Harvard University’s announcement yesterday that it would divest its endowment’s holding of PetroChina Company Limited is a welcome step by a leading American institution to distance itself from the company. PetroChina’s parent, China National Petroleum Corporation, is extensively involved in the production of Sudanese oil, according to Harvard’s governing corporation. Harvard’s report also makes reference to “the salient importance of oil to the Sudanese government as a strategic asset and source of revenue, available to fund military and other operations.” And it reminds us that both the Congress and the Secretary of State have described the situation in Sudan’s Darfur region as a “genocide” in which the Sudanese government is complicit.

The committee that advises the Harvard Corporation on these matters noted that “Harvard manages its endowment to achieve maximum returns to support the academic purposes and programs of the University, consistent with a prudent level of risk. The University maintains a strong presumption against divesting itself of securities for reasons unrelated to investment purposes, and against using divestment as a political tool or a ‘weapon against injustice.'” So it should be; the last thing we’d want would be for pension funds or endowments to become battlegrounds for fighting the political feud of the moment.

But let it be said, too, that in certain cases having to do with communist China in particular, truckling to the leadership in Beijing hasn’t always been a guaranteed recipe for maximizing returns. Philip Condit, the Boeing CEO who likened Red China’s human rights record to America’s and barred a Taiwanese official from visiting a Boeing plant, ended up resigning in a Pentagon procurement scandal as his company faltered. Maurice Greenberg, the AIG CEO who recently resigned amid an accounting scandal, was described by Seth Faison of the New York Times in 1999 as appearing at a conference in Shanghai at which Mr. Greenberg “went out of his way to praise the communist rulers, brushing aside a suggestion that more democracy was needed by arguing that the main job in China is simply feeding the population of 1.3 billion people.”

And now PetroChina. PetroChina’s stock price has doubled over the past two years in trading on the New York Stock Exchange, exceeding even the extraordinary returns in the energy sector as a whole. The price soared after Warren Buffett’s Berkshire Hathaway disclosed that it had accumulated a hefty stake of the PetroChina shares traded in Hong Kong. Goldman Sachs, which came under pressure from the AFL-CIO for underwriting the PetroChina initial public offering in 2000, was fined last year by the Securities and Exchange Commission for, among other things, violating the Securities Act of 1933 when one of its employees sent a pre-IPO e-mail to customers that included a section called “WHY YOU SHOULD TAKE A GOOOOOOOD LOOK AT PETROCHINA?” In the wake of Harvard’s decision, a good look is exactly what the company’s American shareholders and business partners will want to take.