30 State Officials Discover Personal Stakes in S. Africa

Assemblyman Tom Hayden was surprised to learn last week that he owns stock in a company that does business in South Africa.

The one-time anti-war radical--who favors divestiture of California’s $9.5-billion investment in companies linked to South Africa because of that nation’s racist policies--said he would sell his own stock immediately.

“I practice what I preach,” the Santa Monica Democrat said. “I don’t regard this as anything more than a mistake.”

Hayden is one of 30 public officials who have found that the question of divestiture hits close to home.

30 Report Investments

As of last week, 18 legislators and 12 University of California regents--including Gov. George Deukmejian and Lt. Gov. Leo McCarthy--reported that they had financial interests in firms that conduct business in South Africa.

Some legislators and regents are questioning whether they have a legal conflict of interest in voting on whether taxpayers’ money should be pulled out of such firms.

The Legislature is considering a measure, reported out of committee last week, that would halt new investment by two state pension funds in companies doing business with South Africa. The funds have a total of $7.8 billion invested in such companies.

And the UC Board of Regents, faced with mounting student protests, will consider in June whether to sell the university system’s $1.7 billion worth of South African investments.

Advocates of divestiture argue that withdrawing U.S. capital would pressure the white minority government of South Africa to abandon apartheid. Opponents say that it would backfire by eliminating employment opportunities for blacks in that country.

According to the Fair Political Practices Commission, some of the 30 state officials with South African investments may face a conflict because a decision to sell state government and UC holdings could affect the value of their personal holdings in the same companies.

In each case, it will depend on a variety of specific circumstances, such as how much of a particular stock is owned by the state and how quickly it would be sold, said Lynn Montgomery, a spokeswoman for the FPPC.

Further complicating the matter is a difference of opinion among lawyers representing the lawmakers. The attorney for the Board of Regents has concluded that there would be no conflict of interest. The Legislature’s lawyer, Bion Gregory, has said that some regents may have a conflict and therefore should be disqualified from voting. But he has not yet released an opinion on whether legislators would be similarly affected.

Some May Abstain

Some legislators say they may abstain. “If the state of California and the UC pension system dumped a whole bunch of their stock, it could drive the price down and it would have an adverse affect on me,” said Assemblyman Don A. Sebastiani (R-Sonoma), who owns stock worth more than $111,000 in three firms doing business with South Africa. “I may sit it out for that reason.”

Deukmejian, who reported ownership of between $10,000 and $100,000 worth of stock in General Electric Co., has asked the FPPC for advice.

As governor, Deukmejian may have the opportunity to decide the investment issue twice: once as a UC regent and again if the legislation prohibiting new investment, or a similar measure, reaches his desk.

At a recent press conference, Deukmejian said he believed that any regents who have conflicts of interest would disqualify themselves from voting on the issue. But he did not discuss his own situation.

Leaving himself open on the question of South African investments, the governor said that divestiture “is certainly one tool that has to be considered in trying to bring about change in that country.”

McCarthy, also a regent and a strong advocate of divestiture, said he was startled to discover recently that he has an interest in a company doing business in South Africa.

He reported that he is holding stock in Marsh & McLennan, valued at between $1,000 and $10,000, in trust for his son. Despite his strong views on apartheid, McCarthy said he would leave the decision on whether to sell the stock to his son, who will assume control of it today, when he turns 18.

McCarthy declared that he has no conflict in voting for divestiture because “You’re not in conflict if you vote against your interest.”

Fears Bill’s Defeat

He also said he is concerned that the conflict-of-interest question could defeat the proposal to sell off the university’s holdings linked to South Africa.

“There are 28 regents and you need 15 votes to make a decision,” McCarthy said. “I think it would be appalling to have 12 regents declare they had a conflict of interest and not vote. That would, from the start, defeat any effort for full divestiture.”

Growing public attention on South Africa’s policy of apartheid has prompted many officials to examine their personal investments and their opinions on government holdings.

In the Legislature, the list of major investors includes liberals such as Sen. Gary K. Hart (D-Santa Barbara) and Assemblyman Byron Sher (D-Palo Alto) as well as conservatives, including Assemblymen John R. Lewis (R-Orange), Robert W. Naylor (R-Menlo Park) and William P. Baker (R-Danville).

Reporting Required

In their annual statements of economic interest, public officials are required to disclose what investments they hold and list the range of their value.

Hart, a potential candidate for governor in 1986, has holdings valued at between $91,000 and $910,000 in 10 companies linked to South Africa.

“I’m in favor of divestiture, and I’m in the process of divesting them myself,” Hart said, adding that he is hampered in disposing of the stock because of long-standing trust arrangements.

Sher, a former Stanford University law professor, owns stock valued at between $81,000 and $810,000 in nine companies with South African operations. But recent student demonstrations, he said, have convinced him to re-evaluate his holdings and not invest any more money in such companies.

Selling Immediately

During the last week Hayden, Assembly Democratic Floor Leader Mike Roos of Los Angeles and state Superintendent of Public Instruction Bill Honig, a UC regent, said that they were immediately selling their stock in firms that do business in South Africa.

“Selling was not a hard decision for me to make,” said Honig, who had reported owning stock worth between $11,000 and $111,000 in two such companies. “It made it easier for me to clear the air before the vote.”

And Roos, who had reported a small investment, issued a statement that concluded: “I do not expect IBM to quiver over my sale of 10 shares of stock. But it is the most real step I can take as an individual to force change.”

More than 250 U.S. companies conduct business in South Africa, according to a list compiled by the Philadelphia-based International Council for Equality of Opportunity Principles Inc.

Strong U.S. Ties

The list--which includes such major corporations as General Motors Corp., IBM, Exxon, Xerox, Dow Chemical, Hewlett-Packard, Chevron, the Coca-Cola Co., Marsh & McLennan, Tenneco and Eastman Kodak--illustrates the strong U.S. economic ties to South Africa.

Like Hayden, who reported owning between $10,000 and $100,000 worth of stock in the General Motors Acceptance Corp., a number of legislators said that they were unaware they owned stock in companies doing business with South Africa until they were interviewed by The Times.

“I didn’t know about it,” said Sen. Milton Marks (R-San Francisco), who reported an interest in 12 companies identified by the council as doing business in South Africa. Marks reported the value of his investment to be between $120,000 and $1.2 million.

“I will talk to my stockbroker,” Marks said, “and unless he gives me some good reason why I shouldn’t, I would be pleased to dispose of them. I am very much opposed to apartheid.”

Others Won’t Sell

But other legislators who oppose divestiture said they would not sell their own holdings.

“I think it’s a mistake for our pension funds to yield to political pressure,” Assemblyman Baker said. “They have two rules: maximize return and guarantee safety (of the investment).”

He reported owning stock valued at between $43,000 and $430,000 in seven firms tied to South Africa.

Still other legislators argued that withdrawal of investments from South Africa is the wrong approach because it could cause more harm to blacks, who already suffer under apartheid.

“I am skeptical about whether broad-brush divestiture will in fact further the cause, which we all share, of eliminating apartheid,” said Naylor, who reported an interest worth more than $145,000 in 18 firms doing business in South Africa. “It may cause a revolution in South Africa, and I’m not sure that would better the lot of South Africans.”

Added Sen. Henry Mello (D-Watsonville), “If these companies are forced to withdraw, then South Africa could very well become another Ethiopia.” Mello reported an interest of between $1,000 and $10,000 in Eastman Kodak through a trust fund for his children.

THE INVESTMENTS State reports show these state officials hold stock in companies doing business with South Africa. They may face a conflict if the state and the University of California decide to divest public funds of investment in such companies.

THE SENATE

OFFICIAL INVESTMENT AND WORTH William A. Craven (R-Oceanside) Stock in six firms (between $6,000 and $60,000) Jim Ellis (R-San Diego) Exxon stock (between $1,000 and $10,000) John Garamendi (D-Walnut Grove) Trust fund containing Chevron stock (value not specified) Gary Hart (D-Santa Barbara) Stock in 10 firms (between $91,000 and $910,000) Milton Marks (R-San Francisco) Personal portfolio and trust containing stock in 12 companies between $120,000 and $1.2 million) Henry Mello (D-Watsonville) Trust fund containing Eastman Kodak stock (between $1,000 and $10,000) Becky Morgan (R-Los Altos Hills) Stock in two firms (more than $200,000) Newton Russell (R-Glendale) Chevron stock (between $1,000 and $10,000) Rose Ann Vuich (D-Dinuba) Stock in three firms (between $3,000 and $30,000)

THE ASSEMBLY

OFFICIAL INVESTMENT AND WORTH William P. Baker (R-Danville) Seven stocks (between $43,000 and $430,000) Sam Farr (D-Carmel) Stock in six companies (Between $6,000 and $60,000) Tom Hayden (D-Santa Monica) General Motors Acceptance Corp. stock (between $10,000 and $100,000.) John Lewis (R-Orange) Stock in 14 companies (between $122,000 and $1.22 million) Robert W. Naylor (R-Menlo Park) Stock in 18 companies (more than $145,000) Mike Roos (D-Los Angeles) IBM stock (between $1,000 and $10,000) Don Sebastiani (R-Sonoma) Stock in three companies (more than $111,000) Byron Sher (D-Palo Alto) Stock in nine companies (between $81,000 and $810,000) Phillip D. Wyman (R-Tehachapi) Tenneco stock (between $1,000 and $10,000)

UC REGENTS

OFFICIAL INVESTMENT AND WORTH Gov. George Deukmejian General Electric Co. stock (between $10,000 and $100,000) Schools Supt. Bill Honig Stock in two companies (between $11,000 and $111,000) UC President David Gardner Stock in three companies (between $3,000 and $30,000) Joseph Moore Stock in 21 firms (more than $470,000) William Milliken Stock in 12 firms (more than $252,000) Robert Noyce Stock in three firms (more than $210,000) W. Glenn Campbell Gillette Co. stock (between $10,000 and $100,000) Edward Carter E.I. DuPont deNemours & Co. stock (between $10,000 and $100,000) Stanley Sheinbaum The Upjohn Co. stock (between $10,000 and $100,000) William French Smith General Electric Co. stock (more than $100,000) Harold Williams Phillips Petroleum Co. stock (between $10,000 and $100,000)

Sources: Legislators ‘ and Regents ‘ 1984 statements of economic interest updated through interviews; list of companies compiled by the International Council for Equality of Opportunity Principles Inc.