Buffett faulted for keeping PetroChina stake

(Recasts first three paragraphs, adds closing price)

By Jonathan Stempel

NEW YORK, Feb 23 (Reuters) - Warren Buffett's Berkshire Hathaway Inc. (BRKa.N)(BRKb.N) was criticized Friday for keeping its investment in PetroChina Co. (0857.HK) amid claims the Chinese oil company's parent invests in Sudan.

Berkshire's rejection of calls to divest, reported by Reuters on Thursday, came after the company said media, shareholders and others had questioned its PetroChina stake.

Some pension funds and universities, including Harvard, have sold stakes in PetroChina and other companies whose activities, they say, support Sudan's government, which the United States has accused of genocide. Sudan's government has denied that charge. "Warren Buffett, more than any individual, represents the good side of Wall Street, and the fact he is not demanding better behavior from companies he owns is a discouraging outcome," said Amy Domini, chief executive of Domini Social Investments in New York.

The firm invests $1.65 billion in what Domini considers "socially responsible" companies.

Violence in Sudan's Darfur province has resulted in an estimated 200,000 deaths, and 2.5 million people being driven from their homes since 2003.

DEFENSIVE

The PetroChina investment puts the 76-year-old Buffett on the defensive, a rare position for the world's second-richest person. Last year, Buffett won wide praise for donating most of his wealth to the Bill & Melinda Gates Foundation.

PetroChina's government-owned parent China National Petroleum Corp. has a 41 percent stake in Petrodar Operating Co., whose main office is in Khartoum, according to Petrodar's Web site.

In a Wednesday posting on its Web site, Berkshire said "we have seen no records, including the various materials we have received from pro-divestment groups, that indicate PetroChina has operations in Sudan."

The Omaha, Nebraska-based insurance and investment company said it agrees that conditions in Sudan are "deplorable and sympathizes with people who want to remedy them."

Yet it said divestiture would not "have a beneficial effect" on Sudanese behavior.

"We do not believe that Berkshire should automatically divest shares of an investee because it disagrees with a specific activity of that investee," it said, adding: "Subsidiaries have no ability to control the policies of their parent."

Berkshire began accumulating its PetroChina stake in 2002. PetroChina did not immediately return requests for comment.