Adding its voice to the mounting protests against apartheid, an Assembly committee voted Monday to halt the investment of state employee pension funds in companies that do business with South Africa.
California’s two retirement funds have investments totaling $7.8 billion in firms that conduct business with racist South Africa.
By a vote of 7 to 5, the Assembly Committee on Public Investments, Finance and Bonded Indebtedness approved legislation prohibiting future investment by the pension funds in such companies.
“I’m absolutely elated we have gotten this bill passed,” said Assemblywoman Maxine Waters (D-Los Angeles), the author of the measure. “It’s taken six years to get to this point, and I’m delighted.”
This was the Assembly’s first action to halt investment in South Africa. The committee stopped short of adopting a stronger bill by Waters that would have required sale of the controversial investments by Jan. 1, 1987.
Until now, most public attention over California’s involvement in South Africa has been focused on the University of California’s investment of $1.7 billion in firms doing business with South Africa.
That figure is dwarfed by the pension fund holdings. The Public Employees Retirement System reports investments of $5.2 billion in such companies and the State Teachers Retirement System has investments of $2.6 billion. All told, the two pension funds have investments of $40 billion.
An aide to Waters said the measure adopted by the committee could lead to the sale of the South Africa pension fund holdings within three to five years as the two systems carry out their policy of routinely reviewing and reinvesting of their holdings.
The measure also includes a provision aimed at prohibiting the University of California from investing another $85 million in companies tied to South Africa.
The Legislature has no say over most of the university’s investments; the UC Board of Regents has that responsibility. Waters’ bill, however, attached the investment prohibition to $85 million that will soon be transferred from the state general fund to the university.
The measure was adopted after heated debate between advocates, who argued that California must not contribute to apartheid, and the bill’s opponents, who maintained that black South Africans would be hurt the most by the withdrawal of U.S. capital.
Students, teachers, business people such as John Harrington, an investment fund manager, and union leaders such as John F. Henning, executive secretary of the California AFL-CIO, testified on behalf of the bill and called on the committee members to carry out a moral responsibility to oppose apartheid.
Opponents of the measure included representatives of the California Manufacturers Assn., the California Chamber of Commerce and Hewlett-Packard Co., who argued that American companies operating in South Africa aided blacks by advocating changes in the country’s racial policies.
“I feel United States companies should stay in South Africa and work for change,” said Barbara Cavalier, a spokeswoman for the manufacturers group.
Assemblyman Robert Frazee (R-Carlsbad), who recently toured South Africa as a guest of the government, told the committee that his trip convinced him that poor blacks would suffer the most from a halt in investment.
“My opposition to apartheid is as strong as anyone’s in the room,” Frazee said. “But the people who are going to be hurt most by divestiture are poor black South Africans.”
In the end, the committee sided with Waters, who called South Africa “the most oppressive, racist nation in the world.”
Her bill goes next to the Assembly Ways and Means Committee.