Divestment Forces Say Pressure Paid Off : South Africa: Advocates of economic sanctions count Mandela’s visit a victory.
At first it seemed quixotic. But today, billions of dollars in California pension funds have been pulled out of South Africa.
And as Nelson Mandela concluded his U.S. tour, people who set out to force California to pull its money out of South Africa were basking in the belief that they played a part in freeing the anti-apartheid leader.
“It’s an affirmation of our work,” Pedro Noguera said of Mandela’s visit. Noguera, now a professor of education at UC Berkeley, was the university’s student body president in 1985 and 1986, when he spoke out, sat in and got arrested twice in pursuit of one goal:
Forcing the nation’s largest university system to sell off upward of $3 billion in holdings in firms doing business in racist South Africa.
Organizers of Mandela’s reception in Oakland and Berkeley cast this final stop Saturday on Mandela’s U.S. tour as a triumphal visit to the cradle of the divestiture movement. Pressure from economic sanctions helped persuade the South African government to free Mandela in February after it had imprisoned him for 27 years, they believe.
“We feel uplifted and enlivened,” said Oakland City Councilman Wilson Riles Jr., an early proponent of his city’s tough divestment policy. Only a few years ago, he recalled, the coalition backing divestment was scorned and told “little Oakland won’t have any effect.”
Between now and year’s end, managers of the state’s three largest pension funds will sell their last $800 million in holdings in firms that do business with South Africa. Large though that number is, it is nowhere near the amount held when California adopted its divestment policy in 1986, and set a Dec. 31, 1990, deadline for total divestment.
At that time, the massive pension funds for public employees, teachers and University of California employees had investments of $7.2 billion in firms that owned plants, had employees and carried other business in South Africa.
Divestment proponents believe the policy of refusing to do business with firms that retain direct holdings in South Africa is working. They believe the policy has helped prompt firms to sell South African assets. That, in turn, has resulted in billions of dollars leaving South Africa, thus persuading the racist regime to move toward reform, according to anti-apartheid activists.
“I believe South Africa has gotten the message and I’d be surprised if apartheid lasted another year,” said state Controller Gray Davis, a board member of the teachers’ and public employees’ pension funds.
More than 120 state and local governments in the country have some type of divestment policy. Advocates of the policies vow to keep them in place until apartheid--the racist system of segregation against the black South African majority--is dismantled.
Nowhere was pressure to take local action against South Africa greater than in the San Francisco Bay Area. In the middle 1980s, longshoremen refused to unload South African cargo at Bay Area ports. Cities here adopted some of the toughest anti-South Africa measures in the nation.
In Berkeley, university students boycotted classes, occupied the offices of top administrators, and were arrested in numbers reminiscent of the 1960s. Thousands demonstrated outside Sproul Hall and marched through campus. To dramatize the plight of black South Africans, students built shantytowns and resisted police who removed them.
In 1986, the movement took hold in Sacramento. After years of pressure from pro-divestment legislators, chiefly Assemblywoman Maxine Waters (D-Los Angeles), Gov. George Deukmejian signed legislation enabling the state’s pension funds to divest. At the time, he was facing an election challenge from Los Angeles Mayor Tom Bradley, a proponent of such sanctions.
The size of California’s pension funds added considerable weight to the divestment movement. The University of California’s pension fund has $13 billion in assets. The state Public Employee Retirement System is the second-largest pension fund in the nation with $58 billion in assets. The pension fund for teachers is the nation’s seventh largest with $30 billion in assets.
After California acted, more than 100 firms, ranging from IBM to Coca-Cola, severed direct ties and sold subsidiaries in South Africa. Only 117 U.S. companies retain direct South African holdings, down from 322 firms six years ago when the divestiture movement began to take off, according to the Investor Responsibility Research Center of Washington, which supplies information to money managers seeking to invest in firms free of South African holdings.
“There was a drumbeat (to divest). When California did it, the drumbeat intensified,” said Timothy Smith of the New York-based Interfaith Center on Corporation Responsibility, which tracks such issues for the National Council of Churches. “The political significance of Gov. Deukmejian taking a stand was heard in many places.”
So far, authorities say, divestment has taken place with little or no loss to the pension funds. One reason is that many blue chip firms decided to sell their South African holdings, so California can continue to invest in them.
“We essentially have divested without penalty,” Controller Davis said.
When California adopted its policy, the State Teachers Retirement System fund had roughly $1.8 billion invested in firms that did business in South Africa. The Public Employees Retirement System had another $2.3 billion in the firms. UC had $3 billion invested.
As of December, 1989, a document dated last month shows, the state teachers’ pension fund had cut its holdings to $33.5 million in 19 firms doing business in South Africa, including Bristol-Myers, Chevron and Caterpillar.
Now, the teachers’ fund has $23 million invested in firms with direct ties to South Africa, said Sandra Parker, an executive of the fund. The final $23 million in roughly 18 firms will be sold off by December, she said.
The state Public Employees Retirement System has $333.5 million left to unload in firms still in South Africa, said Dale M. Hanson, executive officer of the pension fund. The fund will have sold its “South Africa-tainted” stocks and bonds by the end of 1990.
The number of shares left to be sold is considerable. Within the last month, the fund has sold 150,000 shares in Texaco, and must sell its remaining 350,000 shares in the oil giant by year’s end. The fund also is holding large amounts of shares in Bristol-Myers, Abbott Labs, Du Pont and lesser amounts in 33 other firms.
The university pension fund retains the largest stake in companies with South African ties of any California state pension fund. UC spokesman Rick Malaspina told The Times earlier this week that the $13-billion pension fund for university employees held $763 million in three firms with direct South African holdings.
Citing updated figures, Patricia Small, UC’s associate treasurer, said later in the week that the university pared down its holdings in recent months to $450 million, including $134 million worth of shares in Bristol-Myers, $136 million in Johnson & Johnson and $180 million in 3M International. The shares in the companies will be sold by the year-end deadline, Small said.
In coming months, pressure is expected to build to increase economic action aimed at South Africa’s racist government. But for now, people who fought for divestment basked in their victory, and recalled the fight.
“We were making it up as we went along,” recalled Loni Hancock, mayor of Berkeley. In 1971, Rep. Ron Dellums (D-Berkeley) introduced a resolution in Congress calling on the United States to pull investments out of South Africa. In 1979, Berkeley became one of the first local governments to put its dollars where its principles were, refusing to bank at institutions that loaned to South Africa.
Now Berkeley’s policy goes much further. The city won’t buy an IBM computer, for example, or invest in IBM, in part because though IBM sold its South African subsidiary in 1987, the firm sells computers there.
In the early years, the 1970s, a free South Africa “seemed so far away it was unimaginable,” said Hancock, who as a councilwoman introduced divestment resolutions as early as 1973. Seventeen years later, Mandela arrived. That, said Hancock, “is a powerful and moving thing.”