Action Fund Management,
LLC (AFM), investment advisor to the Free Enterprise Action Fund (Ticker:
FEAOX), announced today that proxy adviser Institutional Shareholder
Services recommended its socially responsible investor clients to vote
"FOR" the FEAOX's sustainability shareholder proposal filed with Goldman
Sachs (Ticker: GS). Shareholders will vote on the proposal at Goldman's
annual meeting on March 27.
"We are very pleased that ISS supports our efforts for increased
transparency on this issue at Goldman Sachs," said AFM's Steve Milloy.
"Goldman 'talks the talk' on environmental issues, but its past actions
don't appear to 'walk the walk,'" added Milloy.
The FEAOX (http://www.FEAOX.com), a publicly-traded mutual fund, filed
the proposal because Goldman's past conduct on environmental sustainability
appears to be at odds with the policy described on the firm's web site. The
FEAOX's shareholder proposal asserts that:
"Goldman's past actions appear inconsistent with its own Environmental
Policy, which states: 'We can make a significant positive contribution to
... sustainable forestry ... through market-based solutions;" and "In
pursuing [sustainability] we will not stray from our central business
objective of creating long-term value for our shareholders ... '
"Goldman justified its much-touted 2004 donation of 680,000 acres of
forest land in Tierra del Fuego, Chile to an environmental group by
stating, '... the best way to maximize the value of the land was to
purchase it for conservation.' The facts indicate this is not so.
"Prior to Goldman's intervention, the Chilean land was the site of a
sustainable forestry plan regarded by experts as highly innovative, pro-
environment, and unprecedented in both scale and promise. The land owner,
U.S.-based Trillium Corporation, had rescued it from clear-cutting and was
committed to preserving 70% of the land for conservation while generating
revenues of up to $150 million/year in perpetuity by developing the
"The project was nonetheless vigorously opposed by various "deep
ecology" activist groups, who oppose even minimal development of natural
resources. A 9-year long activist-forced delay and subsequent collapse of
Trillium's lender made the lands vulnerable to takeover at a distressed
debt auction. Goldman aggressively outbid Trillium for notes secured by the
"Though Goldman initially represented to Trillium that it would permit
the project to continue, Goldman sued Trillium and took the land in
settlement. Upon advice from The Nature Conservancy, Goldman then donated
the land to the Wildlife Conservation Society for the purpose of creating a
nature preserve. Then-Goldman CEO Hank Paulson was chairman of the Nature
Conservancy at that time. Paulson's son was a WCS official.
"Colgate University researchers subsequently concluded that Goldman's
donation to WCS was a less desirable outcome than Trillium's project since
it deprived the world of a pioneering and much-needed example of
large-scale sustainable development and because it would have considerably
helped the depressed local economy. (Geoforum, July 2006).
"The researchers said the Goldman/WCS nature preserve outcome was at
least partially based on a faulty, if not false, rationale -- long touted
by anti- development opponents of Trillium's project -- that ecotourism was
a suitable sustainable development option for the land and surrounding
communities. The researchers noted that claims about ecotourism as a
sustainable development option are often used by environmental groups that
are also vying for control of targeted lands.
"Goldman shareholders expect that sustainable development projects
involving the company will benefit both shareholders and the environment as
promised by company policy. Goldman's Tierra del Fuego land transactions
failed to accomplish either objective."
AFM believes that Goldman's conduct in the Chilean land deal may raise
red flags about its involvement with future projects related to the
environment, such as the ongoing efforts of private equity firms and
environmental groups to effect the purchase of TXU Corp (Ticker: TXU).
"Shareholders and the environment lost out in the Chilean land deal,"
said AFM's Tom Borelli. "As shareholders in both Goldman and TXU, we want
to make sure that history doesn't repeat itself with the TXU buyout and
other environment-related projects," added Borelli.
The FEAOX aims to increase shareholder value by advancing free-market
principles in the companies it owns. FEAOX is available exclusively through
BISYS Fund Services Limited Partnership (applications may be obtained at
http://www.FEAOX.com/how.html), and through E*Trade Financial and HSBC.
An investor should consider the fund's investment objectives, risks,
and charges and expenses carefully before investing or sending money. This
and other important information about the Free Enterprise Action Fund can
be found in the fund's prospectus. To obtain a prospectus, please call
1-800-766-3960 or visit http://www.FEAOX.com. Please read the prospectus
carefully before investing.
Mutual fund investing involves risk, including loss of principal.
The Free Enterprise Action Fund is advised by Action Fund Management,
LLC., which receives a fee for its services, and is distributed by BISYS
Fund Services Limited Partnership, which is not affiliated with Action Fund
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