Faculty to vote on non-binding Corporation plan
By Earl C. Yen
The MIT faculty will vote Dec. 18 on a resolution that calls on the MIT Corporation to fully divest its holdings in US firms operating in South Africa.
The faculty vote on MIT's South African-related investments is not binding on the MIT Corporation, which controls the Institute's investment portfolio.
Gretchen Kalonji, professor in the Department of Materials Science and Engineering, proposed divestiture of MIT's investments at the Nov. 20 faculty meeting.
"Divestment is a valuable tool for putting pressure on the South African regime," Kalonji said. "It is immoral to profit from a system of institutionalized racism. Divestment is an effective action, and it has been overwhelmingly called for by black South Africans."
"South Africa is in a state of crisis, and we could help shorten the conflict and save lives by visible and important action, which divestment would be," explained Professor Willard R. Johnson of the Department of Political Science.
Divestment is already affecting the South African economy, Johnson asserted. The Investor Responsibility Research Center, an organization funded by<>
major corporations to research social responsibility issues, reports that 43 American companies have pulled out of South Africa as of May 1985, Johnson said.
Kalonji's proposal calls on the Corporation to divest itself of stock in companies doing business in or lending to South Africa by May 1, 1986. She suggested that divestment by MIT could influence other colleges to reconsider their South African-related investments.
"MIT has a good deal of institutional prestige," she asserted. "Because of our prominence as a scientific and technological university, divestment would encourage other institutions to take such actions."
US companies that withdraw from South Africa will probably sell their operations to local South African businesses, not to other multinational firms, Johnson said. The Pretoria regime will lose its highly-valued access to American equipment, managerial expertise and financial markets as a result.
"South Africa wants to maintain ties to American busineses, but local ownership [of divested businesses] would not provide those ties," Johnson said. He predicted that the resolution before the faculty will pass.
Kalonji also said there is a good chance that the faculty will approve the resolution. The lack of attendance at faculty meetings, however, makes it difficult to predict how the faculty will vote on the resolution, she explained. "I hope there will be considerable discussion," she added.
Gray opposes divestment
President Paul E. Gray '54 said he is opposed to apartheid, but he does not believe divestment is an effective tactic for ending apartheid. "Opposing divestment doesn't mean favoring apartheid," he said.
There are two viewpoints on how US companies operating in South Africa affect the apartheid system, Gray noted. He explained some people feel that firms profit unreasonably by doing business in a country that imposes rigid racial segregation.
Other people believe that US companies contribute to the advancement of blacks in the workplace, he continued.
"The companies I have studied, the ones I am familiar with, are contributing to the weakening of apartheid," Gray said. "The US companies have promoted blacks [in South Africa], and they have encouraged black performance. The companies are a positive force, and telling them to get out is just the wrong sign." But he cautioned that it is difficult to determine how the presence of all the US companies affects apartheid.
Gray said he would be "astonished" if the proposal passed by an overwhelming majority. "I can't imagine that the faculty would come down so one-sided on such a complex issue for this institution," Gray indicated.
Faculty to vote on pension fund
The resolution also urges the Teachers Insurance Annuity Association College Retirement Activities Fund (TIAA-CRAF) to sell its stocks in companies hiring workers in South Africa.
The TIAA-CRAF is the largest private pension fund in the world, according to Johnson. The fund has approximately $8 billion invested in companies hiring workers in South Africa, he said. MIT offers the pension as an optional, supplementary pension fund to its faculty members, he added.
The TIAA may decide to divest its South African-related stocks early next year, Johnson said. He explained that the value of the association's South African holdings surpasses the amount that has been divested by all other US organizations combined. It is important for the MIT faculty to express its opposition to the fund's South African-related investments, he added.
Faculty members may move to vote separately on the MIT divestment and the retirement fund divestment, Kalonji said.
Corporation reviews policy
The MIT Corporation's Executive Committee, which is ultimately responsible for MIT's investments, has been conducting a review of the Institute's policy on South African-related holdings since September, according to Gray, who serves on the committee.
The Executive Committee has asked the Corporation Investment Committee and the Advisory Committee on Shareholder Responsibility (ACSR) to look into issues surrounding investments in companies doing business in South Africa, said Walter L. Milne, assistant to the Chairman of the Corporation and secretary of the ACSR.
The Executive Committee will discuss the South African investment review at its monthly meetings in January and February, Gray said.
"Based on activities at MIT and elsewhere, the Executive Committee felt that the issue of South Africa would be of some interest to the MIT community this year," Gray explained. "The committee felt it necessary to be brought up-to-date on the [divestment] issue in order to be prepared for questions about MIT's policy."
Gray pointed out, however, that the fact that the committee is reviewing the policy does not mean that it feels a change in policy is necessary.
Student group supports proposal
The part of the resolution before the faculty that calls on MIT to divest resembles a petition that the MIT Coalition Against Apartheid has circulated since mid-November, according to Gretchen Ritter G, a member of the coalition.
"It's a great idea, and it's long overdue," Ritter said of the resolution. She criticized the administration for avoiding immediate action on the divestment issue.
"The adminstration would like divestment to go through all the proper channels," she said. "They would like to have divestment happen on their own terms."
"Clearly, the adminstration has understood that ... divestment is coming to MIT, and the process of understanding what actions are needed to divest is well under way," Ritter explained. The proposed six month period for MIT to divest "is quite a reasonable amount of time to divest $150 million. I have difficulty with the belief that MIT needs more time."
Divestment will cause corporations to reconsider their South African operations, Ritter claimed. "Getting companies to change their direction is the whole point," she said.
Ritter, however, praised Gray for his opennes in dealing with the apartheid issue. "I'm quite pleased with his attendance [at Apartheid Colloquium] events and his willingness to engage in public discussion," she said.