Franklin Templeton Could Feel Darfur's Heat

Not every U.S. mutual fund is divesting itself of stakes in Darfur.

While manager Will Danoff at Fidelity's FCNTXContrafund is dumping his stake in PetroChinaPTR, the Chinese company targeted by activists for its involvement with the Sudanese government, others are standing firm -- or going in the opposite direction.

One example: Franklin Templeton BEN, the fund company based in San Mateo, Calif. I looked though Franklin's public filings and found that between Dec. 31, 2006, and March 31 of this year, the company's investment funds nearly tripled their holdings in PetroChina to 156,699 American depositary receipts, or ADRs, from 61,194.

Most were held by Templeton's TEDMXDeveloping Markets Trust mutual fund (TEDMX). Company spokeswoman Lisa Gallegos pointed out that the stake only amounted to about $20 million.

Yet the figure doesn't include further shares in PetroChina that Franklin's offshore funds have bought in Hong Kong. Although exact figures aren't yet available, activists say those add up to a lot more.

Adam Sterling, director of the Sudan Divestment Task Force in Washington, D.C., highlights the offshore Templeton Asian Growth Fund. According to its latest prospectus, he says, the fund has 19% of its money in three big companies accused of complicity with Sudan's regime: China's PetroChina and SinopecSHI and India's Oil & Natural Gas Co.

The man managing both funds is Templeton's legendary emerging-markets guru, Mark Mobius. He has defended the company's stance. In an interview with USA Today a few months ago, for example, he argued that "engagement is better than departure. Once you depart, you cut yourself off from any dialogue that would be helpful."

But activists aren't satisfied. "We emailed Mr. Mobius asking him what he had done to engage these companies," said Sterling. "He hasn't replied." That was two months ago.

Mobius is hardly alone.