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Harvard's Share in Apartheid

By Neva L. Seidman

On July 16, 1977, Harvard University awarded an honorary degree to Albert Gordon '23, chairman of the board of directors of Kidder Peabody. It was exactly one year after South Africa's township exploded in rage against the racist apartheid system. Since the strikes in Soweto began, thousands of protesters have been killed, wounded or jailed without trial by South Africa's white minority government. But big U.S. companies like Kidder Peabody have refused to end their involvement in South Africa. Harvard's links to U.S. corporations tie the University to oppression in South Africa--a tie symbolized by Gordon's award. Yet the Harvard Corporation has consistently refused to sell out of companies involved in South Africa, or even to support shareholder motions for withdrawal from that country.

The Apartheid System

The role of U.S. corporations in South Africa can only be understood in the context of apartheid, which is based on a system of enforced migrant labor. By law, Africans--80 per cent of the 24 million people in South Africa--may be "citizens" of less than 13 per cent of the country's land area, regions designated as "Bantustans." These impoverished and scattered pieces of land have no large towns and little industry or resources.

If he wishes to live outside the Bantustans, an African must work for a white. In the "white" areas--which contain all the country's major industry, towns and agriculture--Africans may not own houses or land, or, often, live with their families. They must live in segregated townships, for which the regime provides tiny houses, usually without running water or electricity. But the poverty of the Bantustans forces thousands of Africans to shuttle back and forth to the towns, taking any job offered, at any wage.

The system is enforced through the hated pass laws. Every African adult must always carry a "pass"; if caught without one in a "white" area, they face criminal charges or deportation to the Bantustans, where there is almost no hope of finding a job. It makes no difference if the pass was simply forgotten while going to the corner store for cigarettes or to visit friends. Africans who have lived in the city all their lives may be deported to starve in a Bantustan, a "homeland" they have never seen. Over a thousand people are prosecuted every day under the pass laws.

Apartheid requires rigid classification of races and a host of humiliating laws to back it up. Every South African is registered by race: white, Coloured, Asian or African. Skilled jobs are frequently reserved for whites. Marriage or sexual relations across the color line are illegal, with long jail sentences attached. Africans may only go to special "Bantu" schools, designed to train them as servants in white-owned in dustry; blacks must pay for their education, while whites get it free. "Bantu Education" features classes in housework and 60 children to a classroom.

Integrated trade unions are banned. Black organizers are harassed, imprisoned and murdered. African strikes are illegal.

Through this kind of legally-enforced racism, apartheid ensures low wages for blacks. The average income in the Bantustans is estimated to be about a third of the Poverty Datum Line (PDL), the minimum needed for survival. (It is generally conceded that 150 per cent of the PDL is needed for a decent life, as the PDL makes no provision for things like medicine, education, furniture or recreation). About a quarter of the Africans living in the Bantustans are both landless and jobless. Death reigns in the barren huts: half the children die before age six; starvation, malnutrition and diseases like tuberculosis are common. A study in the early '60s found that in some Bantustans, mothers and children ate only three times a week.

Things are not so much better for blacks in the townships outside "white" cities. Eighty per cent of the Africans there earn less than the PDL; four-fifths of African workers show signs of malnutriton.

And this is not the Sahel; South Africa is the most industrialized country in Africa, no longer considered a "developing country" by international organizations.

Opposition to the South African regime is illegal. People can be arrested and detained without trial at the whim of the Justice Minister, who does not have to give any reasons. They can be sentenced to life imprisonment or executed under the Sabotage and Suppression of Communism Acts, which define any attempt to change the status quo as "communist." Under such laws, the African National Congress of South Africa--the party of national liberation--was outlawed in 1960, and many opposition leaders--among them Nelson Mandela, Walter Sisulu and Bram Fischer--sent to jail for life.

But the regime cannot stamp out resistance to apartheid. Illegal strikes and demonstrations are growing in strength; and the ANC continues to work underground.

U.S. Corporate Involvement in Apartheid

U.S.-based transnational corporations have greatly aided South African industrialization. U.S. involvement in South Africa has grown especially rapidly in the last ten years, as apartheid has been more and more strictly enforced. Direct U.S. investment more than doubled between 1969 and 1975, to reach $1.6 billion in 1975, or 40 per cent of all U.S. investment in Africa. If indirect investment--channelled through Europe and Canada--were included, this figure would be much higher. More than 300 U.S. companies are involved. But 13 of them--including seven of the ten largest in America--account for three quarters of all U.S. investment in South Africa, and Harvard has holdings in 12 of those 13. In other words, U.S. investments in South Africa are controlled by a very few firms, and Harvard owns large shares in most of them.

U.S. firms have invested heavily in manufacturing in South Africa, a sector they have avoided elsewhere in Africa. Seventy-five per cent of U.S. investment in African manufacturing is concentrated in South Africa. Under pressure from the white minority regime, U.S. firms have introduced advanced technologies and helped set up basic industry in South Africa, although they refuse to do the same elsewhere on the continent. Often they work in partnership with South African state and private companies.

U.S. firms frequently claim they are a force for progress in South Africa, pointing to wages that are slightly higher than the country's average--at or just above the PDL. But in their search for higher profits, these companies ask only that South African wages be lower than wages they would have to pay Americans--and their black workers earn, on average, less than a quarter of their U.S. counterparts' wages. In addition, the companies cite average pay, glossing over big differences between a handful of relatively well-paid Africans and the other black workers. Most U.S. companies do not recognize unions for their African employees. Finally, no matter what their intentions, U.S. firms cannot provide the basic rights denied South African blacks. But they do provide the technological and financial base that the apartheid regime desperately needs. The South African operations of a few companies in which Harvard has major holdings illustrate this support for apartheid.

Auto industry: General Motors (G.M.), Ford and Chrysler together control almost a third of the South African motor vehicle market, and provide cars and trucks to the South African government, police and army. The regime has required that 66 per cent, by weight, of all cars made in South Africa come from local plants. To meet this requirement, U.S. auto firms have established extensive production facilities in South Africa. Now, they even export parts from those plants to Europe and America.

In 1976, G.M. South Africa employed 3573 workers, one-fifth African, half Coloured, the rest white. Only 61 Africans employed by G.M. earned over $1.07 an hour that year. Most of the other Africans earned less. All but 57 Coloureds earned less than $1.46 an hour. The average monthly wage for whites was well over twice the average wage for blacks.

Harvard owns $30 million of G.M. stocks and bonds.

In 1972, Ford South Africa had 4000 workers, 65 per cent Coloured and 8 per cent African. It paid most of its black employees less than 84 cents an hour.

Harvard owns $56 million of Ford's bonds.

Oil: An oil boycott would seriously damage the South African minority regime as the country has no known oil deposits. U.S. firms have played an important role in enabling this regime to overcome this vulnerability, by helping it set up plants to extract oil from coal, and look for oil. Most important, U.S. firms have invested heavily in South African oil refineries--more than doubling their investments in recent years--giving South Africa a hold over other countries in the region, which depend on South Africa for refined oil.

One Mobil subsidiary in South Africa runs a refinery near Durban; another handles marketing. Mobil recently bought 32.9 per cent of a lubricating-oil refinery. It is prospecting for off-shore oil. There is evidence that Mobil South Africa has exported oil to Southern Rhodesia (Zimbabwe), breaking U.N. sanctions that are binding on U.S. companies.

The average African monthly wage at Mobil's Durban refinery was $137 without Christmas bonus in 1972. Between 1962 and 1972. Mobil trained 19 Africans (mostly in heavy-vehicle driving) and 992 whites.

Harvard holds $53 million in Mobil stocks and bonds.

Caltex is owned jointly by Texaco and Standard Oil of California. It operates a refinery in Cape Town, and markets petroleum products throughout the country. It also owns shares in two Southern Rhodesian marketing and refining companies. Caltex employs about 2000 workers in South Africa, about a third of them black. The average African wage in 1972 was $139 a month; the minimum was $111.

Harvard owns $22 million in Standard's stocks and bonds, and $11 million of Texaco's.

Electricity and Electronics: Like the auto companies, U.S. electrical and electronics companies have established major plants in South Africa. They produce and market sophisticated equipment, much of it used by the regime's utilities, military forces and police. For example, IBM computers are used by the South African army and the regime's Atomic Energy Board. The West German company. AEG-Telefunken--of which General Electric (G.E.) owns about 15 per cent--supplied the regime's Simonstown military tracking system with sophisticated electronic equipment. ITT also provided equipment and recruited and trained engineers for the base.

G.E. employed almost 2000 workers in South Africa in 1976, 1306 of them black. More than 1240 held unsalaries posts. Only one was at the "professional and management" level, compared to 262 whites. In 1972, blacks at G.E. earned between $73 and $213 a month, with most at the lower rates. ITT's main subsidiary paid its African employees an average of $125 a month in 1972, and whites, $546.

Harvard owns $6.3 million in ITT shares, and $15 million in G.E. stocks and bonds.

Banks: U.S. banks and financiers play a key role in furthering investment in South Africa, providing advice and capital for U.S. corporations there. Recently, U.S. finance companies have organized huge loans to the South African regime. The Rockefeller banks, Chase Manhattan and Citicorp have been most active in this area; but Manufacturers Hanover, Morgan Guaranty and Kidder Peabody also play an important role. Between 1974 and 1976, Manufacturers Hanover participated in at least $730 million in loans to the South African regime and state-owned corporations. Morgan Guaranty participated in at least $490 million in loans to the regime and its agencies. Kidder Peabody managed at least $130 million in South African bonds. None of these loans were made directly to the South African army; but the banks admit they do not control the ultimate direction of the money. The loans go to develop a white-controlled economy, and give major U.S. banks a long-term stake in apartheid.

U.S. loans to South Africa have helped the South African regime counteract the outflow of investment capital since last June. For this reason, pressured by public interest groups, several banks have agreed to make no new loans to South Africa. Manufacturers Hanover and Morgan Guaranty have also been under pressure. For example, in July the furriers union in New York withdrew over $10 million from Manufacturers Hanover because it continued lending to South Africa.

Harvard owns $600,000 worth of stock in Manufacturers Hanover, and the same amount in Morgan Guaranty.

***

There is not enough space here to deal with the activities in South Africa of all companies linked with Harvard, but three more may briefly be mentioned. Union Carbide was long noted for breaking mandatory sanctions on Southern Rhodesia by importing chrome from there. The U.S. government finally made this illegal in 1976, but Union Carbide now refines chrome in South Africa and ships it to the U.S. from there. Where that plant's ore originates is problematical. AMAX has invested in one of the largest Namibian mining companies, Tsumeb, together with other American and South African companies, Falconbridge, a Canadian subsidiary of Superior Oil, owns the Oamites copper mine together with a South African government corporation. Black miners in Namibia are paid even less than miners in South Africa. Fur-thermore, investments there break the mandatory boycott imposed because of South Africa's continued colonization of the country.

Harvard owns $11 million Union Carbide stock, $11 million in AMAX stock, and $1 million in Superior Oil stock.

U.S. companies go to South Africa largely in search of low wages. It is utopian to think they will willingly oppose a system which, like apartheid, has given them profit at a rate of 16-20 per cent--almost twice the average rate of profit in the U.S. Realizing this, black organizations have long called for a total boycott of South Africa, Zimbabwe and Namibia. The wages foreign investors pay South African blacks are so low, and the aid they give the apartheid regimes so great, that southern Africans fighting for freedom prefer to forego the small benefits of the firms' presence. Steve Biko, the South African leader who died recently in prison, called for the with-drawal of U.S. firms; the ANC, South African student organizations and independent African trade unions, as well as the Namibian and Zimbabwean liberation movements, also call for a boycott.

In spite of these appeals, the Harvard Corporation continues to invest in companies doing business in South Africa. And unless members of this community protest the Corporation's investment decisions, it will listen, as so often before, to the call of profits rather than conscience.

Neva L. Seidman '78, an Economics concentrator living in Adams House, is co-author of U.S. Multinationals in Southern Africa [Lawrence Hill, 1977] and is a consultant to the U.N. Special Committee on Apartheid.

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