Unprincipled Pullouts

Troubling questions are raised by the call of the Rev. Leon H. Sullivan for American companies to pull out of South Africa.

He has acknowledged that apartheid has not been brought to an end by the efforts of 127 U.S. corporations to respect the code of behavior that he devised--a code that brought racial equality and social reform to the workplace. So he has suggested that these companies now get out. But he has suggested that they get out by selling their assets to non-Americans who will respect that same code.

The risks of such a strategy have been well demonstrated by General Motors, on whose board of directors Sullivan sits. GM has severed its direct ties with South Africa, selling out to South African interests that have abandoned the Sullivan Principles while making a general commitment to work-place equity. GM paid off the debt of the South African operation before turning it over to the new South African owners, but financial details of the transfer have not been made public. GM continues to do business indirectly, supplying the new South African enterprise with passenger-car components through Opel, a wholly owned European subsidiary, and truck components through Isuzu in Japan, in which GM has a 38.6% stake. Indeed, of the more than 100 American companies that have "pulled out" of South Africa in the last 18 months, most have done so with no regard to the principles that they had claimed to be supporting. Many have been sold to South African interests with no commitment to social change. Many continue to enjoy indirect ties. An exception is Kodak, which is breaking all commercial ties at the end of this month and is seeking to bar the flow of any of its products to South Africa.

There certainly are issues of conscience for corporations as they weigh the propriety of maintaining operations in South Africa. A sound argument can be made that they could influence the future of the country if, in pulling out, they do as Coca-Cola is doing, and favor blacks in selling off assets, or if they cut all ties so that they can no longer be accused of profiting by the exploitation of an economy based on racism. American banks could have a major effect on South Africa's depressed economy if they rejected an extension of credit and insisted on settlement of outstanding loans. But divestments and disinvestments have been crudely managed for the most part, contributing little beyond a psychological climate that seems to have made the government of South Africa more intransigent and reform more distant.

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