Corporate Squeeze

More than 350 American corporations and U.S. banks hold investments and loans in South Africa. Activist stockholders and their supporters have tried, generally unsuccessfully, to persuade such firms to quit doing business there. Where that has failed, the movement has pushed a tactic termed divestment. This involves pressuring public and private institutions to sell their stock in firms that invest in South Africa.

From South Africa's viewpoint, U.S. holdings loom large. American companies control nearly 70% of the nation's computer industry and one-half of its petroleum business. Yet from the U.S. perspective, the activity is relatively small. Although bank loans amount to $3.88 billion and stock holdings in South African companies to $7.6 billion, direct investment of U.S. corporations was only $2.3 billion at the end of last year. That is a mere 1% of all U.S. corporate investment abroad.

Between 1976 and 1982, 36 U.S. universities removed more than $143 million in investments from firms dealing with South Africa. At least 13 cities, including New York, Philadelphia, Boston and Washington, have passed ordinances restricting pension-fund investments in companies operating there. So have five states: Connecticut, Maryland, Massachusetts, Michigan and Nebraska.

Corporate investors in South Africa include most of the U.S. blue-chip giants. Among those singled out by protesters: Citicorp, which has in the past lent money to the Pretoria government; Mobil Oil, which has invested about $426 million and sells its products to the government's procurement office; and IBM, whose computers are used by the country's bureaucracy. Business spokesmen argue that U.S. firms provide jobs for blacks in South Africa, work quietly to break down racial barriers and would be replaced by companies with a lower social consciousness if they pulled out. Indeed, many U.S. corporations, including General Motors, IBM and Mobil, have helped foster economic equity in South Africa by adopting a set of guidelines that include maintaining an integrated workplace, adhering to nondiscriminatory pay scales and increasing the number of nonwhites in management positions.