Episcopal Press and News
Episcopal Church Challenges Phillips Petroleum
Diocesan Press Service. April 30, 1974 [74129]
BARTLESVILLE, Okla. -- Appearing at the stockholder's annual meeting here on April 30, representatives of the Episcopal Church and other church groups challenged Phillips Petroleum Company on two issues of corporate responsibility.
The first resolution, filed by the Executive Council of the Episcopal Church, urged Phillips to cease its exploration, mining, oil drilling and oil production activities in Namibia (formerly South West Africa) and to withdraw its operations from that country "as expeditiously as possible."
The second proposal requested the board of directors of Phillips "to immediately implement effective internal procedures " to prevent the company from making illegal political campaign contributions such as those made to the finance committee to re-elect the President in 1972.
The first resolution, requesting Phillips to withdraw from Namibia, was introduced by Ms. Goler Butcher, Washington, D.C., a staff assistant for the House committee on Africa and a former legal adviser on Africa in the U.S. State Department.
"The presence of our company in Namibia, " she said, "is directly counter to U. S. government policy, officially discouraging investment in Namibia by U. S. corporations. "
She went on to say the U.S. government has indicated that "it will not protect such investments against claims of a future lawful government in Namibia. "
The Episcopal Church's resolution contended that since "the United Nations has terminated the League of Nations Mandate under which South Africa received the temporary governance of Namibia after World War I, " the continued occupation of that country is illegal.
In discussing the company's public image as a reason for supporting the resolution, Ms. Butcher said, "Our public image has plummeted. The honest, the unfortunate truth is that our public image is moving to rock bottom. Our company simply cannot afford to be in a position of defying formally announced U.S. government policy here or abroad. "
" The man on the street, " she continued, "is already worried that the oil companies are acting in their own self-interest. What will he think of our co-working with international lawbreakers ?"
She said that it was indeed in the dollars and cents self-interest of stockholders that Phillips withdraw from Namibia. Otherwise, she said, "we may court the hostility of Africa, a vast continent with considerable petroleum reserves."
Tim Smith, speaking on the proxy of the American Baptist Churches, holding 23,000 shares of stock valued at more than $1 million, asked if management had ever discussed their involvement in Namibia with any Africans from that country. A spokesman for management said he did not know of any such discussion.
The questioning pointed out that serious discussions between the company and the United Nations have not taken place. Mr. Smith commented that this was regrettable since the U.N. was the sole legitimate legal authority for Namibia.
The management of Phillips argued that the energy crisis had reinforced its need to stay in Namibia. Further, management contended, Phillips' activities in Namibia "do not violate the laws of the United States. " It was emphasized that the presence of Phillips in Namibia does not imply either approval or disapproval of the political or social policies of the governmental authority there.
Philip A. Masquelette, Houston, Tex., moved the adoption of the second Episcopal Church resolution, calling for "effective internal procedures" to prevent illegal political contributions in the future.
Mr. Masquelette said that Minnesota Mining and Manufacturing Company (3 M) "not only did not oppose our stockholder proposal, which is the same one as we made to Phillips, but went further and agreed to vote all Minnesota Mining shares which were undesignated in this regard in favor of our proposal. "
He said that those who proposed the resolution "do not agree that adequate procedures have been established to monitor compliance with what the Phillips management has said is company policy in this regard. "
Mr. Masquelette chided the management of Phillips for not taking "sufficient formal action at the board of directors level to establish effective internal procedures with regard to illegal political contributions. " Further, he said, the by-laws of Phillips "have not been amended in this regard. "
He also said "that no definite program has been launched to recover illegal contributions made out of corporate funds in connection with 1970 and 1972 congressional races."
Mr. Smith, in seconding the resolution, said its adoption "would be a return to sound auditing procedures, a return to law and order, and a return to the good name of Phillips Petroleum Company. "
The chairman indicated that management still does not have full information about how the money was given to the Nixon campaign and said that special counsel were looking over the issue and would report to the board in a few months. When asked by Mr. Masquelette whether a summary of such a report will be given to shareholders, the chairman said that was up to the board to decide. This statement caused audible gasps from several stockholders.
Mr. Masquelette said that the Episcopal Church would look very carefully at what management's response was in terms of whether the church will come back next year with a resolution.
On the Namibia resolution, the Episcopal Church received approximately 5 percent of the vote: 2,731,224 for the resolution, 53,230,336 against, with 2,158,496 abstentions. The officers indicated that this represented 91.6 percent voting for management.
On the political contributions resolution, the vote was 3,941,985, or approximately 7 percent, for it, 52,063,706 against, with 2,114,361 abstentions. Management declared 89. 6 percent supported the management position.
The Episcopal Church owns 15,600 shares of common stock in Phillips, having a current market value in excess of $750, 000.
Mr. Smith said the church representatives "were delighted with both votes, which indicated that shareholders had serious problems with management's position on both these issues, when virtually one in 10 stockholders present did not support management on the issues. "
