Bok Letter Sweeps South Africa Issue

The following is President Derek C. Bok's statement on Harvard's South Africa-related policy released yesterday.

Every thoughtful person has been gripped by the recent events in South Africa. The widespread violence, the mass arrests following the declaration of a state of emergency, and the stubborn refusal of the Botha government to extend full political rights to the black South African majority have deeply troubled individuals and institutions everywhere and made them consider how they should respond to such cruelty and repression. Here at Harvard, within the next two weeks, the Corporation Committee on Shareholder Responsibility will issue a progress report and reply to several recommendations from the Advisory Committee on Shareholder Responsibility will issue a progress report and reply to several recommendations from the Advisory Committee on Shareholder Responsibility suggesting further steps for Harvard to take as a responsible investor. In advance of this statement, I would like to provide a more comprehensive account of an appropriate, positive response by this University to the vexing problems of South Africa. The paragraphs that follow set forth actions that Harvard can carry out, as well as steps that individuals can take, to oppose apartheid and assist those who suffer under its yoke.

If effective sanctions are to be imposed on South Africa, the proper agency to do so is the United States government. In principle, democratic governments are more appropriate agencies to judge the wisdom of international sanctions than a host of private institutions acting individually. Pragmatically, only Washington has the power to impose effective sanctions on another nation (and even that is very difficult). Accordingly, those who believe in sanctions can best proceed by addressing their arguments to Congress and the Executive Branch.

Although universities do not take institutional positions on political questions that do not affect them directly, I have worked as a private citizen since last spring in support of sanctions legislation. Specifically, I testified last May before a Senate committee in behalf of the strongest set of sanctions considered by that body (sanctions that were consistent with positions taken by the University as a shareholder toward companies in which Harvard holds stock). In July, I drafted a letter supporting sanctions that was signed by 19 other university presidents and sent to Senate leaders. Eventually, after both Houses of Congress were on the verge of enacting a compromise bill, President Reagan signed an Executive Order announcing a milder set of penalties. I believe that the enactment of legislation with stronger sanctions would provide a more powerful expression of national opposition to apartheid, and I stand ready to continue working in appropriate ways to help bring about that result. Those who have a similar point of view may wish to do the same.

As a matter of policy, the University will not invest in predominantly South African companies--i.e., companies with more than 50 percent of their operations in South Africa. Harvard holds stock in American companies such as General Motors, Coca Cola, IBM, Exxon, and others that have operations in South Africa. The vast majority of these firms, however, have offices or branches in that country that account for less than one percent of their business.

As a shareholder, Harvard should try to persuade companies in which it owns stock to do more to play a positive role in the face of apartheid. The opportunities here are significant, since the business sector in South Africa has tended in recent years to be much more progressive than the government on issues involving apartheid. In fact, within the white community, business has become one of the most influential forces calling for major reforms. By voting shares and by communicating with management, the University can urge firms in its portfolio not only to improve the conditions of their nonwhite workers by implementing the Sullivan principles but also to express their opposition to influx control laws and other apartheid measures. It can also urge companies to leave South Africa it their continued presence promises to do more harm than good.

Harvard has done all these things and will continue to do so. Within the past year, we have been in active dialogue with a number of companies in our portfolio. Sixteen firms with which we have corresponded have announced plans to adhere to the Sullivan principles. Others have announced specific steps to improve their Sullivan performance rating and improve the conditions of their black employees. Seven firms with which we were actively corresponding have either sold their South African operations or announced their intention to do so. Since our last progress report, two firms manifested sufficient intransigence in their communications with the University that we decided to sell their stock in accordance with a long established policy.

During the past year, the University has also written to all portfolio companies with operations in South Africa urging them to oppose the influx control laws, which are central to the apartheid system. The replies of these companies reveal that most are now taking basic steps in this area, either by aiding their black employees to overcome the obstacles that apartheid raises against their choice of where to live and work, by supporting organizations working against the influx control laws, or by meeting directly with officials of the South African government to urge repeal of the laws. We continue to urge companies to be active opponents of this flagrant from of injustice and plan to intensify our efforts in this regard during the coming year.

Finally, during the past year, Harvard has written to all companies in the portfolio with operations in South Africa calling on them not to support apartheid directly by the sale of goods or services that are of significant value to the South African government. We have now developed a formal University policy on this issue, based in part on company responses to our inquiries and in part on recommendations recently prepared by the Advisory Committee on Shareholder Responsibility. We will shortly announce policy changes consistent with our belief that American companies should not be engaged in supplying goods of strategic significance in the administration of apartheid.

Education

However long the process takes and however peacefully or violently it develops, blacks in South Africa are bound to achieve equality and destroy the apartheid system. When that time comes, it is important that they be prepared to take full advantage of their opportunity for self-determination. Critical needs will exist for able men and women with advanced training. As a result, Harvard and other American universities have a chance to make a long-term contribution by helping to compensate for the lack of educational opportunities available to blacks under the apartheid regime.

Toward this end, the University has made funds available to offer scholarships to black South African students. Our South Africa Fellowship program has been in existence since 1979. This year the program has been expanded to five graduate students, who will study at the School of Public Health and the Graduate School of Education. By now, the Fellowship program has provided scholarships to over 20 South African students. In addition, nine black South African journalists have studied at Harvard over the years under our Nieman program. The Business School has also enrolled black South Africans in its middle management programs and has plans to attract more in the future. In the coming year, we will be exploring new initiatives for contributing to the educational needs of black South Africans in consultation with educators in that country.

On the national level, Harvard helped to initiate the South African Education Program (SAEP) in 1979, and I have chaired that program's National Council since its inception. At an annual cost of $6 million, the Program funds approximately 85 black students each year chosen by a committee in South Africa chaired by Bishop Tutu. These students study in colleges and universities throughout the United States. They receive full tuition and fees, room and board, transportation and expenses, and mechanisms have already been established to help them find suitable employment on their return to South Africa. More than 400 students have now come to America to study under this program.

Individual Contributions

Students, faculty and staff at Harvard can participate as individuals in the effort to overcome apartheid. As I indicated earlier, each of us can work for appropriate measures in Washington; the campaign for sanctions legislation affords an apt illustration. As suggested by Amnesty International, we can identify and publicize the plight of political prisoners and hence let the South African government know that the welfare of such prisoners is a matter of international concern. We can contribute money for the defense of South Africans whose human rights have been violated. There are even opportunities to go to South Africa to contribute in some meaningful way. Undergraduates may be able tutor black high school graduates to prepare to enter one of the leading South African universities. Medical students may be able to spend a period of time giving health services to black communities that are desperately in need. Law students may be able to work for legal services offices helping them defend those in jeopardy under apartheid legislation. A few students have already gone to South Africa in these capacities. We plan to take steps to explore further opportunities of this kind and disseminate information about them.

Several of the educational steps just mentioned require funds--whether to bring non-whites to Harvard for study or to help individuals from Harvard who wish to go to South Africa. Accordingly, the University will guarantee a total of up to $1 million, to be spent over the next three years to finance such activities. I will also establish a committee of knowledgable persons at Harvard to consider how these funds can be used to the greatest effect.

By guaranteeing a substantial sum for these purposes, I recognize that I am taking an unusual step. In doing so, I am moved not only by recognition of the fact that the problems of South Africa are serious and represent matters of deep concern to many members of this community. I have also taken this initiative because I consider it so important educationally to emphasize the need to respond to social problems affirmatively instead of simply trying to cut all one's ties with the situation.

I realize full well that the actions we take at Harvard will have but a limited impact. Still, every South African black who receives an educational experience that would not otherwise be available has an opportunity to contribute something of value to his or her people. Every black worker whose working conditions improve through company policies we have helped to change is a human life made better. Every service that Americans can render in South Africa either to defend the victims of apartheid or to prepare students for higher education is a step that helps pave the way for change. Such efforts may not make an immediate visible dent on the apartheid system, but they are still worth doing. Together with similar steps by other concerned organizations, they may help to hasten the day of human dignity and political rights for all people in South Africa.

In contrast with these affirmative measures, merely selling Harvard's stock in all American companies doing business in South Africa would be a misguided response that we would eventually regret. In particular cases, of course, we may disagree so deeply with a firm's behavior that we no longer wish to be associated with it through stock ownership. As previously mentioned, we have recently sold the stock of two firms that have been intransigent in responding to our inquiries about their employment practices. (We sold the shares of another firm earlier this year on similar grounds.) We are also about to respond to a recommendation by Harvard's Advisory Committee on Shareholder Responsibility that may lead to the sale of stock of firms selling substantial quantities of goods used in the administration of apartheid. But selling selected stocks in particular cases is one thing and blanket divestment is quite another.

Total divestment is unwise, first of all, because it is ineffective. The aim of divestment is to force American companies to leave South Africa in the hope that their departure will administer a shock to the economy that will force the Botha regime to leave office or dismantle apartheid. This strategy breaks down for several reasons. To begin with, in the unlikely event that American firms did withdraw as a result of divestment, the result is not likely to cause apartheid to disappear. Instead, the departure of these firms might simply cause black unemployment without forcing the Afrikaner regime to change its policies. More likely, local interests would buy up the American facilities at bargain proces, and life would go on much as before.

A greater weakness in the strategy of divestment, however, is its assumption that selling stock will somehow force companies to leave. In fact, divestment merely transfers shares from one stockholder to another without bringing any effective economic force to bear on management. Thus, it Harvard had sold its stock at any point in the last 10 years, as we were repeatedly asked to do, apartheid would still remain intact. The only difference would be that the University would have lost the influence we currently possess to try to persuade companies to oppose apartheid and improve the lot of their black employees. In the last analysis, companies may leave South Africa because of the instability produced by the protests of blacks in that country. They are not likely to be moved by the transfer of shares out of the hands of institutions that, in any event, hold less than one percent of the total amount of stock outstanding in American corporations.

Selling stock would also be inappropriate for a university on other grounds. Institutions of learning depend on preserving the freedom of their professors and students to teach and learn as they think best. Over the years, we have gradually persuaded outside groups, including corporations, not to try to use financial leverage to impose their views upon our campuses. We cannot expect these organizations to continue exercising such restraint if we insist on resorting to boycotts in an effort to impose our will on them. Once powerful groups in the society feel free to use economic sanctions to force their opinions on others, universities are bound to lose heavily in the process.

Despite these arguments, some will still argue that it is simply immoral for the university to "invest in apartheid" and reap the benefits of such an unjust regime through the dividends received from these companies. In fact, the vast majority of the firms in our portfolio do less than one percent of their total business in South Africa. Any profits that are repatriated from from that country and find their way into company dividends make up only a tiny portion of the funds we receive from our equity holdings. Those who feel that even this amount is enough to condemn these stocks have difficult questions to answer. Do they object to students who take jobs with IBM, Ford, Exxon and other companies who do business in South Africa and take money from these firms in the form of wages rather than dividends? Do they object to buying Coca Cola, Kellogg's Corn Flakes and other products of such companies, thus contributing to profits that may help finance South African operations? Do they object to investing in the 6,000 firms that help South Africa by selling them needed products or buying their exports? What about buying consumer products made in South Africa, or products with components made in South Africa, thus contributing to the apartheid government's economy and its trade balances? Thus far, I have heard no discussion of these questions. Without such discussion, I can only conclude that no coherent moral principle has been advanced, let alone a principle we are willing to apply consistently and obey in our own lives.

My main objection to selling stock, however, is that it is a costly, negative and ineffective way of responding to the sufferings and wrongs of South Africa. I recognize that the massive injustices of the apartheid system create a constant temptation to walk away from South Africa with some angry gesture of defiance. But if there is a moral principle that arises from holding stock in companies doing business in South Africa, it is not that we should wash our hands of the matter by simply selling our shares to someone else. Walking away will not shorten the life of apartheid by a single minute or lessen the burdens of a single black South African. For those who truly care about the injustices of apartheid, the right course is to look for positive steps that a university can take to help black South Africans work toward a better future marked by human dignity and political freedom. I intend to pursue this course in the coming months and to increase Harvard University's efforts in the direction.

*Allis Chalmers ($2 million) and Tokheim ($.8 million). The University sold its shares of Baker International (about $1 million) on the same grounds last February. HARVARD DIVESTMENTS Corporation  Amount  Date of Divestment Baker International Co.  $1 million  February 1985 Allis Chalmers  $2 million  August 1985 Tokheim, Inc.  $.8 million  September 1985