Companies See No Rush Back to South Africa : Trade: Officials say the President’s decision to lift sanctions does not affect numerous state and local laws.
Big U.S. companies made clear Wednesday that they won’t be stampeding back into South Africa, despite President Bush’s decision to lift economic sanctions.
Only a few companies contacted Wednesday--among them, Irvine-based Fluor Corp.--said they were taking exploratory steps toward eventually returning. Such multinational giants as Mobil, Exxon, General Motors and Xerox said they had no such intentions.
“The lifting of sanctions has not changed any of our business plans,” said Lance Lamberton, a spokesman for Exxon, which pulled out of South Africa in 1986. “The reasons that we left”--most of them economic, rather than political--”have essentially remained the same.”
Perhaps most significantly for the South African economy, most major U.S. banks said they have no plans to resume lending in that country.
Spokespersons for Citibank, Chase Manhattan and Bank of America, among others, said that for the time being they won’t take advantage of the relaxed restrictions. Only one major bank holding company contacted Wednesday, J. P. Morgan & Co., said it was “reviewing” its ban on doing business in South Africa in the wake of the Bush announcement.
Political convictions or independent assessments of South Africa’s progress in dismantling apartheid, its system of racial segregation, did not appear to be a significant factor in companies’ plans.
The reasons most cited for their hesitancy were these:
* Although Bush moved to lift federal sanctions, dozens of cities and states--including California--have adopted laws that prohibit government agencies from investing in or buying products from companies with interests in South Africa. So there would still be severe financial penalties for corporations that returned.
DeWitt F. Bowman, chief investment officer of the $62-billion California Public Employees Retirement System pension fund, said he has detected no movement in the Legislature toward repealing the state’s sanctions law.
Xerox spokesman Thomas C. Abbott said such restrictions by more than 80 localities would cost the company far more in lost business than any gain that could be expected by moving back into South Africa.
Political pressure remains strong in many localities for continuing sanctions.
* Giant pension funds for public employees and unions also aren’t moving yet to drop their boycotts of companies that invest in South Africa. These funds wield considerable clout as investors. Spokesmen for several funds said they are unlikely to change their policies until the leading black South African political organization, the African National Congress, endorses an end to sanctions.
Perhaps the largest U.S. pension fund, TIAA-CREF--which provides retirement benefits for college professors and teachers around the country--said it has no plans to drop its policy of pressuring companies to withdraw from South Africa.
New York City’s largest public-employee pension fund is pressing ahead with efforts to impose even stricter divestiture rules than those already in force, said Andrea Bernstein, spokeswoman for City Comptroller Elizabeth Holtzman.
“There is still no democracy in South Africa,” Bernstein explained.
* The South African economy remains weak. Companies fear that they wouldn’t earn an adequate return on new investments there. And companies that sold off considerable assets in South Africa in the late 1980s say the cost of buying back in now would be prohibitive.
Mobil, for example, pulled out of South Africa in 1989, selling a refinery and other assets and giving up its 20% share of the South African gasoline market.
“A lot of people don’t understand what it would take” to return to South Africa, said Mobil spokesman John Lord. “We’d either have to buy the business we sold or start from scratch to reenter the market.”
At General Motors--which controlled between 10% and 15% of the South African car market before it left in 1986--the thinking is that there are many other areas of the world where new investment might be more profitable, spokesman Ron Thiess said.
Officials of anti-apartheid organizations in the United States said Wednesday that they were pleased with the American firms’ reluctance to rush back into South Africa, on the grounds that fundamentals of apartheid remain in place.
Timothy Smith, executive director of the New York-based Interfaith Center on Corporate Responsibility, said he expects to see “a lot of contingency plans, a lot of feelers” by companies, but little move to make significant investment.
Among the few companies that said Wednesday that they would contemplate a return to South Africa were Irvine-based Fluor Corp, the international construction and engineering concern, and H. J. Heinz Co., the Pittsburgh-based food concern.
Fluor spokeswoman Deborah Land said the company, which pulled out of South Africa in 1986, will proceed slowly, if at all. “We’re waiting until the dust settles before making a decision on how to proceed,” she said.
When Fluor left, it sold its South African holdings to an independent trust, with an option to buy it back if conditions changed.
Heinz spokesman Ted Smyth said the firm currently does a profitable business in countries neighboring South Africa, including Zimbabwe and Botswana, adding that it probably would make sense for the company to go into South Africa. But Smyth emphasized that Heinz, for now, intends to move slowly.
* MAIN STORY: A1
