Page 2-Tuesday, November 22, 1977- The Michigan Daily

Diemma
(Continued from Page 1)
advises the administration on money
,matters; and the Committee on Com-
Munications, a sponsor for issue for-
utns which was created in the late
.'-s but has languished for several
fars.
'SACFA WAS directed to study the
' Vniversity's investments in South
'Africa and make a recommendation
for action - or maintenance of the
satus quo - to the administration.
'e Communications committee will
attempt to hold a forum, in which the
sides of the issue can be presented in
public.
"According to University V i c e-
President Richard Kennedy, the
committee deliberations could easily
°delay a resolution of the issue until
next fall - a prospect which angers
iMany who insist that the South
African political deadlock must be
bFoken immediately.
But University officials argue that
divestiture is a -complicated matter
which demands careful examination
and plenty of time for debate.
BUT IT IS. not committees or
administrators who will ultimately
~tetermine University policy. The

over stock
decision rests with the Board of
Regents. All eight officials say they
are waiting for the reports to make a
decision, but since the beginning of
the controversy, various Regents'
comments have made it apparent
that a motion to divest would fail.
Last week, however, Regent David
Laro (R-Flint) said, "I'm sure there
are investments which are worthy of
University investment which aren't
in South Africa."
Regent James Waters (D-Muske-
gon) would only say: "I don't think
there's much doubt that when you
invest in a corporation you are
supporting that country to some
extent."
AT THE HEART of the furor is the
issue of apartheid itself - the unique
system of racial segregation and
discrimination whichallows the
white minority in South Africa to
dominate completely the much larg-
er non-white population.
Protestors say blacks are subject-
ed tochazardous and inhumane work-
ing conditions, particularly in the
country's rich mines. The nation's
blacks, Asians, and "coloreds" (peo-
ple of mixed, non-white descent), -

about 80 per cent of the population -
have no representation in the govern-
ment. South African law forbids any
black from giving any white an
order, and forbids blacks to super-
vise whites in industry or business.
Also, the system provides labor in
the nation's wealthy industries at re-
markably low wages. In 1975, the
Rand Daily Mail, a major newspa-
per, reported that the nation's blacks
earned roughly 16 per cent of what
whites were paid for the same jobs. It
is this low wage rate that makes
South Africa a paradise for industry,
and leads to the high return on stock
that makes speculation so attractive
to foreign investors. The rate of
return on South African investments
is an average 19 per cent, compared
Jo the 11 per cent international aver-
age.
THE UNIVERSITY administra-
tion's dilemma over divestiture fo-
cuses on several factors - the losses
it might incur by pulling out of the
corporations; the loss of a voice in
corporations activities; and the pos-
sible loss of diversiti in its invest-
ment portfolio.
The diversity problem is of particu-
lar concern. Well-rounded invest-
ments, which put money in several
industries, protect an institution or
individual investor from major

losses if one industry suffers ,a
depression. The University, in other
words, doesn't want all its eggs in one
basket.
University financial officers have
put over $73 million (out of a total in-
vestment pool of $235 million) into
both stocks and bonds in corporations
which do at least some business in
South Africa. The difference in types
of investments is important; to buy a
share of stock is to become a partial
owner of a company and attain a say
in its management, while buying
bonds guarantees a higher return on
investment but no voice in manage-
ment.
JAMES Brinkerhoff, University
vice-president for finance, has said
the administration has no intention of
giving up its holdings in corporate
bonds. The issue, he argues, is
management policy. As a stockhold-
er, the University has partial respon-
sibility for a corporation's policy
toward blacks. Brinkerhoff says the
question is whether or not to keep the
stocks and maintain partial owner-
ship, and therefore partial responsi-
bility for apartheid policy.Bonds
have nothing to do-with policy, he
says, and therefore are harmless.
Management control is not the
issue, according to Denis Brutus, a
black South African who is a profes-
sor at Northwestern University. The
mere presence of the corporations in
the country is what supports Prime

Debate elsewhere

By BRIAN BLANCHARD
Since the initial outbreak of pro-
test last spring, student demon-
strations against investments in
corporations in South Africa
"seem to have died,'' as in the
words of a Stanford Daily editor.
Student groups are meeting firm
resistance from college adminis-
trators, and in some cases, their
peers.
But the groups have succeeded,
in many cases, in forcing adminis-
trators to examine closely the line

between financial and moral con
siderations. At most campuses,
though, regents and trustees have
decided to retain some financial
ties to South Africa.
AT STANFORD, for example,
3,000 students demonstrated last
spring against the university's
$125 million list of investments in
56 companies doing business in
South Africa. A student group, the
See DEBATE, Page 10


Minister John Vorster's government,
he argues. Thus, investments such as
the University's give Vorster "his
muscle and his money. .. without
which he could not survive," Brutus
said.
Michael Maher, a University busi-
n e s s administration professor,
claimed the University's reluctance
to withdraw its money is based
purely on economics.
"IF THEY HAVE to take profit-
able South African companies'
(stocks and bonds), and sell them,
and buy less profitable other com-
panies', then they'll take a bath
(loss) in divestiture," he said.

One alternative open to the Univer-
sity is adoption of the so-callea
"Sullivan Statement," a plan name
for a member of General Motors
board of directors. The statemeni
advocates desegregation, equal pay
for equal work, training programs
for blacks, and other non-discrimina-
tion measures.
THE GUIDELINES are meant to
be used by any investing institution,
individual investor, or corporation as
a measure of discrimination. All but
five of the corporations dealing in
South Africa in which the University
has investments have agreed to
adopt the Sullivan guidelines, bu
enforcement of the rules is no
provided for.
University investments offices
Norman Herbert said the Sullivar
plan is merely a statement o
intention. It would be difficult for the
University to be sure the guidelines
were being followed, he added.


C.'
P

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C Rankin/Bams Producnons Inc. 1977

f

1'
-9


.....
The "Cool One" Is On Campus! Cool Peppermint Schnapps

Xerox presents 90 minutes
with one of literature's most
celebrated heroes.

Bilbo Baggins, the reluctant

finally, the awful Smaug.

CI

I