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Paperwork Helped Bury Apartheid

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TIMES STAFF WRITER

Half a world from the crumbling apartheid government of South Africa, George S. Wolfberg is a soldier in the fight for human rights. His war room is a cluttered office at Los Angeles City Hall.

Armed with computer printouts, affidavits and reference manuals, Wolfberg oversees enforcement of the city’s economic sanctions against South Africa. In seven years, he has tabulated more than 3,400 companies ineligible for Los Angeles contracts because of ties to the white-ruled nation.

He revises the list constantly. Some firms, such as Bristol-Myers-Squibb and NEC Corp., are household names; others are anonymous conglomerates or subsidiaries--a phone book’s worth of banks and development firms, photography labs and munitions factories. In more than a few cases, Wolfberg said, companies seeking lucrative city deals try to hide their South Africa connections.

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Wolfberg plays sleuth to ferret them out.

“There are companies you never heard of that are billion-dollar companies,” the chief administrative analyst said, shaking his head. “It’s incredible.”

The scrutiny that Wolfberg brings to the task has helped give Los Angeles a reputation for leadership in the extraordinary worldwide effort to end apartheid. That campaign reached a milestone Friday, as Nelson Mandela and other black leaders of South Africa began calling for sanctions to be lifted. Unless political events change, Los Angeles and scores of other government jurisdictions in the United States are poised to begin dismantling the machinery of censure, even as scholars and elected officials try to gauge its importance to the South African struggle.

As the sanctions era nears an end in the United States, it leaves behind a legacy of high ideals, red tape and unevenly shared commitment to a common cause. More than a decade after the first few cities adopted sanctions, the movement still shows strength. Today, at least 30 states, 109 cities and 39 counties and other public agencies impose trade and investment restrictions against South Africa, according to one independent research organization.

Even after the federal government withdrew its own sanctions in 1991, lesser jurisdictions--some of them obscure--continued to make costly sacrifices to keep the censures in place. One California public pension fund, for example, has estimated its losses from missed stock opportunities at $800 million after it eschewed investments in thriving pharmaceutical companies that do business in South Africa.

The scope of the overall commitment to sanctions in the United States has been “absolutely unprecedented,” said William Moses, a senior analyst with the Investor Responsibility Research Center Inc., a Washington-based organization that provides impartial analysis of business and public policy issues. Moses, who carefully tracked the sanctions, said they drew support from a surprisingly broad cross-section of America--from whites and blacks, rich and poor, in all geographic regions.

“This incredible latticework of sanctions just overhangs the entire country . . . from Louisiana to West Hollywood,” Moses said. “It is striking to think that the plight of South Africa’s black majority struck such a chord with the American people.”

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Whether that commitment made much difference is a matter of debate, scholars said.

“Clearly, struggles (for human rights) are won internally--they’re not won because somebody imposed sanctions,” said UCLA professor Edward A. Alpers, president-elect of the international African Studies Assn. Still, Alpers believes that the American activism was important in accelerating the reforms.

“It’s been a very big effort, and it’s been significant,” he said of the sanctions.

In California, whose economy ranks as one of the 10 largest in the world, sanctions have been a factor in scores of public contracts and investments affecting untold billions of dollars, government officials say. In 1986, as the sanctions movement was gaining momentum nationwide, George Deukmejian, who was then governor, approved a bill forcing the state’s huge public employees’ and teachers’ pension funds to phase out their South Africa-related stocks over three years.

The law also allowed University of California regents to take the same action. All three systems held about $7.2 billion worth of targeted stocks at the time.

The bill appeared to bring results. After it passed, more than 100 companies withdrew operations from South Africa, leaving about 123 on investor blacklists, according to Moses of the Washington-based IRRC.

But the action also proved expensive. The state employees pension, CalPERS, held about $2.3 billion in South Africa-related assets in its $71-billion portfolio, the nation’s largest public fund. CalPERS winnowed out those stocks while forsaking potentially fruitful investments in companies that ignored the boycott. One of those firms was Merck & Co. Inc., the pharmaceutical giant.

“It had excellent market performance” during the late 1980s, said CalPERS’ Chief Investment Officer DeWitt Bowman. A study conducted two years ago by fund managers showed that the retirement system lost $800 million in what Bowman called “opportunity costs” because of the sanctions.

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Although the fund is likely to benefit substantially from the lifting of restrictions, there are obstacles to that too. The California Legislature, like many other governing bodies nationwide, does not meet year-round; in fact, legislators adjourned earlier this month and will not reconvene until December. Assemblywoman Gwen Moore (D-Los Angeles), who met privately with Mandela during his most recent visit to Los Angeles, conceded that there may be no choice but to keep the restrictions in force at least until then, or, more likely, until a new session begins early next year.

Legal technicalities and politics have been closely entwined forces throughout the sanctions era. Some major agencies, including Los Angeles County, never adopted sanctions. Others, such as the state of Florida, wrote them so loosely that little sacrifice was required. In Florida’s case, the boycott was applied only to firms based in South Africa or owned by the South African government.

Few, if any, contracts were held up, and no stocks were divested by Florida’s $35-billion pension fund, one state administrator said.

In still other instances, even tough-sounding sanctions policies withered under the prospect of lost revenue. The city of Los Angeles’ Fire and Police Pension Fund, for example, adopted investment restrictions but granted waivers to about 25 major companies--including profitable pharmaceutical, chemical and manufacturing firms--rather than sink money into less desirable companies with no ties to South Africa, said Gary Mattingly, general manager of the $5.5-billion fund.

The fund’s seven-member board, which is responsible for handling investments on behalf of 20,000 firefighters and police officers, both active and retired, approved the exemptions for pharmaceutical firms such as Johnson & Johnson and Upjohn Co. and for other corporate giants such as Monsanto, Gillette, Caterpillar and Texaco, the fund manager said.

“The whole biotech drug field . . . was the place to be” among investors, Mattingly said. “Our investment managers came to us and said, ‘These are good investment opportunities and we can’t find suitable replacements for them.’ We felt for us to lose this kind of money, even though the taxpayers would make it up, would be a breach of our fiduciary responsibility.”

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Within more than a few public agencies, controversy boiled below the surface of public attention as money managers and elected officials struggled to take difficult stands. Occasionally, those battles became public, as they did in Seattle in early 1991.

There, computer software giant Microsoft Corp., a company that Seattle residents regard with pride, reached a decision to re-enter South Africa. By that time, Mandela’s release from prison and other reforms in South Africa were causing many nations--including the United States--to ease restrictions. Many other computer firms were already in South Africa before Microsoft opened its 10-member office there.

But the city of Seattle and the University of Washington endowment fund immediately moved to rid themselves of Microsoft stock, despite an editorial outcry from Seattle-area newspapers. For the university, the move meant dumping about $720,000 in shares--even though Mary Gates, one of the university board members, is the mother of Microsoft Chief Executive Bill Gates.

Led by former Mayor Tom Bradley and strong civil-rights advocates on the City Council, Los Angeles joined New York, Chicago, Philadelphia and other major cities at the forefront of the sanctions movement by enacting its own strict ordinance in 1986.

The law, modified several times, initially required virtually every routine city purchase to be scrutinized, a provision that produced mountains of needless paperwork, Wolfberg recalled.

“Literally, if a police (automotive) mechanic needed a filter and had to go down to Pep Boys . . . (we) had to go through this procedure,” the city’s sanctions overseer said.

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Later, the rules were changed to exempt purchases of less than $500. Then a charter amendment extended the sanctions to contracts over $25,000, covering big-ticket purchases such as fleets of cars. Even on Friday, as two City Council members responded to Mandela’s call by introducing a motion to repeal, the law remained one of the nation’s most stringent, according to Wolfberg.

It applies not only to companies with offices or business ties to South Africa, but also to parent or subsidiary firms. That detail has given the ordinance considerable reach, Wolfberg said. He recalled a time, several years ago, when Security Pacific Bank was about to enter a major contract to handle city payroll checks.

At the last minute, it was discovered that the bank still held a minor subsidiary in South Africa.

“In two weeks, they got out,” Wolfberg said, remembering other firms that dealt less honorably with the city’s demands.

“People will send us papers and say, ‘We have no parent (company),’ ” Wolfberg said. “I just call the (firm’s) number. I say, ‘Who’s your parent?’ Whoever answers the phone, they always know. They say, ‘We’re a subsidiary of Megalopolis Inc.’

“What’s amazing to me is we’ve never gone after anybody for perjury.”

Times staff writer Ralph Frammolino contributed to this story from Sacramento. Also contributing were Times researchers Doug Conner in Seattle, Greg Miller in Washington, D.C., Ann Rovin in Denver and Anna M. Virtue in Miami.

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Curbs Range From Arms to Oil

South Africa’s policies of apartheid resulted in a raft of U.N. sanctions. But a day after the country’s Parliament enacted a law giving blacks their first say in the running of the country, several nations moved to lift many of the sanctions. Here is a description of the sanctions.

ARMS--The Security Council in 1977 forbade the sale of arms or other military equipment to South Africa. This mandatory embargo is expected to stay in place for the time being. In 1984, it imposed a non-mandatory resolution prohibiting the purchase of South African arms.

OIL--The General Assembly adopted non-binding resolutions barring oil sales to South Africa. Many states broke the embargo, but enough obeyed to make imports of petroleum more expensive.

FINANCES AND TRADE--The General Assembly had called on all states to maintain existing bans on investment and trade in South Africa following initiatives taken by various nations worldwide. The resolutions also called on the International Monetary Fund and the World Bank, both U.N. agencies, not to extend new loans and credits to South Africa until agreement was reached on a non-racial democratic constitution or until a transitional authority made specific recommendations. The United States last July lifted most federally imposed economic sanctions, but among the most damaging were formal and informal sanctions adopted by 150 state and local governments, including New York City, the U.S. financial capital.

SPORTS AND TRAVEL--Several measures were lifted by the General Assembly in 1991 because of serious negotiations in South Africa toward a non-racial democracy. These included sports, academic, scientific and cultural links. U.N. Secretary General Boutros Boutros-Ghali in 1992 lifted travel restrictions that had prevented U.N. personnel from flying on South African Airways.

Source: Reuters

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