’) in its
registration statement” about its holdings in Sudan. The Commission has found religion is a
major factor in the 17-year war being waged by the government of Sudan against Christians and
animists in the south. Revenue from oil production is the government’s principal source of funds
for the war in Sudan, and the Commission found that foreign corporations, including Chinese
petroleum companies, are vital investors in the Sudanese oil industry. The text of the letter
follows:

October 20, 2000

David B. H. Martin, Esq.
Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
Washington, D.C. 20549

Re: Recommended Investigation Of China Petroleum & Chemical Corporation
(“Sinopec”)

Dear Mr.Martin:

The United States Commission on International Religious Freedom recommends that the
SEC
investigate the accuracy and adequacy of material disclosures by the China Petroleum &
Chemical Corporation (” Sinopec”) in its registration statement, in light of recent media reports
about its holdings in Sudan. This recommendation is made pursuant to section 202(b) of the
International Religious Freedom Act of 1998, 22 U.S.C. 6432(b).

This Commission is charged with the authority and responsibility to investigate religious
persecution abroad and to recommend to the U.S. Congress, the President, and the Secretary of
State how United States foreign policy could advance international religious freedom. The
Commission has found: that religion is a major factor in the genocidal war-making of the
Government of Sudan (“GOS”) against its southern residents; and that revenue from its oil
production is the principal source of funds for the prosecution of the GOS’s civil war. The
Commission also found last fall that foreign corporations, including Chinese petroleum
companies, are vital investors in the Sudanese oil industry.

On the eve of this month’s initial public offering of Sinopec shares, the Wall StreetJournal
reported on October 11 that a Sinopec subsidiary (Zhongyuan Petroleum Corporation) had a joint
venture in Sudan’s oilfields with a unit of China National Petroleum Corporation (CNPC); that
last summer Sinopec gave its entire interest in the Sudan venture to CNPC, the chief shareholder
of its chief domestic rival, PetroChina, Ltd.; that it has not disclosed the value of any assets from
CNPC in return for this transfer; and that there is evidence that Sinopec’s subsidiary continues to
do business in Sudan’s oilfields.

If true, this report would suggest that Sinopec’s prospectus has a material omission rendering
it
misleading: Nowhere does it disclose any assets or operations in Sudan. The prospectus
cryptically mentions that on June 3, 2000, its parent, Sinopec Group Company, “transferred to us
certain operations, consisting principally of, various overseas investments . . .” Prospectus of
China Petroleum & Chemical Corporation, October 12, 2000, p. 175. But in the absence of
any
other information in the prospectus, a prospective investor is led to believe that these “overseas
investments” are not the wells in Sudan’s Block 6 oilfield, but rather “16 residential and office
units located in various buildings situated in Hong Kong, Macau, Republic of Singapore, and
the United States of America.” Prospectus, Annex B, p. B-10.

American investors who may be considering investing in Sinopec may consider it material to
their investment decisions to know whether the registration statement of Sinopec is adequate and
accurate in its disclosures about that company’s possible ongoing business interests in Sudan.

Therefore, the Commission recommends that the SEC determine whether Sinopec has
accurately
and adequately disclosed its interests in Sudan. While we understand that the SEC generally does
not discuss specific disclosure or enforcement views with respect to a specific registrant, the
Commission nevertheless requests, pursuant to section 203(b) of IRFA, 22 U.S.C. 6432a(b), that
the SEC provide the Commission with the results of any such investigation.

Thank you for your consideration of our recommendation and your cooperation with our
information request.

Sincerely,

Elliott Abrams
Chairman

The U.S. Commission on International Religious Freedom was created by the International
Religious Freedom Act of 1998 to give independent recommendations to the executive branch
and the Congress.

Hon. Elliott Abrams, Chairman * Dr. Firuz Kazernzadeh, Vice Chairman * Rabbi David
Saperstein * Laila Al-Marayati, M.D. * Hon. John R. Bolton * Dean Michael K. Young *
Archbishop Theodore E. McCarrick * Nina Shea * Justice Charles Z. Smith * Ambassador
Robert Seiple, Ex-Officio * Steven T. McFarland, Executive Director

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