Saturday, May 21_, 1977
THE MICHIGAN DAILY
Page Seven
'U' investments; profits and racism
By MICHAEL YELLIN
THE UNIVERSITY of Michigan
owns some $43 million worth of
stock in more than 30 corporations
which operate or have affiliates in
South Africa. Of the University's
top ten investments, involving a
market value of $20 million, six are
in corporations which rank among
the 12 investors in South Africa
and the remaining four are in the,
top 50 investors in that country.
University officials have said the
main reason for investing in these
corporations is to maximizenprofit.
Many believe they can separate the
moral implications of such invest-
ments from the profits returned.
Most will argue the American cor-
porations in South Africa are a
progressive influence working to
benefit the blacks, coloreds and
Asians which make up more than
80 per cent of the South African
population.
It is an undeniable fact that in
South Africa the relatively high
level of return on capitol invested
is due toSouth Africa's discrimi-
natory labor policies which per-
petuate wage levels unjustifiably
low when compared to worker pro-
ductivity.
avoids this by having all of its
menial work contracted out. The
MEL is a figure the South African
government has established to rep-
resent the minimum income needed
to raise a family in an urban area
at a subsistance level.
IN THE FALL of 1970, the Brain
Mistrust, a student radical re-
search group, brought before the
Office of Student Services Policy
Board (OSSPB) a proposal to ban
corporations from using University
recruitment services if those cor-
porations had operations in South
Africa. OSSPB agreed on the
grounds that such operations vio-
lated the University's anti-discrim-
ination policy towards recruitment.
As a result, four major corpora-
tions were banned - Ford, IBM,
General Foods and Dun and Brad-
street, from recruiting at the Stu-
dent Services facilities.
After hearing debate on both
sides of the issue the Regents over-
turned OSSPB's policy and imposed
a more moderate ban prohibiting
recruitment for jobs specifically
for countries where discrimination
is legal.
This was the last involvement
the Regents have had on the issue
management into taking positive
action in ° South Africa. These
stockholders resolutions have ask-
ed corporations to either withdraw
from South Africa or implement
policies which'would go against the
system of apartheid.
When given an opportunity to
vote on these resolutions the Uni-
versity has chosen to support man-
agement and voted against a
change in South Africa towards
black rule. By this decision the
University administration has
shown blanket support to corpor-
ate policies in that country. The
policies corporations have estab-
lished must comply with the gov-
ernments wishes there or risk get-
ting kicked out of the country.
The reason for the University's
support of management as given
by Chief Financial Officer James
Brinkerhoff and several of the Re-
gents follows a University policy
established in 1971 which states if
the University can't support man-
agement's position then the Uni-
versity's stocks will be sold. In ad-
dition, members of the administra-
tion believe if they vote against
management this would show a
lack of faith and may hurt their
financial investments.
PROFESSOR AT YALE University
Jon Gunneman, one of the au-,
thors of "The Ethical Investor,
Universities and Corporate Respon-
sibility," calls the administrations
arguments concerning blanket sup-
port of management "strange," and
stated, "It never hurts financial
investments to vote against man-
agement."
Both Yale and Harvard Univer-
sities have established review com-
mittees and guidelines which in-
volve yearly review concerning the
morality of their holdings, accord-
ing to Gunneman. The review com-
mittees, made up of students, ad-
ministrators and faculty, consider
selling stock only as a last resort.
Instead they vote for stockhold-
ers resolutions which would require
that multinationals work to equal-
ize the situation in South Africa.
Beyond this, the review committee
writes letters to corporate heads
giving reasons why certain votes
were taken against management.
Gunnemann believes Yales de-
cisions not to support manage-
ment on questions of activities in
South Africa and other countries
practicing unethical moral policies
has, "transformed management de-
cisions," and continues Yale and
Harvard's support of sharehold-
ers resolutions have "increasingly
opened up ways of thinking in
management which had previously
been closed."
The South African government
depends on a strong economy to
keep it in power. But the strength
of their economy depends on con-
tinued foreign investments and
could not stand a drop in foreign
capital.
If U.S. investors keep propping
the economy up with a high level
of investment the white govern-
ment can stay in power until an
inevitable revolution breaks out.
By acting toward the goal of black
majority rule in South Africa the
University could be a key figure
in bringing this goal about. By
continuing to blindly invest and
support corporations which support
apartheid the Univtrsity is contrib-
uting to maintain the conditions in
South Africa.
U'leaders on
SUtAfrican
investments
Regent Thomas Roach (D - De-
troit) - "We ought to look at it
f r o m an investment standpoint.
We don't want to diminish our re-
turns . . . I would not want to use
our stock portfolio for social
change."
Robben Fleming (Pres. U-M) -
"They (the South African whites)
are trying their best to improve the
situation, and I'm not s u r e we
should be telling them how to solve
this very difficult problem."
Regent Deane Baker (R-Ann Ar-
bor) - "I don't like the policy of
apartheid at all. The matter of in-
vestments is a separate issue."
Regent David Laro (R-Flint) -
"I have no objection to a Univer-
sity policy which declines to invest
in companies or corporations which
ought not to be invested in because
of these reasons (discrimination of
sex, creed, or color)."
Regent Paul Brown (D-Petoskey)
-"It is not purely an economic
issue when we consider stock we
hold or sell."
Regent Gerald D u n n (D-Lans-
ing)-"I don't see anything wrong
with our present policy."
Regent Robert Nederlander (D-
Birmingham) -"Is it a profitable
investment or not?"
Fsa eagsaa"rrgpmi{.."s..e.1..5e saa":
the
Saturday
1Magazine
The University's wish to maxi-
mize profits is not compatable with
their intentions of raising the wage
level of living conditions of a ma-
jority of South Africans.
Black S o u t h Africans are not
allowed to strike or form unions
and can never supervise whites.
No U.S. employer in South Africa
is paying all its workers above the
Minimum Effective Level (MEL),
with the exception of IBM, which
of South Africa. Now they are faced
with a similar issue, should the Uni-
versity support management in
South Africa, or further still,
should the University invest in cor-
porations with any involvements in
South Africa?
In recent years church groups
who own stocks in companies in-
volved in South Africa have been
seeking votes by stockholders at
annual conventions to pressure
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ii
13
The University of Michigan's investments in top corpora-
tions operating in South Africa
approximate investment University investment in
Name of Firm (U.S.) in S.A. in mill. of $'s firms in mill. of $'s
General Motors 125 1.799
Mobil 122.5 1.514
Ford 80-100 .436
ITT 50-70 .500
Firestone 25-30 1.584
Goodyear 15 .802
3M 12 1.745
IBM 8.4 4.5
Caterpillar 6.4 1.943