The University of California Board of Regents announced Friday that the university will sell $12.3-million worth of bonds issued by Eaton Corp. because the Cleveland-based manufacturer has failed to meet the university's standard of "good corporate citizenship" in South Africa.
The planned sale, which represents only a tiny fraction of UC's $2.4-billion holdings in companies that do business in South Africa, is the first such action taken by the university since the regents adopted a plan to make a case-by-case review of its South Africa-related investments last June.
Students and faculty members who for months have demanded full divestment of UC's huge South African portfolio reacted sharply to the regents' announcement Friday, calling it an inadequate response to the apartheid policies of the South Africa government.
"What has been done today can only be said to be too little, too late," said Percy Hintzen, associate professor of Afro-American studies at the Berkeley campus. "It's clear that $12.3 million from one company is not even a drop in the bucket of what is necessary."
Under UC's divestment policy, the regents have agreed that the university "generally will only invest in companies doing business in South Africa that are signatories in good standing of the Sullivan Principles or adhere to an equivalent standard of good corporate citizenship in that country."
The Sullivan Principles, named for the Rev. Leon Sullivan of Philadelphia, call for equal treatment of blacks in the workplace and efforts to improve the overall quality of life for blacks in South Africa.
UC's decision to sell its Eaton securities was based partly on an analysis by Arthur D. Little Co., a Cambridge, Mass., consulting firm that rates corporate activities in South Africa. Although Eaton is a signatory of the Sullivan Principles, Little rated Eaton as a company that "needs to become more active" in its compliance with the Sullivan code of conduct.
According to a statement issued by the university, a UC divestment committee composed of faculty, students and administrators concluded after corresponding with Eaton that the company "did not have a strong commitment to raising its standing in regard to the Sullivan Principles."
103rd on Fortune List
Eaton is a manufacturer of electrical equipment whose South African subsidiary makes electrical switches. With annual sales of more than $3.7 billion, it ranked 103rd on Fortune magazine's 1985 list of the 500 largest U.S. industrial corporations.
Phone calls by The Times to Eaton headquarters on Friday were not returned. Daniel Brubeck, Eaton's director of corporate communications, told the Associated Press that the company "had no comment" on the regents' decision.
UC Treasurer Herbert Gordon said the sale of the Eaton bonds will be made in such a manner so as not to "prejudice the return or safety of the university's investment portfolio." What that means, a university spokesman said, is that the bonds will be sold over an extended period so as not to depress the price.
Warn 3 Companies
Last November, the university sent letters to three other companies warning that divestment of their stock might occur. The strongest letter went to Nalco Chemical Co. of Oakbrook, Ill., one of the original signatories to the Sullivan Principles in 1977. The regents froze all purchases of Nalco stock pending some improvement in Nalco's adherence to the Sullivan Principles.
The other two companies were Dun & Bradstreet Inc. and Baker International Corp. Neither is a signatory to the Sullivan Principles, but officials of both companies have assured the university that the firms meet UC's standards of good corporate citizenship.
The university has so far taken no further action with regard to its investments of any of the three companies.