Trust Me

As the sole undergraduate representative to Harvard's Advisory Committee on Shareholder Responsibility (ACSR) I feel compelled to respond to Jonathan Ratner's indictment (May 25) of Harvard's investment policies in South Africa. Mr. Ratner has painted a picture of a monolithic Harvard Corporation which "completely ignore[s] the moral indignation of the students" by investing in companies with activities in South Africa. Further, the Corporation, he states, consistently votes against or abstains on shareholder resolutions which would have the effect of reducing these companies' activities in apartheid South Africa. This picture is just plain incorrect.

Unlike at Hampshire College where students have not had any input into the investment or proxy decisions of the college, Harvard since 1972 has had a committee set up solely for this purpose, the ACSR. The ACSR is composed of twelve members--four students, four faculty, and four alumni--with the responsibility of advising the Harvard Corporation on social issues regarding the Harvard portfolio. In the past year, the ACSR has advised the Corporation on 47 different proxy issues carrying social implications and has attempted to define an acceptable general position for Harvard to take on both the Arab boycott and South Africa questions. In only one instance out of 47 did the Harvard Corporation totally break with the ACSR, by voting Harvard's shares against a resolution we had been in favor of by a very slim margin. On the whole, then, the Harvard Corporation takes the ACSR very seriously and leans heavily on it for advice.

In regard to South Africa, the ACSR, after careful study, has adopted the view that a complete withdrawal of American companies from South Africa would not, at this time, be the wisest course (a view which I personally do not share). The ACSR felt that the issues of withdrawal or non-expansion are best dealt with on a company-by-company basis. As Ratner points out, "a few corporations have aggressively challenged apartheid regulations," and these the ACSR feels can often be a positive force for change in South Africa. Other factors the ACSR has considered are employment policies, nature of business (e.g., mining as opposed to distribution), and who would be hurt most by the company's withdrawal.

In light of these views, the ACSR has recommended varying responses to the Harvard Corporation in regard to six South Africa-related proxy issues this year. Ratner has reported on two of these, Manufacturers Hanover Bank and General Electric. On Manufacturers, the ACSR faced the South African question for the first time over the issue of further loans to the South African government. Other than agreeing that we felt Manufacturers should establish a policy of assessing the likely social impact of each loan to the government, the ACSR could not agree on how to recommend to Harvard to vote its proxy shares. A plurality, but not a majority were opposed to the resolution. Others advocated abstention; and still others (myself among them) advocated a vote in favor of the resolution. In light of this disagreement in the ACSR and in light of their own deliberations, the Harvard Corporation finally decided to abstain on the issue.

With regard to G.E., the ACSR mustered a very slim majority in favor of a total South African withdrawal resolution. G.E., among other things, had a less than perfect employment record in South Africa, and this was a key factor. The Harvard Corporation, however, was unsure of the merits of the proxy proposal and, breaking only slightly with the ACSR, again took the middle ground of abstention on the issue.

One vote Ratner fails to point out, however, is the ACSR and the Harvard Corporation's favorable vote on a proxy issue at Union Carbide. This proxy would have required Union Carbide to stop all further expansion in South Africa if passed by a majority of Union Carbide shareholders.

Many students may not be pleased with the results of Harvard's proxy votes or with Harvard's continued ownership of stock in companies that do business in South Africa. The resolution of these issues, however, need not be accomplished through protest rallies and Mass. Hall takeovers, as Ratner implies. The ACSR was set up in 1972 for the very purpose of bringing student, faculty, and alumni views into the management of Harvard's portfolio. If students in recent years have failed to use the ACSR effectively, they have none but themselves to blame for it.

Accordingly, I urge all students dissatisfied or merely curious about Harvard's investment policies to seek me out or present a petition to the ACSR. As your undergraduate representative on the committee, it is I who am delegated with the authority to speak on your behalf. If you would but use this authority, takeovers and protest marches, such as those at Hampshire and Stanford, would become totally unnecessary. Carlton M. Smith '78