Quick Take: CNOOC and the Junta

If you've thought about investing in CNOOC (NYSE: CEO  ) , you may already know that the Chinese oil and gas concern has operations in the country formerly known as Burma. You probably also know that "Myanmar" is a miserable place run by tyrants. While you may be inclined to turn a blind eye to the company's dealings with such unsavory people, the U.S. Treasury Department is not.

On Monday, the Treasury's Office of Foreign Assets Control placed sanctions on a leading Burmese family. The elder gentleman, Lo Hsing Han, is known as the "Godfather of Heroin." His conglomerate, Asia World, is run by son Stephen Law, and does all manner of contract work for the military junta. Stephen's wife holds a Singaporean company called Golden Aaron, which is one of CNOOC's joint venture partners in its Burmese oil field concessions.

We are talking about the very company listed here in the U.S., not CNOOC's state-owned parent. There is no dodging the direct connection, as Buffett did with his investment in Sudan-stainedPetroChina (NYSE: PTR  ) . As a foreign company, CNOOC will not be slapped with an Alien Tort Claims suit a la Boeing (NYSE: BA  ) or Chevron (NYSE: CVX  ) subsidiary Unocal, but I hope the company's connection to drug traffickers and a murderous military regime is enough to make you think twice before buying a piece of the business.


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