Apartheid: Should I Stay Or Should I Go? (1989)
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Holmes Report

Apartheid: Should I Stay Or Should I Go? (1989)

In April this year Mobil chairman Allen E. Murray announced that the company was planning to sell off the company’s South African interests and that the oil giant would pull out of South Africa after 90 years of doing business with Pretoria's racist regim

Paul Holmes


In April this year Mobil chairman Allen E. Murray announced that the company was planning to sell off the company’s South African interests and that the oil giant would pull out of South Africa after 90 years of doing business with Pretoria's racist regime.

Ten years ago, such an announcement would have been heralded as a triumph by the foes of apartheid. Liberal commentators would have rushed into print with articles suggesting that apartheid was crumbling, that even the oil companies—those symbols of ram­pant capitalism—could no longer abide the abhorrent policies of the Afrikaaner government. This year any cheer from liberal America is muted, to say the least.

Mobil's interests in South Africa have passed to the General Mining Union Corporation (Gencor), a South African company with a reputation among blacks as a harsh employer, even by South African standards.

Mobil, like most other major American companies doing business in South Africa, ran its operations there according to the Sullivan Principles, which call on signatories to provide assistance to black employees and to defy many of apartheid's most petty rules and regulations, particularly those relating to segregated housing and income levels.

Companies like Gencor, for whom Mobil's black employees are now working, abide by far less liberal prin­ciples.

So while activists like the Interfaith Center on Corporate Responsibility continue to advocate disinvestment and bring whatever pressure they can to bear on compa­nies that insist on doing business with Pretoria, others—like the Investor Responsibility Research Center—cite polls that show most black South Africans oppose disinvestment, urging foreign companies like Mobil to continue to work for change from within the system.

On the surface, then, this looks like a triumph for business. By hanging tough and insisting on the good they can do in South Africa companies like Mobil and Johnson & Johnson, United Technologies and Goodyear (all of whom remain in South Africa) appear to have convinced all but their most fierce critics that they are right.

"We were very proud of our company's record of opposition to apartheid," says Mobil's John Lord. "We were one of the leading companies in implementing the Sullivan Principles. We had identical wage structures for black and white employees, we encouraged the growth of the union movement in South Africa, we spoke out against apartheid whenever we could.

"In 1981 one of our non-white apprentices became the first Black to qualify as an artisan since legislative changes- made it possible. In our refineries and depots many non-whites supervised white employees. There were 222 non-whites in the supervisory management ranks,out of a total of 751. In the skilled worker catego­ry, we went from five non-whites to more than 500 in 15 years.

"We felt we could be more effective in our opposi­tion to apartheid within South Africa than we could if we withdrew."

In addition to its record in the workplace, Mobil was involved in a variety of corporate PR activities within the black community. The Mobil Foundation of South Africa, for example, was founded to fight for social jus­tice, and was, according to Mobil press materials, "involved with the complete abolition of all apartheid laws and practices." The Trust concentrated on educa­tion, community development, and small business development.

The company also developed a progressive education policy for its employees' dependents. All employees with children at primary school received funding to help with books and clothing. The sum increased for depen­dents at secondary and tertiary levels of education, cov­ering all academic costs for all but a few courses.

Other companies—both those that have recently withdrawn from South Africa and those who remain—tell remarkably similar stories.

Peg Hashem, a spokesperson for United Technologies, which continues to operate its Otis Elevators subsidiary in South Africa says the company has repeatedly stated its "abhorrence"—the word crops up in every conversation on this subject—of apartheid, and is like Mobil a strong supporter of the Sullivan Principles.

"We have provided financial help to our black employees," she says. "We have helped them secure loans by giving them financial guarantees, we have helped them buy their own homes. We have provided advice and guidance over legal matters. We have helped black employees get residency permits.

"Everything we are doing in South Africa is designed to show our abhorrence of South Africa and to improve the possibility of a peaceful transition and a speedy end to apartheid. We could not achieve this if we were no longer there."

While Mobil and others agree that there has felt pressure from anti-apartheid groups within the United States and on an international scale for withdrawal from South Africa, none of them cites this pressure as a factor in their decision to withdraw, or at least, not as a direct factor.

Mobil's withdrawal came about after the US tax laws were changed—under the almost unopposed Rangel Amendment, named for Manhattan Congressman Charles Rangel—so that taxes paid to the South African government could no longer be deducted from US tax returns, meaning that in effect the company was taxed twice.

"We had to weigh business considerations," said chairman Allen Murray. "It was increasingly difficult to be competitive."

Ken Mills of Chase Manhattan Bank, which with­drew in 1985, tells a similar story. "We had not made available any funds to either the South African govem­ment or any parastatal agency since 1977," he says. That was for moral and ethical reasons. "But we had decided to remain in South Africa because we felt we could do more good by remaining than we could if we withdrew. What eventually forced us to pull out was the fact that we were no longer making a profit."

In truth, companies like Mobil and Chase Manhattan have been only too happy for an excuse to get out of South Africa, since the controversy over their supposed support of the apartheid regime has left them between the proverbial rock and the mythical hard place.

Consumer opposition to companies that did business with apartheid—which peaked in the late `70s and early `80s—made many large corporations uncomfortable about doing business in South Africa. Some managements would have loved to be able to withdraw, for public relations reasons, and just forget it.

Unfortunately, there was another public to be con­sidered, one that was putting the pressure on for contin­uing business with South Africa. As long as such busi­ness was profitable, shareholders continued to vote down resolutions at annual meetings calling for with­drawal. As always, the principle of "maximizing share­holder value" overrode all other principles, however lofty they might have been.

Thus it was that these companies came up with the line that they were staying in South Africa because they felt they could do more good by being there. It satisfied everyone. Shareholders were happy because their profits were still coming in, and the enemies of apartheid saw the benefits that US companies could create.
Almost by accident, companies like Mobil and United Technologies ended up doing good in South Africa. And that is why, now that economic forces have caused their withdrawal, many black South Africans and even a smattering of western liberals will be sorry to see the back of them.

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