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 remainder.

"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 land.

"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 Management, LLC. 

Edited by: InvestmentWires Staff, 


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