A.F.L.-C.I.O. Joins Effort to Block PetroChina’s Bid to Penetrate U.S. Capital Markets

(Washington, D.C.): America’s trade union movement has formally joined forces with
leaders of
the national security, human rights and religious freedom communities to thwart the $5-7 billion
Initial Public Offering that a problematic Chinese oil company hopes shortly to list on the New
York Stock Exchange. With the AFL-CIO’s resources and horsepower now added to the mix, the
prospects for this IPO can only be described as imperilled.

A press release issued today by the Nation’s most powerful labor organization
announces the
release of a devastating report concerning the impending stock offer by PetroChina, a holding
company that is — according to its prospectus — “completely controlled” by its state-owned
parent, China National Petroleum Company. The report addresses concerns about shareholder
protection, forced labor, environmental and human rights issues.

The AFL-CIO’s bottom line should further chill what little enthusiasm has been
evidenced to
date for this offering by U.S. investors (for example, the Nation’s two largest pension funds,
TIAA-CREF and California Public Employees Pension Fund, have already indicated they will
not be purchasing PetroChina shares). In the words of the organization’s president, John
Sweeney: “This PetroChina IPO has many risky financial holes, and they are covered in an
intricate patchwork of human rights and environmental violations….Investing in PetroChina only
encourages human rights abuses while at the same time exposing investors to significant risks
which they will have few protections against.”

AFL-CIO Press Release, 1 March 2000

Report Says Proposed $5 Billion PetroChina IPO
Laced With Investment Risks And Human Rights Violations;
Money Managers Urged to Review Findings

Washington, D.C., March 1 — Today the AFL-CIO released a report marking the beginning
of a
campaign to focus investor attention on the growing investment, human rights and environmental
concerns presented by the $5 billion initial public offering (IPO) of PetroChina, the largest such
offering of a Chinese state-owned enterprise.

The report, which was sent this morning to the top 100 investment management firms
involved
in emerging market IPOs, documents the significant financial risks posed by the company’s
governance structure, ethical issues surrounding PetroChina’s human rights abuses in Sudan and
Tibet, and the expected layoffs of one million workers in China.

“This PetroChina IPO has many risky financial holes, and they are covered in an intricate
patchwork of human rights and environmental violations,” said AFL-CIO President John
Sweeney. “Investing in PetroChina only encourages human rights abuses while at the same time
exposing investors to significant risks which they will have few protections against.”

The report, which can be found at www.PetroChinaWatch.com,
concludes:

• Ownership and control will remain with the Chinese government.
  PetroChina is
  offering $5 billion of common stock, representing a 15% stake in the company. The remaining
  85% will be controlled by PetroChina’s parent company, state-owned China National Petroleum
  Corporation (CNPC). As a state-owned enterprise, CNPC is controlled by the Chinese
  government. As a result the majority shareholder, the Chinese government, will be able to
  control all matters requiring shareholder approval.
• Shareholders have only limited legal protection in China. So far, all of
  PetroChina’s
  executive officers and the majority of directors and shareholders live in China and Hong Kong.
  As a result, outside investors may not be able to enforce legal judgments against the company or
  its officers including judgments relating to the securities laws of the United States and other
  countries.
• PetroChina is associated with forced labor. PetroChina’s parent
  company, CNPC,
  which is involved in a joint venture with the Sudanese national oil company and Canada’s
  Talisman oil company, has been widely associated with the use of forced labor and displacement
  of villagers living near the joint venture’s operations.
• Environmental and human rights threats in Tibet. Human rights activists,
  religious
  groups, and environmentalists are raising concerns centered around PetroChina’s domestic
  operations. PetroChina’s activities in the North could further harm the Tibetan people, as well as
  disrupt already ecologically fragile areas in Tibet.
• Over one million unprotected workers could lose their jobs. Press
  reports have
  indicated PetroChina intends to lay off up to one million employees in China after its IPO. These
  workers have no means to represent themselves in this process due to China’s ban on
  independent labor unions.

This March, an international consortium of investment bankers, accountants, consultants and
others led by the investment banking firm of Goldman Sachs, plans to market the PetroChina
IPO to institutional investors, many of which manage pension and defined contribution funds for
American workers. If successful, this offering will mark the largest public offering ever in a
Chinese state-owned enterprise. It is the first of several large IPOs that the Chinese government
is planning to market to Wall Street this year in anticipation of its entrance into the World Trade
Organization.

“The AFL-CIO will work with unions and worker pension fund trustees, in the United States
and
abroad, to make institutional investors fully aware of the risks in the PetroChina deal. We will
offer an alternative investment perspective to Goldman Sachs’ marketing “road show” expected
to begin later this month,” said Sweeney. The AFL-CIO’s Office of Investments plans on hosting
a conference call with investment analysts next Thursday.

American workers own $430 billion worth of foreign equities through pension funds.

Today’s Wall Street Journal reported that several members of Congress are sending a letter
requesting that President Clinton block the state-owned company from making an initial public
offering “until an acceptable use of the proceeds has been assured.” The letter warns that some of
the proceeds could be diverted to the Khartoum government, which has been waging civil war
against Christian and other Sudanese minority communities.

The PetroChina IPO has received a skeptical reception from many pension fund investors
and
workers organizations worldwide. CALPERS, the world’s largest public pension fund, has
chosen not to participate in the IPO. Other prominent funds have already divested from
Talisman.

“We are very pleased that CALPERS has chosen not to place our members’ retirement assets
in a
risky investment in a company so deeply involved in human rights abuses,” said Service
Employee’s International Union President Andrew Stern, which represents CALPERS
participants.

“PetroChina does not recognize its workers’ fundamental human rights, ” said Fred Higgs,
General Secretary of the International Federation of Chemical, Energy, Mine and Mineral
Workers’ Unions, representing workers in 115 countries, including many in the oil industry.

Hans Englebert, the General Secretary of Public Service International, representing 20
million
public sector workers world-wide, including participants in CALPERS and the giant Dutch
pension fund ABP, said “as a company that is not in compliance with the International Labor
Organization’s Core Labor Standards, operating in a country that is not in compliance,
PetroChina appears to be an inappropriate investment for worker capital.”