Divestiture Would Cost $5-10 Million
Divestiture of holdings in all companies operating in South Africa would cost Harvard between $5 million and $10 million each year, according to a study approved last night by the Advisory Committee on Shareholder Responsibility (ACSR).
The study, which was supposed to be completed in time for the release of the ACSR report in March, states that selling all South Africa-related holdings would immediately cost the University between $5.7 and $16.5 million because of brokers' commissions and a drop in the price of the holdings.
Long-run costs would arise because Harvard would be unable to invest in the large portion of United States firms that operate in or trade with South Africa, making it harder for the managers of the portfolio to beat the falling stock market to make a profit.
The divestiture study, prepared by Michael Spence, professor of Economics and an ACSR member, Henry B. Reiling, professor of Business Administration and ACSR chairman, and George W. Siguler, assistant treasurer, is scheduled to be printed on Thursday and released soon after that.
Although this is the first public report on the costs of divestiture--a policy ruled out by the ACSR and the Corporation--the ACSR based its report on a similar study prepared for the committee several months ago during its deliberations.
That study states the long-run costs would be between $6.5 million and $21.5 million annually.
Computer problems delayed the release of the report because the private firm asked to run the computer program needed in the study "did a real botch job," Reiling said Monday.
After tentatively approving the report, which ACSR members will have a chance to read fully and object to in the next day or so, the committee vetoed four shareholder resolutions including one that seeks to force Occidental Petroleum to end all trade with "Communist-bloc" nations.
Nine ACSR members voted against the study, with none in favor, because "interaction with other countries is fundamentally a good thing to do except in very, very rare cases," Reiling said.
Occidental Petroleum is engaged in oil and mineral development and transport in the Soviet Union.
The resolution, which urges the firm to end all trade with and disengage itself from the Soviet Union, China, Cuba, North Korea, Indochina and Eastern Europe, "was written in a very extreme anti-communist way and hardly anyone took it seriously," David H. Rubin '80, the replacement for the usual undergraduate ACSR member, said yesterday.
Some ACSR members brought up the question of why the world should be against trade and interaction with South Africa but not Russia, but "we have long since agreed South Africa is a special case and there was little controversy on the issue," Reiling said.
The ACSR also voted on several resolutions that it has considered before in other companies, and gave the proposals the same treatment this time around--voting down all of them.
A resolution in Exxon to prevent the firm from making charitable contributions to institutions that perform animal experiments without a veterinarian present lost by a unanimous vote.
A second Exxon resolution to prevent the firm from pressuring employees to support political campaigns also lost--by a vote of one in favor and eight against--because many of the acts the proposal sought to prevent are already illegal and Exxon states it is not engaging in those tactics anyway.
The committee unanimously vetoed a resolution to stop Xerox from making charitable contributions to any organization not directly related to its business activities.
The meeting concluded the ACSR's schedule for the year, except for an informal session with the Corporation investment subcommittee Monday, a session that is meant as a "debriefing on the year," Reiling said.
All the resolutions the ACSR considered yesterday will go on to the Corporation subcommittee, which makes the final decision on all proxy votes