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May 27, 1982 - Image 10

Resource type:
Michigan Daily, 1982-05-27

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Page 10-Thursday, May 27, 1982-The Michigan Daily
'U' bends on South Africa policy


(Continued from Page 1)
developer of the principles-and used
by the University to assess the progress
of U.S. companies that have signed the
THE REMAINING 13 companies
were categorized as "need to become
more active," the third and lowest Lit-
tle rating. Herbert and Brinkerhoff's
report to the Regents indicated that the
only reason three of these com-
panies-Carnation, Motorola, and
Squibb-received poor ratings was
their failure to join an organization to
promote non-white business in South
The University's assessment,
however, was wrong, according to an
official at Little.
In 1980, joining the business
organization, known as the National
African Federated Chamber of Com-
merce (NAFCOC), became a "basic
requirement" in Little's evaluation.
Companies must meet all "basic
requirements" before being considered
for a favorable rating.
DESPITE WHAT the investment of-
fice told the Regents in March, Car-
nation, Motorola, and Squibb all were
NAFCOC members at the time the fifth
and latest Little evaluation was com-
pleted in 1981, said Reid Weedon, a Lit-
tle senior vice president and director of
the Sullivan project.
Herbert said the discrepancy
probably was due to "an oversight" by
his office. But several documents in the
investment office clearly showed that
the companies were not assigned the
poor ratings only because of the NAF-
COC issue.
The fifth Little report, published in
October, 1981, placed Motorola, Inc. in
its ILIA category, which meant it met
the "basic requirements"-including
NAFCOC membership-but failed to
show enough progress in South Africa
to receive an acceptable rating. Those
companies that do not meet "basic
requirements" are assigned to the IIIB
The previous year, Motorola had
been assigned a IIIB rating for its
failure to join NAFCOC, but company
executives later decided to join the
organization, according to their spring
1981 report to investors, another
document which the investment office
possesses. Herbert described
Motorola's move from IIIB to IIIA as
"a progress," although both ratings
mean a company "needs to become
more active."
ALTHOUGH THE Herbert/Brinker-
hoff report to the Regents does
not say so, Squibb Corporation's Beech-
Nut Life Savers subsidiary "failed to
meet three of the basic criteria" accor-
ding to an August, 1981 report by the In-
vestor Responsibility Research Center
(IRRC), an organization that in-
vestigates a wide range of investment
questions for its patrons, which include
the University.
The IRRC report said that Beech-
Nut's minimum wage fell well below
that considered adequate by the
Sullivan organization; the company
would not make its rating known to its
employees, as required by Sullivan;
and the company had not joined NAF-
COC (although IRRC later amended its
report to show that the company had
joined NAFCOC in July, 1981).
"The company's wage was one of the
lowest paid by any U.S. subsidiary
visited by IRRC," the report stated. In
July, 1980, Beech-Nut's minimum entry
level pay was approximately 50 percent.
below the subsistence standards
determined by South African univer-

SQUIBB HAS responded by im-
plementing a three-year plan to bring
wages up to the university-determined
subsistence level by 1984. But IRRC
said Squibb's "goal ... is less than the
goal Rev. Sullivan has set for
signatories-a minimum wage at least
30 percent above the subsistence level."
The investment office is still waiting
for Squibb to respond to a University
inquiry on why Beech-Nut had refused
to discuss its rating with employees.
The Herbert/Brinkerhoff report to the
Regents said "(Squibb was) contacted
only recently . . . and we are still
awaiting (a) response." However in-
vestments office files show that Her-
bert requested the information 17 mon-
ths ago and the only recent letter was
written in February asking Squibb to
respond to the earlier request.
In an interview, Herbert said,
"There's no way to make an evaluation
on (Squibb) until we receive their
THE THIRD company whose low
rating Herbert attributed to its alleged
failure to join NAFCOC-Car-
nation-also is a member of the
organization, according to the Little
In 1979, Carnation received a poor
grade in Little's Third Report, even
before NAFCOC membership became a
Carnation has denied several Univer-
sity requests for information regarding
the company's progress in South
Africa, despite a warning from Herbert
in December, 1980 that "the Univer-
sity's continued investment in Car-
nation is predicated on your prompt
and complete response to our request
for information."
. The Regents policy asks for "regular
reports to publicly disclose corporate
progress toward achievements (in
South Africa)."
CARNATION HAS also refused,
without explanation, IRRC requests for
interviews and on-sight visits.
Herbert said that Carnation's par-
ticipation in the Little evaluation is suf-
ficient "as we've interpreted it" to
comply with the Regents' resolution.
Little makes its evaluations based on a
detailed questionnaire, but company's
respond to Little under a guarantee of
Herbert said a Carnation represen-
tative did respond by telephone to a
University questionnaire-which the
University sends out if the companies
will not provide the information they
send to Little-regarding the com-
pany's policies in South Africa.
The Carnation representative an-
swered affirmatively to six general
questions: Are all of your employee
facilities integrated? Are your com-
pany benefit plans equivalent for both
whites and non-whites? Does your
company provide for equal pay for
equal work? Isthe minimum wage paid
by your company greater than the ap-
orooriate minimum level? Does your

Daily Photo by DEBORAH LEV
NORMAN HERBERT, the University's investment officer, could not ex-
plain discrepancies in information he received from companies with
holdings in South Africa and said there were "oversights" in his report to the

company have a formal training
program for non-whites for higher level
positions? Does your company have
non-whites in supervisory positions?
Carnation would not respond,
however, to three other University
questions, saying that to answer the
questions would put the company at a
disadvantage with its competitors.
Those three questions asked for specific
information, including a breakdown by
race of Carnation's South African em-
ployees, statistics on wages paid to both
whites and non-whites, and a descrip-
tion of the opportunities for promotion
available to non-white employees.
In a recent letter to Carnation,.Her-
bert said that the verbal assurances on
the first six questions were adequate to
comply with the University's policy.
ACCORDING TO an International
Telephone & Telegraph Corp.
executive, ITT received a "Needs to
become more active" rating for its
minimal improvement in wages and
fringe benefits. The August, 1981 IRCC
analysis said an ITT subsidiary's wage
structure "increases smoothly from
one grade to the next in the first four
grades (but) there is a $345. jump bet-
ween the maximum wage paid in grade
four-the highest grade in whicp blacks
are found-and grade five, the first
category in which whites are em-
IRRC also said the company's
"fringe benefits continue to fall short of
those offered at other U.S. sub-

John Navin, ITT's vice president and
corporate secretary, wrote to Herbert
in February that he felt the Little
analysis was unfair because it relied
too heavily on statistics "and is not
designed to make an objective
assessment of the overall contribution
of a particular company in South
NAVIN CITED several accomplish-
ments in other areas, including the cor-
poration's $450,000 contribution over a
ten year period of St. Anthony's School
a multi-racial training center, and its
support of five black South Africans at
American universities.
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.
MAINTAINING that the University
does not have "enough information to
draw the conclusions IRRC drew,"
Herbert defended his position that ITT
complied with the Regents' resolution.
"I think you have to look at the overall
picture. Part of the wage problem has
been affected by the economic con-
ditions (in South Africa)," he said.
Herbert concurred with ITT's opinion
that Little can ignore a company's out-
side activities. "You have to look at the
principles as a complete package. (The
University) is looking for the com-
panies to be a positive force for change.
They may be slower in one area than in
another for various reasons," he said.
Although Weedon, the Little
representative, would not comment on
the specific case of ITT, he said that
such reasoning was inappropriate. "A
company must meet the basic
See 'U,' Page 11





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