First UC Divestment OKd, $12.3 Million in Stock : Didn’t Meet Rules on Apartheid

University of California regents voted today for the first time to sell the university’s stock in a company that failed to meet UC’s standards for doing business in South Africa.

The divestiture of $12.3 million worth of stock in Eaton Corp., a Cleveland-based electrical equipment manufacturer, was taken in a closed session of the regents’ committee on investments. The investment committee’s decision is final and does not require approval of the full 29-member Board of Regents.

After the closed-door meeting of the 12-member investment panel, the regents said in a written statement that UC President David P. Gardner and the university’s advisory committee on investor responsibility had recommended the action on Eaton Corp. stock.

The advisory committee, which includes faculty, staff and students, had concluded that the Eaton Corp. “did not have a strong commitment to raising its standing in regard to the Sullivan Principles,” the committee statement said.

Policy Adopted in June

Last June, the regents adopted a policy, criticized at the time as weak on the divestment issue, for a case-by-case review of the “good corporate citizenship” of corporations in which the university invests.

Under that policy, the regents declared that they would invest only in companies doing business in South Africa that are signers of the so-called “Sullivan Principles,” which call for equal treatment of blacks in the workplace and for support of efforts to improve the quality of life for blacks in South Africa.

South Africa, a country with a black majority, is ruled by whites and follows a policy of apartheid, in which the races are segregated.

Although Eaton Corp. is a signatory of the Sullivan Principles, its compliance with the code of conduct for those who signed the agreement received a rating of “needs to become more active” from the Arthur D. Little Co., which rates corporate citizenship in South Africa.

Company Has No Comment

Daniel Brubeck, director of corporate communications for Eaton Corp., said today in a telephone interview from his Cleveland office that the firm has no comment on the regents’ decision.

Dan Greening of UCLA, president of the University of California Students Assn., said that the committee also recommended divestiture in two banks but that no final decision was made on them today. The issue will be taken up by the regents at their next meeting in Berkeley in May.

UC Treasurer Herbert M. Gordon said the sale will have no significant impact on the university’s financial portfolio.