UC Regents Vote to Scrap South African Investment Ban

University of California regents voted Thursday to rescind their once-controversial policy banning investments in companies that do business in South Africa, freeing university officials to invest in more than 700 firms that have been off limits.

The unanimous vote by the Board of Regents’ Committee on Investments ends what had been a thunderous issue for the UC system in 1986, when regents bowed to student and community pressure for economic sanctions to protest apartheid and underscore demands for the release of jailed civil rights leader Nelson Mandela.

Nearly seven years later, Mandela is free and in September he appeared before the United Nations to call for renewed investment in South Africa. On Thursday, black and white political leaders ratified a new non-racial constitution that paves the way for free elections in April.

“For all of that to happen in the last 10 years is major progress for the world,” regent William T. Bagley told colleagues before the vote.

The move, expected to be ratified by the entire board this morning, would allow the UC treasurer’s office to invest any part of its $23.7-billion portfolio of retirement funds, endowments and other investments in 700 international companies and 80 domestic firms--30 of which are on the Fortune 500--that were excluded by the policy on South Africa. These companies have operations in the country.

The only question Thursday was whether the UC system could begin investing immediately because the state has yet to repeal a similar law banning South African investments. Although the regents agreed that the law applies to the UC system--it indemnified regents from financial harm--the university’s legal counsel essentially gave the green light by saying he could not “identify any meaningful legal risks” if the university went ahead.

The Legislature is widely expected to repeal the law in December or early next year, when it comes back in session.

The divestiture vote came shortly before the regents turned to the glum task of deciding how much to ask the state for next year. The board’s Finance Committee voted to ask Gov. Pete Wilson and the Legislature for $1.9 billion--$142 million or 7.9% more than last year. Overall, the university’s operating budget is $7.4 billion, which includes funds from student fees and other sources.

UC officials predicted that the state will come up with about half of the proposed increase, making it highly likely that the rest will be made up from increased student fees. UC President Jack W. Peltason has previously suggested a scenario in which fees would increase $650 a year through the late 1990s.