US PUBLIC SECTOR PENSION FUND THREATENS TO SELL ALCATEL SHARES BECAUSE OF ITS SUDAN PRESENCE

Mergers, Acquisitions and Financial Results

Alcatel has rejected a campaign by U.S. pension funds to stop selling communication equipment to Sudan, the troubled African country in which an estimated 300,000 people have been killed in violence orchestrated by the government.

CALPERS, a big California public sector pension fund with more than $200 billion U.S. in assets, has warned it could sell the shares of Alcatel and other companies if they continue to do business in the Sudan. But in a filing with U.S. regulators this week, the French telecommunications giant warned that if pension funds sell or refuse to buy Alcatel stock, "it would be counter-productive to the aim of helping the population of Sudan. "We, too, are deeply concerned with the plight of the Sudanese people. "However, we sincerely hold the view that our limited operations in Sudan help foster the dissemination of communications services to the population as a whole and as such, our activities help promote democracy and economic development." In any event, Alcatel also noted, the complaining funds were not major shareholders. "These U.S. pension funds and endowments represent only a tiny fraction of our U.S. investors," it told the U.S. Securities and Exchange Commission's office global security risk. It said the campaign won't hurt share values because these pension funds hold only 1.4 per cent of Alcatel stock and represent only about 1.5 days of trading around the world. Critics say the communications and other equipment that Alcatel, Siemens and ABB have installed in Sudan are helping the central government wage a war against the Darfur region, which has left 300,000 people dead and two million people homeless. The California pension fund voted in December to urge Alcatel, Siemens and ABB to get out of Sudan. "Companies with business ties to the Sudanese government present a financial risk and moral threat to their shareholders," California state treasurer and CALPERS trustee Phil Angelides said in a statement. Alcatel said CALPERS owns about 2.4 million Alcatel shares and other U.S. pension funds hold another 18 million. In its SEC filing, Alcatel said that 14 U.S. states have or are considering legislation forcing state pension funds to divest stock of companies doing business in Sudan. In addition, several universities and colleges are implementing similar policies.

The Ottawa Citizen