niversity lax on The Michigan Daily-Thursday, September 9, 1982-Page 9 South Africa policy By BARRY WITT * The University continues to invest in several U.S. companies whose conduct' in South Africa does not meet anti-apar- theid guidelines, in direct contradiction to a 1978 Regents' policy, a Daily review of investment records shows. Correspondence between the Univer- sity and the companies in which it in- vsts, and reports from two indepen- dent research agencies, show that several of these companies do not com- with one or more of the Sullivan inciples-a set of guidelines for U.S. companies working in racially- segregated South Africa. Investing in these companies appears to be a violation of the University Regents' 1978 resolution opposing apartheid in South Africa, a policy adopted in response to earlier student protests. THE UNIVERSITY policy asks com- panies to affirm the Sullivan Prin- diples; work toward the enhancement 0(0 political, economic, and social rights fpr their employees in South Africa; and public disclosure of corporate progress toward achievements in these matters. The investment office currently monitors 42 University stock and bond holdings to check compliance with the 1978 resolution. The policy states the University will divest from companies that do not "within a reasonable period of time take reasonable steps" to im- plement the measures outlined in the Sullivan Principles. To monitor the companies, the University uses the Washington-based Investor Responsibility Research Cen- ter (IRRC), an agency that examines and reports on South African sub- sidiaries for educational institutions and other investors; Arthur D. Little Inc., a private consulting firm retained by Rev. Leon Sullivan-developer of the principles that bear his name; and private correspondence between the University and the individual com- panies. THE UNIVERSITY primarily uses the investor services to alert the ad- ministration to any companies that might be violating the Regents' guidelines, said Norman Herbert, the University's investment officer, who is responsible for monitoring the com- panies. But most important in the evaluation is the individual contacts and direct exchange of information with the companies, Herbert said. The Little firm assigned poor ratings last year to 13 of the companies in which the University invests part of its $120 million endowment. But the University administration considers all 13 companies to be making sufficient anti-apartheid progress to comply with the Regents' policy. In making its evaluation, the Univer- sity has allowed reportedly minimal corporate contributions outside the South African workplace to substitute for the deficient wages the companies pay their black employees. International Telephone & Telegraph Corp.-a company in which the Univer- sity holds a small amount of stock-pays its highest ranking black hourly employees in South Africa $345 a month less than its lowest ranking white workers, according to an IRRC report. And, IRRC said, the company's fringe benefits for blacks continue to fall short of those offered at other U.S. subsidiaries. IRRC ALSO said that ITT's minor contributions toward education in South Africa are not enough to make up for the company's inadequacies in wages and benefits to its own employees. Despite the company's concern for black education, IRRC said that "unlike almost every other company interviewed, (the ITT subsidiary) has no formal program to help employees finance education for either themselves or their children. "The company has also given no in- dication that it intends to improve its minimum wage or fringe benefits. Without improvements in these areas, few black employees are likely to ob- tain the discretionary income they need to attend adult education courses, school their children, or buy homes," IRRC concluded. tate divestment bill faces U' resistance By BARRY WITT Legislation passed in May by the state House of Representatives may prompt a constitutional battle over who has the ultimate authority over Univer- sity investments. The House-approved bill would require all state universities and com- munity colleges to withdraw their in- vestments from U.S. companies with business operations in racially- segregated South Africa-a move which the University has opposed for years. An amendment to the bill requires schools to divest from companies with holdings in the Soviet Union because of that nation's human rights violations. But University officials say that if the bill becomes law, the University likely will ignore it. They maintain that the University's Regents have autonomous control over how the institution uses its funds. A state mandate to divest "would be an unconstitutional exercise of legislative authority," said Thomas Roach, a lawyer and Democratic University Regent from Saline. University officials point to a section of the Michigan Constitution which states tit the Regents have "control and direction of all expenditures from the institution's funds." But state Rep. Perry Bullard (D-Ann Arbor), who sponsored the bill, disputes *the University's claim. He said that similar measures have been successful in other states. A Bullard aide, Dave Cahill, said that it is within the state's police power to enforce civil rights legislation. Cahill compared the state's authority to en- force anti-discriminatory legislation with its power to arrest suspected criminals within the confines of the campus. The Regents' refusal in 1978 to divest from companies working in South Africa was a motivating factor behind the state legislation. Michigan State University, along with a number of other schools in the nation, divested in the late 1970s.. Rather than withdrawing the Univer- sity's investments in these companies, the Regents argued that the University could use its financial leverage to en- courage progressive change in the apartheid policies of South Africa. In 1978, the Regents passed a resolution calling on the companies in which the University invests to affirm non- discriminatory employment practices. The Regents also promised to divest from any company which they deter- mine is not making sufficient progress. So far, the University has sold off its holdings from one company but main- tains investments in more than 40 others that do business in South Africa. The Regents decided on their 1978 policy after a series of protests and disruptions from students demanding divestment. The demonstrators argued that businesses operating in South Africa support the economy of a racist society, and hence racism itself. They felt the University, in turn, should not support those companies. Since 1979., however, the, campus movement on the South Africa issue has all but vanished, and attention has focused on action at the state level. The state Senate is expected to take up the bill this fall. Reid Weedon, who directs the South Africa evaluation for the other research agency, Arthur D. Little Inc., con- curred that progress for employees was most important. Although he would not comment on the ITT case, he said, "A company must meet the basic requirements first (such as those for wages and fringe benefits), before it can be accepted." BUT HERBERT and James Brinkerhoff, University vice president and chief financial officer, reported to the Regents in March that they con- sidered ITT to be in compliance with the University's policy. They noted ITT's financial and management sup- port of St. Anthony's School, a multi- racial training center, and continued support of black South Africans at American universities. During the past 10 years, however, ITT's contributions to the school have amounted to $450,000 and the company has supported a total of five black South Africans in America, according to a let- ter to the University from ITT Vice President John Navin. A second company that received a poor rating from Little, but which the University considers acceptable for in- vestment, is INA Corp. (University in- vestments of $1.9 million). As in the case of ITT, Herbert and Brinkerhoff pointed toward INA's efforts in various South African educational projects as evidence of INA's anti-apartheid progress. THE UNIVERSITY financial officers said that while INA's "small size of operation prevented it from increasing its activities with respect to implemen- ting the (Sullivan) Principles in 1980-81, the company had not decreased its ef- forts over the period." But Weedon said his firm "bends over backwards to take into account the size of the company" when making an evaluation. He said that he does not feel INA's complaint with respect to its size is justifiable. Asked if a company could use its smaller size continually as an excuse for not making improvements, Herbert said, "If and when we get more detailed information, then we'll see. If there's no (employee) turnover, then it's difficult (for a company) to effect change." A THIRD company in which the University invests, Squibb Corp., paid one of the lowest wages of any firm visited by IRRC in 1980, according to an August 1981 report. Herbert and Brinkerhoff reported that Squibb (University investments of $2 million) was in compliance with the Regents policy in March. In late July, Squibb reported to the University that it had sold its South African company. The University's policy also asks companies to fully disclose their ac- tivities in South Africa, but one cor- poration has refused several year's requests for information and a second still is being pursued by the investment office to justify its poor rating from Lit- tle. Since 1980, Carnation Co. (University investments of $330,000) has denied several University requests for infor- mation regarding the company's progress in South Africa, despite one warning from Herbert in December 1980 that "the University's continued investment in Carnation is predicated on your prompt and complete response to our request for information." THUS FAR, Carnation has refused-to respond to three University questions essential to evaluating the company's performance. The questions deal with-a breakdown by race of Carnation's South African employees, statistics on wages paid to both whites and ,non- whites, and a description of the oppor- tunities for promotion available to non- white employees. Herbert said in July that a change in personnel at Carnation gave him hope that the company would provide com- plete responses to the University. But Herbert has not received a response to a questionnaire he sent to Carnation in late June, and he sent a follow-up letter August 26 asking again for a response. Carnation, which has also refused IRRC requests for interviews and on- site visits, has stated that disclosing the information the University has requested would put the company at.a disadvantage with its competitors. -, ANOTHER company that has not an- swered investment office inquiries suf- ficiently, Motorola, Inc., was asked in early June to explain its poor rating from the Little firm, according to Her- bert. Motorola's response was inadequate, Herbert said, and he sent them another letter requesting infoir- mation in July. Motorola has not responded yet. Herbert said he finds direct contact with the companies most useful iii making his evaluation because the Li- tle evaluation alone is "inadequate an incomplete." He said he uses the Littl survey to identify those companies that need further examination. Herbert also hinted that the Little company, which is primarily a business consulting firm, has a potential conflict of interest when it evaluates a company in an industry with which it regularly deals. The responsibility for assuring. that companies comply with the RegefTt$ resolution rests with Herbert: "Brinkerhoff and myself are those who review (the South African issue) most closely, though Brinkerhoff does not look at all the corespondence. H leaves it up to the investment officer," Herbert said. BECAUSE "THERE are only so many hours in a day," Herbert said he employs a graduate student to help him in the monitoring project. He said that person is responsible for conducting most of the research. Beyond that, there is no direct review of the companies within the University. Both the Regents and a faculty commit tee review annual summaries of the monitoring process, but neither body is closely involved. In fact Physics Prof. Lawrence Jones, who chairs the faculty comrit See 'U', Page 11 .,U Daily Photo State Rep. Perry Bullard (D-Ann Arbor) is sponsoring a tilt that may force the University to divest from companies with operations in racially- segregated South Africa-a move the University traditionall has resisted. HURON TOWERS- CO-OP-Better Than Renting! tApt.No. 3, Apt. No. 4 Apt. No. 5 Apt. No. 6, Apt. No. 7, Apt. No. 8, 5 ft. 500 sq: ft. 500 sq.ft. 550 sq. ft. 700 sq. ft. L SS iR, DS.- B.R. R 8R LR D 5.8R LR. - 9R BR BR LR-D S R .R ¢a ,,, t ,2 a 13 20 a12 9-.0.a1729.0 , 2 9.0.f I4 0. a10 U'/,alb 16 1 6 a9 1) 6 1 3 / I KIT. KIT DRESS DRESS BATH BATH 4 i KIT ~KIT-- DRESS - DRESS STAIR-2 KT. _ BATH AT BATHIT CORRIDOR BATH Li V BATH Q KIT. l.R."DS. 24'6 . 12 109 C STUDY . 131 .9 'V. 7 -_ C I.BT / /C\KIT BATH KIT ]ATH BATH DRESS KIT .R- S.B.R. 19 {Vi s 2 10 U II - BATH 20. 1i' l56.46r. L - 41- LR- D.S. ,j39 * 189 Q: Why should 1 join Huron Towers Co-op rather than rent? A: Because the Co-op offers homeowner tax de- ductions it can cost you or your family much less. And you can leave with a sizeable "nest egg" when you move. Q: When I want to leave, do I have to sell my own apartment? A: No. You are required to offer it for sale bock to the Coop. u ut givesixty days' written nrtice Q: Dos my equity In my Co-op mem- bership Increase n value? A: Yes. You get back what you paid down, and more, when you leave. Q: Where is Huron Towers? A: On the e..ge of UM's North Campus. overlooking Huron River with free bus service to downtown and Main Campus. Q: Who gets priority to live at the Co-op? A: Applications are taken on a first-come, first- served basis. 93BR ' 9m .2 BR -e 1s 1-,- 1 R -D0 10. !89 m- 6.R LR D5, 44>. I93 -9 4 m_ n fI' i h - - - Ix f I iI I- II--, ' _______J~ - I -w- I A pt. No. 13, A pt. No. 12, A pt. No. 11, Apt.No. 10, 785 sq. ft. 625 sq. ft. 590 sq. f t.46 sq. f t. SPECIALI YOU GET SO MUCH FOR SO LITTLE! * Extralargebacon Sqar Monthlyg bacn a A pt. No. 9, 6 20 sq. f t. FEATURES OF HURON TOWERS COOPERATIVE: ;e of North Campus. lies, large swimming pool. vailable, laundry, beauty parlor, lounge and teel fireproof construction. aster TV antenna. non-profit housing cooperative organized by the tenants to purchase ord mutual benefit of everyone living at Huron Towers. You pay only your shore of age payments and taxes. Co-op members elect the resident board of directors. i"d supervises the professional mn'ge'en". 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