PUBLIC INVESTMENT AND SOUTH AFRICA
February 1987
Divestment Actions Must Target Franchise
and Licensing Agreements As Well As Direct Investment
The
divestment movement has won a string of impressive victories over the last few
months. California's record $12 billion plus divestment law, the passage of
limited sanctions over a presidential veto and wave after wave of corporate
"pullouts" are all testimony to the power and potential of our movement.
At a time when the South African
government has made almost all peaceful protests illegal, has detained
thousands of people and continues to wreak havoc on its neighbors, the pressure
divestment activists are exerting is important support for those struggling
inside South Africa.
But more needs to
be done.
As a response to the
various pressures that have been exerted, many companies that do business in
South Africa have ended their direct investment in South Africa, but have
maintained mutually profitable ties with the apartheid economy. At present these ties are continuing through
franchise and licensing agreements that allow the companies to provide the
up-to-date technology that is needed for the new South African-owned companies
to take over the functions of the U.S. company that
has "pulled out."
In an attempt to deal with
this shifting corporate response to both internal and external pressure, ACOA
in conjunction with other national anti- apartheid organizations, has
formulated a set of guidelines to help determine whether a company is still
doing business in or with South Africa. That
we have convinced many companies to end their direct investment is a victory,
but already this year the apartheid government has shown itself capable of increasing
the violence and repression inside the country as it attempts to put down the
democratic resistance. In the face of
these actions, there must be a clear response from the people of the United
States.
As part of this response,
we must focus attention on the attempts that the corporations are making to
represent their limited "pullout" actions as an end to their links to
the apartheid economy. The bulk of the
recent "pullouts" are nothing but a rearrangement of who owns the
actual factories in South Africa and will not contribute to the economic
isolation of apartheid. If left to
themselves, these U.S. companies will continue to provide the apartheid economy
with the much needed technological support on which they are dependant.
In cities and states, in
union meetings and religious organizations, on college campuses and at
foundations we must ensure that our actions will continue to target these
companies. Where we are fighting for
divestment, companies that have not severed all ties to apartheid must be
included in our campaigns. In areas
where victories have been won, we must work to be certain that these companies
are included in our definitions.
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Statement on U.S. Companies and South
Africa The past two years have seen
major developments in the struggle for freedom in South Africa and Namibia.
As the strength of popular resistance has grown in South Africa, so has
government repression. The South
African apartheid regime has detained more than twenty- three thousand
people, including more than eight thousand children since June. Internationally, an increasing number of
countries have imposed at least some limited sanctions. In the U.S., the anti-apartheid movement
has long recognized the key role played by U.S. corporations in bolstering
apartheid. As a result, these
companies have become an important target in our campaigns. Nineteen states, 70 cities, and 116
universities as well as numerous religious bodies, foundations and unions
have adopted binding measures mandating divestment or other economic action
against companies doing business in South Africa. This past October, the U.S. Congress
overrode a veto by President Reagan and imposed limited sanctions against
South Africa. As a result of both the growing internal
resistance to apartheid and the divestment movement in the United States, an
increasing number of U.S. companies have moved to end their direct investment
in South Africa. However, we feel that
it is essential to distinguish between those corporations for which
withdrawal means the termination of all economic ties to South Africa, and
those for which withdrawal merely indicates a restructuring of economic
relations. We particularly applaud
companies such as Eastman Kodak that have severed all economic connections. By contrast, companies like General Motors,
IBM, and Coca Cola have announced withdrawals but continue to provide vital
economic support to South Africa through ongoing licensing, distribution,
marketing, and service agreements. Such companies have not ended
their links to apartheid. We have
formulated the enclosed guidelines to clarify what the national anti-
apartheid movement means by economic disengagement from South Africa and
Namibia. We urge those who have
already committed themselves to divestment to consider these guidelines as
the morally and legally correct interpretation of their present policy. We also encourage the numerous institutions
and individuals that are considering divestment to use these criteria as the
basis for their policies. Through thousands of local actions
across the country, the anti- apartheid movement has won many victories in
the struggle to isolate South Africa. The
implementation of the enclosed criteria will further strengthen our movement
and provide strong support to the people of South Africa and Namibia in their
struggle to achieve genuine democracy and self-determination. |
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Guidelines for Divestment We
support an end to all corporate involvement in or with South Africa and
Namibia. A corporation is doing business in or with the Republic of South
Africa or Namibia if it, its parent, or its subsidiaries: 1)
have direct investments in South Africa or Namibia, or have entered into
franchise, licensing or management agreements with or for any entity in those
countries; or 2)
are financial institutions that have not prohibited new investments, loans,
credits or related services, or the renewal of existing financial agreements,
including those for the purposes of trade, with any entity in those
countries; or 3)
have more than 5% of their common stock
beneficially owned or controlled by a South African entity. A company with operations in South Africa or Namibia for the
sole purpose of reporting the news shall not be considered doing business in
those countries. The Statement and guidelines
were issued by the following organizations:
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Since the
principles were released in January, their importance has been widely
recognized and endorsement has already come from:
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SOME COMPANIES THAT HAVE HOT FULLY
WITHDRAWN International
Business Machines (IBM)
announced it was withdrawing from South Africa in October of last year and
sold its SA subsidiary to local employees.
The former manager of IBM South Africa, Jack F. Clarke will be
managing director of the new independent company. In full page advertisements in major South
African papers, Clarke has gone out of his way to reassure IBM's South
African customers that they will still be able to buy IBM computers and other
products. "The new company will
hold the sole franchise for IBM in South Africa, and has a supply and service
contract with IBM.... There will be no change in the supply of IBM
products," he wrote in a personally signed letter. Annual sales are
estimated at over $200 million, the largest by far of any computer company in
South Africa. IBM computers will continue to dominate the South African market. General Motors sold its South African operations to
local management at the end of 1986.
The South African company will continue to manufacture and sell GM
cars under license from the U.S. company.
Under the terms of the sale, not only has GM invested an estimated
$100 million in the form of a loan to the new South African company to pay
off debt, but the agreement also contains a clause giving the U.S. company
the right to buy back the South African company at a future date. One of the first actions of the new company
was to reconsider a previous ban on sales to the South African security
forces. Coca-Cola sold its SA subsidiaries in late
1986. When Coke first announced its
plans to end direct investment in South Africa, it said that its subsidiaries
would be sold to local SA business.
Coke also made headlines by reporting that they would sell some of
their interests to Black-owned businesses - although as of January 1987 they
still hadn't found any Black buyers.
More importantly, Coke will continue to supply syrup concentrate and
franchise the use of the name. Since the vast majority of Coke's profits in
South Africa come from the sale of syrup concentrates, profits from the new
arrangement are not expected to be significantly decreased. Coke products will continue to have a 75%
market share of the soft drink market in South Africa. SOME COMPANIES THAT HAVE ENDED ALL
BUSINESS TIES
Note: A full listing of companies doing business in South Africa is
available from the Africa Fund-198 Broadway, NY, NY 10038 |
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“Apartheid must go. This is not the time to improve its
efficiency, because that's the purpose of reform, to improve. The struggle has reached this level and the
struggle can only grow... We know we shall win because you are there. Our continuing plea is let's put more
pressure, let's get more companies to divest. Let us put the squeeze on. Let all the American people come with us.” --Oliver Tambo,
President African National Congress New York City,
January, 1987 |
Copyright The American Committee on Africa, February 1987
The American Committee on Africa - 198 Broadway, New York, N.Y. 10038 •
(212) 962-1210
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