Page 4-Thursday, March 16, 1978-The Michigan Daily
How nation views
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investments
A recent report to the U.S. Senate's
Foreign Relations Committee by the Sub-
committee on African Affairs asked a very
basic question.
Have American corporations making
money in South Africa been successful in
bringing about progressive social and
economic change for the non-whites who suf-
fer under the apartheid system?
"COLLECTIVELY," comes the answer,
after more than a year of detailed study,
"U.S. corporations operating in South Africa
have made no significant impact on either
These articles were researched and
written by staffers Rene Becker, whohas
covered the complex South African in-
vestments issue for the DaIlg, and
Brian Blanchard, who covers the Univer-
sity Regents. The Regents are expected to
decide at this month's meeting what
should be done, if anything, about
University investments in corporations
operating in South Africa.
REPORT
TO THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
BY
SENATOR DICK CLARK, Iowa, Chairman
SUBCOMMITTEE ON AFRICAN AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
African I
Business,
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relaxing apartheid or in establishing com-
pany policies which would offer a limited but
nevertheless important model of
multinational responsibility.
"Rather," the 232-page report continues,
"the net effect of American investment has
been to strengthen the economic and military
self-sufficiency of South Africa's apartheid
regime, undermining the fundamental goals
and objectives of U.S. foreign policy."
This conclusion is about as clear a
statement you're likely to read in a federal
report about South African economics: "U.S.
policy should be changed to actively
discourage American foreign investment in
South Africa."
THE UNEQUIVOCAL recommendation,
one of many offered by the Subcommittee, is
followed by three suggestions the Congress
ought to consider:
" Cutting U.S. credit to South Africa, par-
ticularly from the Export-Import Bank (an
institution created after World War II to boost
American exports. It discounts, or backs,
loans from private banks to other countries on
the condition that the money be used to buy
products from the U.S.);
* Deny tax credit to those U.S. cor-
porations paying tax to the South African
government which fail to act in ways con-
sistent with U.S. foreign policy. This would
also involve cancelling tax credit to those U.S.
corporations which extend loans to or invest
in South African government projects that
promote separate development. (Separate
development is the government program
which represents "plural democracy," ac-
cording to Deon Erasmus, a member of the
South African Consul in New York. "Plural
democracy means democracy for all the
various groups," Erasmus said. This includes
creating "homelands" or separate "indepen-
dent" states within South Africa specifically
for blacks.)
* Withholding official endorsement of
private groups which organize in defense of
U.S. corporate investment in South Africa
unless they satisfactorily support corporate
guidelines and fair employment principles
laid down by the U.S. government;
ON THE OTHER hand, the Subcommit-
tee's report discounts more extreme
measures, such as the disengagement of U.S.
corporate investment, a blanket denial of tax
credits, or the adoption of wider trade and
investment sanctions.
After qualifying the recommendations in
this way, however, the Subcommittee states,
"Nevertheless, at some time in the future, the
situation may merit stronger measures
should these recommendations prove ineffec-
tive or impractical."
The Subcommittee report, shaped and
protnoted by Iowa's Democratic senior
Senator, Dick Clark, also concluded that "the
code of conduct for multinational cor-
porations drawn up by Rev. Leon Sullivan, a
member of the General Motors, suggest some
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Eighty-Eight Years of Editorial Freedom.
420 Maynard St., Ann Arbor, MI 48109
Vol. LXXXVIII, No. 130
News Phone: 764-0552
Edited and managed by students at the University of Michigan
A better way to curb drinking
of the more modest steps ... than can be
taken."
THE SULLIVAN statement requires cor-
porate commitment to:
" non-segregation of the races in all eating,
comfort and work facilities;
" equal and fair employment practices for
all employees;
" equal pay for comparable work over the
same period of time;
" the initiation and development of
training programs that will prepare, a sub-
stantial number of non-whites for super-
visory, administrative, clerical and technical
jobs;
. an increase in the number of non-whites
in management and supervisory positions;
and
" improvement in the quality of em-
ployees' lives outside the work environment
in such areas as housing, transportation,
schooling, recreation and health facilities.
Although many corporations have pledged
commitment to the Sullivan principles, the
question remains whether they will carry
through with those promises.
Seventy-one corporations with South
African subsidiaries responded to a
"Questionaire on U.S. business activities in
South Africa" created by Senator Clark's
Subcommittee on Africa. Some of the replies
from corporations who have signed the
Sullivan statement present contradictions.
TWENTY-FOUR companies responding
said they do not have an equal opportunity
policy designed for South Africa-based sub-
sidiaries. The University has investments,
either stock or bonds, in four of them:
American Express Co., Firestone Tire and
Rubber Co., Kellogg Co., and Monsanto Co.
Only the-Kellogg Co. has signed the Sullivan
statement.
Seven companies responding stated they
do not pay equal pay for equal work. The
Kellogg Co. is one of those companies. The
University owns $345,000 worth of stock in the
Kellogg Co.
Twenty-five American firms in South
Africa stated they pay non-whites according
to the Johannesburg Chamber of Comrherce
Poverty Datum Line (PDL). The PDL is used
in South Africa only for non-white population.
THE HIGH RETURN on South African in-
vestments, 19.1 per cent, as opposed to the in-
ternational average of 11 per cent, is due to
the large pool of cheap black labor - a result
of apartheid.
The PDL is a calculation of the lowest
retail cost of necessities to maintain an in-
dividual or household in good health. This in-
cludes the minimum cost for: food, fuel,
lighting, clothing, and cleaning materials for
personal and household use, rent, as well as
transportation to work.
The University owns stock or bonds in nine
corporations which pay non-whites according
to the PDL. They are American Express Co.,
Borg Warner Copr., Colgate-Polmolive Co.,
American Cyanamid Co., Eli Lilly and Co.,
Firestone Tire and Rubber Co., Ford Motor
Co., Goodyear Tire and Rubber Co., Kellogg
Co.
OF THE SIXTEEN American firms which
stated they have no sort of worker represen-
tation or unions at all, the University has over
$6 million worth of stock in two of them: Dow
Chemical Co. and International Business
Machines Corp. (IBM).
IBM added an explanitory note to their
negative response: "IBM South Africa
believes in respect for the individual and
prefers dealing on an individual basis with
employees."
South Africa is the only country in the
world, with the possible exception of
Rhodesia, which bases its legal, social, and
economic systems on racism.
APARTHEID IS South Africa's own par-
ticular brand of racism which denies 80 per
cent of the population, the non-whites, the
right to vote, keeps 64 per cent of the
population illiterate, and allows 40 per cent of
the non-whites to suffer unemployment.
The United States is South Africa's largest
trading partner, its second largest overseas
investor, and the supplier of nearly a third of
its overseas credit, according to the Clark
report.
Of South Africa's private sector, 80 per
cent is either totally or partially foreign-
owned. There are over 300 American cor-
porations with factories and/or offices in
South Africa, according to the American Con-
sulate General.
DURING THE Subcommittee on Africa's
hearings on South Africa, Andrew Young,
ambassador to the United Nations, recom-
mended "the United States should more
clearly align itself with the forces of
liberation in southern Africa."
Frederick Matthaei, who bears the distin-
ction of having served as both a University
Regent ('67-'69) and as a Chairman of the
New Detroit business group, wrote in a letter
dated Feb. 16 to University President
Fleming: "I have followed the media reports
of the recent discussions in Ann Arbor
relating to courses of action on South Africa. I
support your apparent decision not to divest."
New Detroit is a group of very prominent
Detroiters including Henry Ford II, Joseph L.
Hudson Jr., Coleman Young, and Lynn Town-
send (former head of Chrysler Corp.), who
are involved in the "renaissance" of Detroit.
IT IS NOT surprising a representative of an
influential business coalition would write
a letter - on New Detroit stationary - to the
head of a local institution urging him to leave
its financial ties to major corporations intact.
What is disturbing is that the decision not to
divest was "apparent" to Matthaei a full
month before the Regents planned to make an
official decision and while campus-wide
debate on the issue was still raging. In fact,
only a few days before the letter was written,
Fleming's Committee on Communications
had reported that the University community
actually favors divestment.
MATTHAEI'S was a clear, well-written
statement of opposition to apartheid. But not
opposition expressed by withdrawal. Not ex-
pressed by divestiture. And not expressed by
economic sanctions.
Business, labor, and political groups have
had varying responses to the issues of profits
made in South Africa. The United Auto
Workers (UAW) threatened early this month
to withdraw its money from any group that
makes loans to the South African Government
or its businesses, according to the Detroit
Free Press.
Last week the Michigan State Legislature
sent to President Carter a resoluton urging
sanctions against the South African Gover-
nment as a protest against its "hideous
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ADOPTED BY the state's House and
Senate, the resolution calls for "immediate
sanctions against the South African gover-
nment in response to that country's shocking
and total disregard for human rights and
dignity."
The resolution suggests the suspension of
all arms trade with South Africa, bans on in-
vestments in South Africa, and curbs on
trade.
Locally, the Washtenaw County
Democratic Party sent a letter to each of the
six democratic Regents (Brown, Dunn,
Nederlander, Power, Roach, and Waters)
urging withdrawal from those firms in South
Africa supported by University investments
of over $50,000 within 30 days of March 9.
"WE HAVE an obligation in good faith to sit
down and find out what involvement a bank
has in South Africa and then to find out if they
are willing to cease that involvement," said.
UAW Presdent' Donald Fraser. Earlier
Fraser told a group that "the government of
South Africa continues to brutally suppress
blacks and other nonwhites who make up 80
per cent of the population."
Last week, the New York Times reported,
Citibank, the nation's second largest bank,
decided not to make loans to the South
African Government or to Government owned
manufacturing and utility businesses.
Citibank is one of 11 American banks respon-
sible for most of the $2.2 billion in outstanding
loans to South Africa.
In a statement from late February, the
AFL-CIO Executive Council declared,"... it
is deplorable that the subjugation and
repression of the non-white citizens of South
Africa by the white minority has escalated."
The Council, representing about 15 million
skilled and unskilled workers around the
country, endorsed the recommendation that
"U.S. corporations should immediately divest
themselves of South African affiliates, and
sever all ties with South African corpora-
tions."
A recent statement by the Chairman of the
Teachers Insurance and Annunity
Association of American College Retirement
Equities Fund (TIAA-CREF), William
Greenough, rejects business expansion and
loans to the public sector in South Africa
because "the South African government has
accepted racism as the official policy."
University employees utilize TIAA-CREF
benefits.
THE FINAL ACT is nearing in the
controversial move to raise Michi-
gans's drinking age to 19. Both houses
of the legislature have passed the bill,
and Governor William Milliken is ex-
pected to sign it into law.
Some backers of the 19-year-old
drinking law contended that the bill was
necessary to head off efforts to raise the
drinking limit still further.
Indeed, a citizens group is now
collecting signatures on petitions to
place a 21-year-old minimum drinking
law on the state ballot in November.
The 19-year-old limit, while it may
be the lesser of two evils, is an evil
none-the-less. And the argument that
some legislative action was needed to
hear off still higher drinking age
restrictions is unconvincing.
The responsible legislative ap-
proach would have been to initiate new
alcohol education programs in schools
around the state, expand alcoholism
rehabilitation programs and step up en-
forcement of drunk-driving laws.
Such measures could 'have helped
satisfy the legitimate public demand
for action on the youth drinking
problem - and the general drinking
problem in the state and in the nation.
Support tenants with a tag
Under the influence of student demonstra-
tions, public discussion, and in one case, a
state law, a growing number of universities
around the country have taken steps to cut off
or at least reduce financial ties with corpora-
tions doing business in South Africa.
The general pattern has emerged: an
initial outbreak of protest by a small number
of students and faculty, followed by discus-
sion within the university community and
consultation with financial officers, and, in
some cases, a decision to divest from cor-
porations with South Africa holdings.
UNDER PRESSURE from the state's At-
torney General, Bronson LaFollette, the
Regents of the University of Wisconsin voted
14-2 last month to sell investments in firms
doing business in the minority governed
nation, which practice racial discrimination
and separation. LaFollette told Wisconsin's
Regents that such dealings with discrimina-
tory companies violate state law and recom-
mended that Wisconsin dump stocks in such
corporations.
The Associated Press reported at the time
that while the Wisconsin Regents were in the
process of deciding to sell about $9 million in
stocks, campus police arrested three people
in a brief scuffle during a massive protest.
In a message from the Board of Trustees
of Brandeis University dated December 8,
1977, that group states, "The ongoing policy of
apartheid in South Africa and the increasing
severity of the repressive measures taken by
the Government of South Africa against the
opponents of that policy are abhorrent to the
Brandeis Board of Trustees and are in direct
conflict with the most basic founding precepts
of the University. As stockholders, the
Trustees will use the most effective means at
their disposal to combat these inhuman prac-
tices."
THE STATEMENT goes on to declare that
Brandeis will sell its holdings in the Newmont
Mining Co.; support the anti-discriminatory
Sullivan Code; support resolutions calling for
disclosure of business activities and employ-
ment practices in South Africa; leave open
the divestiture option if corporations do not
change policies "which the Trustees ... find
toward the termination of apartheid," accor-
ding to a newsletter published by the Wash-
ington based Investor Responsibility Resear-
ch Center Inc. (IRRC).
Last September, the University of Massa-
chusetts voted to eliminate all South African
related securities from its $682,000 portfolio.
As a result, within ninety days the University
divested more than half of its portfolio.
Bryn Mawr College and Haverford College
have co-sponsored shareholder resolutions
with church groups coordinated by the Inter-
faith Center on Corporate Responsibility::
Bryn Mawr will request Eastman Kodak Co.
to prohibit the sale of any equipment to the
South African Government that could be used
for regressive purposes; Haverford will
request Motorola, Inc. to restrict all sales tc
the South African Government.
The University of Minnesota has asked a
long list of corporations which do business in"
South Africa and use Minnesota's investment
ts to adopt the Sullivan principles.
But if the University of Michigan's Regen-
ts decide to sit pat on the University's $80.5
million investment in stocks and bonds in
corporations doing business in South Africa'
the eight-member board won't be alone. The
Universities of Chicago, Texas, Stanford;
Princeton, Yale, to name a few, have not
divested any stocks or bonds and do not seem
to be in market for replacements/for their
South African-connected business.
MANY OF THE student newspapers and
active student groups on these campuses
have come out against the South African in-
vestments, but the attitudes of both
businesses and students in general seems to
range from indifferent to strongly opposed on
the question.
Approximately half of the undergraduate
body at Princeton University believes that
that institution should not take stands on ex-
ternal political issues except when academic
freedom is directly threatened according to a
Daily Princetonian poll.
The Yale Anti-Apartheid Coalition has
collected 2,000 names on a petition which it
plans to present to the Yale Corporation in
May. The petition calls for Yale to divest it-
A S THE ICE and snow melt from the
ground, the Diag and Fishbowl
will again abound with speakers,
leafleters and others promoting their
assorted causes.
Today through Saturday, a cause
worthy of support from all of us will
make its presence known around cam-
pus and the city.
The Coalition for Better Housing is
sponsoring "Tenants' Tag Days" to
raise money for the two housing issues
on the April 3 city ballot.
In past local campaigns, pro-tenant
legislation has faced a tremendous
uphill battle because of the large fun-
draising advantage of the city's power-
ful landlord lobby.
hand of tenants in a housing market
where landlords hold most of the good
cards.
The first proposal - called the
"Truth in Renting" law - would set up
fines and possible jail terms for lan-
dlords who put illegal or unenforcible
clauses in leases.
The second issue - referred to as
the "Fair Rental Information"
proposal - would create a tougher ver-
sion of the tenants' rights booklet which
landlords are required to give their
tenants.
So far, indications are that local lan-
-dlords do not plan the same type of big-
money effort against this year's ballot
i