UC Plans Sale of Stock Tied to S. Africa : Divestment: Affected are $763 million in holdings in 3 corporations: Bristol Myers-Squibb, Johnson & Johnson and 3M. The university’s stake in the firms is relatively small.
The University of California, in the first such move since it adopted a divestment policy four years ago, announced Tuesday that it will sell $763 million in holdings in three corporations that maintain ties with South Africa.
The university’s planned sale comes as black South African leader Nelson Mandela prepares to visit California on the final leg of his U.S. tour. Mandela plans to conclude the tour with a stop in Oakland this weekend.
“It is a great step forward and excellent thing to be doing as the Bay Area welcomes Nelson Mandela,” said Berkeley Mayor Loni Hancock, one of the earliest supporters of sanctions against South Africa.
The three companies are Bristol Myers-Squibb, Johnson & Johnson, and 3M International. The university system’s stake in the companies represents a small part of its $13-billion investment portfolio.
“It has not been damaging,” UC spokesman Rick Malaspina said of the divestment policy adopted in July, 1986. “The portfolio has grown. It is healthy.”
In 1986, when the regents voted 13-9 for divestment, the university system had pension fund investments totaling $9 billion, including $3 billion in 29 companies that did business in South Africa. Over the years, several of those companies pulled out of South Africa, enabling the university to keep its holdings in them, Malaspina said. Others were dropped from the university’s portfolio for other reasons.
But in a closed-door hearing earlier this month, UC Treasurer Herbert Gordon told regents that three corporations in which the university has holdings maintain business ties to South Africa. Despite university pressure to sever the ties, the companies continue to operate in the segregated country, university officials said. Gordon told the regents he therefore would start selling blocks of stocks and bonds in them.
Spokesmen for the companies said that despite the university’s action, they plan to continue to operate in South Africa. Johnson & Johnson employs 1,400 people in three South African facilities, while Bristol Myers employs 580 people and 3M employs 850.
“We feel our economic presence is a more meaningful way to contribute to change than not being there,” said Samuel Bates, spokesman for 3M International in St. Paul, Minn., echoing comments of spokesmen for the other firms.
Upon hearing of the university’s action, Bates noted: “It doesn’t come as a surprise, but it does come as a disappointment. . . . It’s disappointing that people would sell because of political reasons. It doesn’t make much sense from an investment point of view.”
In 1986, when the UC regents voted to divest, the action represented the largest such move by any governmental entity in the country. A few months later, Gov. George Deukmejian signed legislation affecting $11 billion in state investments.
The University of California adopted its divestment policy after a long and bitter fight led primarily by students at several campuses, chiefly UC Berkeley.
A review shows that the university will not meet the deadline set forth when the policy was adopted. The policy says the university “shall not make or hold any investment” in companies doing business with South Africa as of July 1, 1990.
However, Malaspina said guidelines adopted in September, 1987, give the university’s financial managers until Dec. 31 to cast off such holdings.
“As long as those shares are sold by Dec. 31, 1990, I will be satisfied,” said Regent Yori Wada, who was among the main proponents of the “disinvestment” policy.
Wada, who was at the closed-door meeting with Treasurer Gordon earlier this month, said regents supported the plan to sell off the holdings. But he noted that some regents “were very disturbed” about Gordon’s proposal to replace the holdings with stocks in foreign companies.