How the Process Evolved : Governor’s S. Africa Shift Called ‘Moral Imperative’

While being driven to a meeting last month, Gov. George Deukmejian heard the sobering radio news that South Africa had imposed an unprecedented nationwide state of emergency and had seized hundreds of anti-apartheid activists in predawn raids.

It had been nearly a year since the governor and the other regents of the University of California rejected passionate pleas to cut immediately the university’s vast financial ties with firms that do business in the racially torn nation in favor of a more cautious company-by-company review.

But now, as he rode in the back seat of his chauffeur-driven state sedan, Deukmejian--who prides himself on his strong human rights stands--was troubled that he and the regents had adopted a too soft course.

“It was very, very frustrating to the governor,” recalled Steven A. Merksamer, Deukmejian’s chief of staff.

Under questioning by reporters later that day, Deukmejian disclosed that he no longer was comfortable with UC’s go-slow divestment policy against a backdrop of escalating violence and repression in South Africa. This marked a turning point in his strongly held view that limited actions would hasten change in the minority white-run Pretoria government, said intimates of the governor.

Scarcely a month later, Deukmejian made the transition complete when he abruptly announced that he now supports total divestiture of both UC holdings and public employee pension fund investments in firms that continue to do business within South Africa. Such a divestiture had long been an elusive goal of activist Democrats both in the Legislature and on the Board of Regents.

With the regents, Deukmejian accomplished the task with virtually no lobbying by coalescing a solid core of divestiture advocates and a smaller group of his own recently appointed members who felt a strong loyalty to him. Several sources said it was uncertain even as the July 18 meeting got under way whether the governor actually had the votes to approve his program to divest about $3.1 billion starting in 1987.

Indeed, two Deukmejian appointees disclosed in interviews later that they opposed divestiture but agreed to follow his lead as a way of eliminating the long-festering issue that had ripped at the university system for more than a year.

Deukmejian insiders and some regents told The Times that the clincher to success, however, was inclusion in the proposed new policy--subject to legislative approval--that the regents be freed from personal liability if divestiture resulted in losses to UC’s massive investment portfolio of $9.6 billion.

To put in motion the machinery to sell off about $6.5 million in teacher and public employee pension fund investments at the state level, Deukmejian will need legislation. It is all but a foregone conclusion that the Democratic Legislature will give it to him, as it did last year when it sent him a similar bill. At that time, he vetoed it.

‘Monumental Flip-Flop’

One critic, Mayor Tom Bradley of Los Angeles, Deukmejian’s Democratic reelection challenger, deplored the governor’s newly hardened stance as an election-year “monumental flip-flop.” He suggested that Deukmejian merely was following his lead as a divestiture advocate and jumping aboard the anti-South Africa bandwagon.

Supporters, however, insisted that Deukmejian’s switch from go slow to full divestment was a deeply felt “moral imperative,” and was made without regard to political advantage and his reelection campaign.

Deukmejian told reporters Wednesday that he believed his shift could cut either way politically. “It’s probably a stand like all stands on controversial issues--you make some supporters and you lose some. . . . I’ve done what I think is right and we’ll see what happens. Some people may like it and some may not,” he said.

“Obviously, I think it was a matter of conscience for him,” said regent Sheldon Andelson, a politically savvy Los Angeles Democrat who long advocated full divestment by UC. “But it was a case where conscience and politics came together for him and for all of the rest of us (who favored divestiture).”

Political Considerations

A top-level Deukmejian Administration official, who did not want to be identified by name, agreed that the application of heavier pressure against South Africa in an effort to help break up apartheid represented a “sincere and logical” progression for Deukmejian, but noted that it also contained major political implications.

“If you want to pry down deeper, I’d say it’s a helluva nice move at the right time to knock the pins out from under Bradley,” the official said.

According to Chief of Staff Merksamer, the issue of pursuing full divestiture was dealt with at a series of private meetings with a handful of Deukmejian’s closest in-house advisers during the month that preceded the regents’ meeting. He said participants included himself, speech writer and research director James Robinson, legal affairs secretary Vance Ray and the governor.

Deukmejian campaign director Larry Thomas, who had left the public payroll as the governor’s press secretary, said he attended the final session and “I can’t recall (Bradley’s) name even coming up.” Thomas insisted, “He was never a factor.”

Legal, Financial Hazards

During the discussions leading up to the decision, Merksamer said that Deukmejian, the son of Armenian immigrants, kept pressing for complete divestiture as others played a devil’s advocate role pointing out the potential financial and legal hazards.

“But the bottom line for the governor is that it was a moral imperative (to divest),” Merksamer said. “You don’t grow up listening to the story of the Armenian genocide without having deep empathy for oppressed people wherever they may be. This is quite an emotional issue with him.”

When the regents first tackled the issue last year, a proposal by Assembly Speaker Willie Brown (D-San Francisco) for full divestiture over a five-year period was soundly rejected in favor of the go-slow plan favored by Deukmejian.

So it came as a surprise to almost everyone when Deukmejian suggested a plan that was almost a carbon copy of Brown’s defeated proposal, except that the governor’s plan would hasten full divestiture by one year.

Majority Needed

Going into the vote, Deukmejian’s tacticians said they hoped that at least six of the regents who supported Brown’s plan last year would also vote for Deukmejian’s policy, as would a new student and alumni representatives. These, coupled with four of Deukmejian’s recent appointees, would give them the majority needed for approval.

With Deukmejian’s vote, the policy was approved 13 to 9.

Frank Hope Jr., a San Diego architect appointed to the Board of Regents by Deukmejian, voted against Brown’s plan last year but supported Deukmejian’s resolution because “it seemed an important time to defuse the issue. . . . Now maybe we can get on with the more important business of running the university properly.”

Like other Deukmejian appointees to the board, Hope rejected the notion that the governor’s move was for strictly political reasons. “It may have served a political purpose to do it,” he said, “but I don’t think it was his motivation.”

Hope said he received a call from the governor a couple of days before the meeting and was told what Deukmejian intended to do. “I was somewhat negative. He said, ‘Vote any way you want,’ ” Hope recalled.

‘Right Thing to Do’

Hope said he is still philosophically opposed to divestiture but “I feel a great deal of loyalty to the governor. I respect his political judgment better than my own. It is his judgment that this is the right thing to do at this time.”

Tirso del Junco, a former state Republican Party chairman and a new appointee to the board, said he had “a lot of difficulties with divestment because I’m not very sure that it will do the job.” He noted that projections indicated that the university would have lost $250 million to $350 million if divestment had occurred a year ago.

“On the other hand,” Del Junco said, “we had to morally do something and no one presented any resolutions better than the governor’s.”

Another new regent, Fresno attorney Leo Koligian, said he made up his mind to support the governor only after listening to Deukmejian’s impassioned appeal to the board. “It is going to cost us a lot of money, but sometimes that turns around in your favor for being the standard-bearer for anti-apartheid,” he said.

Lawsuit Feared

Most regents and Deukmejian advisers interviewed emphasized the importance of exempting the regents from being held personally responsible for any financial losses that might occur under divestiture. Some said they feared being sued if they violated their fiduciary responsibility to get the highest return on university investments.

“I’m 64 years old,” said Regent Roy Brophy, a Sacramento land developer and generous Republican campaign contributor. “I was genuinely concerned. I would hate like hell to lose what I have saved all my life.”

Deukmejian’s proposed legislation would indemnify both the regents and other state pension managers against personal liability. The university’s divestiture program is contingent upon the Legislature granting indemnification.

Details of indemnifying the regents and state government pension fund administrators are expected to be worked out soon. However, the governor’s office indicated that the proposed legislation merely would include the regents in an existing law that indemnifies state employees from personal liability as a result of an alleged wrongful action they may have taken.

However, Deukmejian spokeswoman Donna Lipper said the governor’s advisers think that it is conceivable that an action could be filed against the Board of Regents, even if individual members were indemnified. She said if the plaintiff won, the award likely would be paid from general taxpayer funds.