Excerpts of Letter From Casey Chairman Hon. Roger Robinson to PetroChina Shareholders

Over the past four years, the William J. Casey Institute has pursued a Capital Markets Transparency Initiative (CMTI) designed to raise national awareness of the fact that global “bad actors” are successfully raising funds in the U.S. debt and equity markets. In the course of this research, we have identified a number of listed foreign companies and government- controlled entities that are engaged in activities overseas which contravene important U.S. security interests and fundamental values. China National Petroleum Company (CNPC) and its hastily configured subsidiary, PetroChina, are among these concerns.

Our CMTI is focused on strengthening disclosure and transparency in the markets and expanding voluntarily “due diligence” assessments to include national security, human rights, religious freedom and other non-traditional risk factors. In addition to the moral implications of helping finance activities inimical to our nation’s interests, these new, non-financial market forces are increasingly impacting upon the value of these foreign equity and debt issues as well as the fate of initial public offerings in our markets (witness the sharp downsizing of the PetroChina IPO).

The Casey Institute has consistently opposed capital controls, undue government intervention and other measures which could impede the free flow of capital into and out of the United States. Nevertheless, there are rare occasions when the international operations of a foreign firm (or its parent, subsidiaries or affiliates) are so egregious as to warrant steps to prevent it from raising largely undisciplined and non-transparent funds from U.S. investors or, if already listed, divestment by U.S. institutions holding such paper.

Regrettably, we are persuaded by numerous official and unofficial reports that the substantial involvement of PetroChina’s parent company with the U.S.-sanctioned Greater Nile Petroleum Operating Company and the terrorist-, genocide- and slavery-sponsoring government of Sudan implicates the holders of this stock in the wholesale death and destruction that are a daily reality in southern Sudan. Critical national — and international — media attention to this genocidal campaign being waged by the Khartoum regime is intensifying.

Sudan’s official involvement in trafficking in components for weapons of mass destruction and ballistic missile delivery systems — not to mention its well-known reputation as a leading “safe harbor” for international terrorists — adds a serious national security dimension to its brutal human rights abuses. We also share the concerns of other organizational participants in our “PetroChina Coalition,” including the abuse of labor rights, the denial of religious freedoms, the despoiling of the environment and the jeopardizing of Tibetan autonomy, culture and resources.

Put simply, investing in PetroChina stock runs the unacceptable risk of helping fund — albeit unwittingly — these and other odious activities. Claims of a “firewall” between PetroChina and its parent company, CNPC, have been judged illusory by reviewing the company’s prospectus and other credible indicators.

Accordingly, we strongly recommend that your firm follow the lead of CalPERS, TIAA-CREF and other large institutions that have publically made clear that they have no intention of holding PetroChina stock. These industry leaders, as well as many others, have similarly divested or eschewed equity holdings in Talisman Energy Inc. which — like CNPC — owns a major stake in Sudan’s oil consortium. Indeed, CalPERS’ Board of Directors recently instituted new non-financial criteria (including human and labor rights and environmental concerns) to help govern all purchasing decisions with regard to emerging market entities. An audit of California’s public pension fund systems, mandated by that state’s legislators, is also underway to vet these portfolios for possible national security-related concerns.

In short, we believe it would be prudent in the future to include national security, human rights, religious freedom, labor rights and environmental concerns in the “due diligence” assessments performed by your firm and/or those of your external fund managers. For more information on this rapidly developing issue area, we invite you to review our web-site: (/institutes/wjci.shtml).