Divestiture Stand of UC Board Called Spinelessness

The president of the Massachusetts Institute of Technology accused the University of California Board of Regents of “spinelessness” in its recent conditional vote to sell the university’s investments in businesses that have ties to South Africa.

Speaking in Costa Mesa over the weekend, MIT President Paul E. Gray pointed out that a July vote to divest the California state university system of $3.1 billion in investments was made contingent on the regents being protected from liability for financial consequences of divestiture.

“I have to say, since we are in California, that the decision by the California regents was an extraordinary example of political expediency and spinelessness,” Gray told about 250 people attending MIT’s national alumni conference in Costa Mesa on Saturday. His comments came during a question-and-answer session that followed a prepared speech.

Opposed to Divestment

Unlike the University of California, MIT has resisted faculty members’ and students’ demands to divest. Eliminating investments in firms doing business in South Africa will not bring an end to that country’s social, economic and political segregation of the races, Gray has argued.

Attempts to reach several of the regents were unsuccessful.

The MIT president’s comments came one day after California Gov. George Deukmejian signed legislation requiring the withdrawal of up to $8.9 billion worth of public pension fund investments in companies that operate in the racially segregated nation.

The law signed Friday also includes a provision indemnifying UC officials from any personal liability for failing to meet their “fiduciary responsibility” to seek a prudent return on the university’s investments.

Value Is Symbolic

The primary value of divestiture is its symbolism, rather than its ability to bring an end to the apartheid system of racial separation, Gray said. The regents’ call for a law to protect them against responsibility for divestiture undercut the vote’s value as a moral statement against apartheid.

At a private university such as MIT, Gray added, the governing board must take personal responsibility for the institution’s investment policy and cannot seek the immunity that the California regents were granted.

Despite student protests on its Cambridge, Mass., campus and a faculty resolution favoring divestiture, the MIT Corp.--the university’s equivalent of a board of regents--has steadfastly refused to divest itself of businesses linked to South Africa.

South Africa’s apartheid policies “demean and dehumanize and literally enslave 70% of the population,” Gray said.

“While that is something we all condemn, I believe that the connection between divestment as a policy and as a solution to that problem is so remote, so loose, as to make divestment symbolically important but practically irrelevant,” he said.

The effect of divestiture on apartheid, Gray said, is like the effect “of pushing on a string.”

Arguments favoring divestiture overestimate both the effect that a university or other institutional stockholder can have on an international corporation and the influence that American companies wield with the South African government or in that nation’s economy, Gray said.

“I happen to believe that U.S investment is a force in the right direction in South Africa,” he said.