Namibia: Corporate Investment in Oppression

NAMIBIA, a de facto province of South Africa, is similar to South Africa in the extreme inequality they both enforce between blacks and whites. Questions of international investment in the occupied territory, however, assume a different character from issues of investment in South Africa because of charges that South Africa's control over Namibia is illegal.

Harvard's newly-formed Advisory Committee on Shareholder Responsibility (ACSR) decided two weeks ago to endorse a shareholder resolution calling for the withdrawal of Phillips Petroleum from Namibia. Several ACSR members stated that the official illegality of South Africa's rule was the crucial factor in their decision.

The Harvard Corporation followed the ACSR's lead and also voted against Phillip's management.

In the final tally of Phillips shareholders, 91 per cent voted with management, 4.5 per cent endorsed the resolution and 4.5 per cent abstained. Despite appearances, 4.5 represents a substantial percentage for proxy resolutions, given that management usually owns the majority of stock. (98 per cent of the votes supported Gulf management in last year's Angola disclosure resolution, for example.) These figures are telling evidence that restrictions on legal grounds may carry more weight than any appeal to moral obligations.

SOUTH AFRICA acquired control of Namibia in 1919, under a mandate of the League of Nations, with the condition that the government promote the well-being and social progress of the inhabitants. But in 1964, the United Nations, successor to the League of Nations, charged that South Africa failed to carry out this condition and deprived inhabitants of basic human rights and freedoms.

The U.N. terminated South Africa's mandate in 1966, and in 1970 the Security Council requested all member nations to refrain from any relationship with South Africa which implied recognition of its control over Namibia.

The Security Council also requested that the International Court of Justice rule on South Africa's mandate. The Court advised that U.N. members had the following duties: 1) to recognize the "illegality of South Africa's presence in Namibia." 2) to recognize the "invalidity of its acts on behalf of or concerning Namibia," and 3) "to refrain from any acts and in particular any dealings with the Government of South Africa a) implying recognition of the legality of, or b) lending support or assistance to, such presence and administration."

In May 1970, former U.N. ambassador Charles Yost announced that the U.S. would officially discourage investment by American business in Namibia, would cut off Export-Import Bank guarantees and would not protect investments made since 1966. But none of the measures the U.S. government has taken to prevent investment have been effective. Many corporations--including Phillips Petroleum, Continental Oil, U.S. Steel and Bethlehem Steel--have decided to invest despite official policy.

Whether the U.S. would maintain sanctions under pressure from business in uncertain. Evidence to the contrary lies in the fact that the United States ended support for U.N.-imposed sanctions on importation of chrome from Rhodesia. This action, which the U.S. called a "strategic necessity," was a result of massive lobbying by the chrome companies.

Namibia sticks out as a clear-cut case of how weak the U.N. is left when its more powerful members do not throw their weight behind U.N. decisions. France and England would not support Namibia and endanger important trade ties with South Africa. The USSR and the U.S. would not acquire any political or economic benefits from a Namibian confrontation. An effort for Namibia would amount to a "moral expedition," said an observer who was quoted in The Wall Street Journal.

Although South Africa is a member of the U.N., it does not recognize U.N., authority as the successor to the League of Nations. In defiance of the U.N., South Africa passed two laws extending formal apartheid measures to Namibians. The Development of Self-Government for Native Nations in South-West Africa Act of 1968 divided the worst desert lands into tribal areas called Bantustans, which were to be kept under close South African control. Then, in 1969, the South-West African Affairs Act brought Namibia completely under South African administration by making it a fifth province.

NAMIBIA lies directly to the northwest of South Africa on the Atlantic coast. Though the country is the size of France and Britain combined, the Kalahari and Namib deserts cover most of the land. Of a population estimated between 610,000 and 750,000, 88 per cent is black or coloured and the remaining 12 per cent, white.

The white sector in Namibia currently depends on Africans for cheap labor. Fifty-five to sixty per cent of the blacks are forced to live in the arid Bantustans of the northern frontier--which are too barren to support the population--while a tax on the Africans drives the men to work in the white "police zone." Black Africans are forbidden by law to fill skilled jobs.

Until last year, the only way to leave the reserve was through a contract with the South-West African Labor Association (SWANLA). SWANLA classified each man according to physical fitness for a) mines and industries, b) agriculture and c) livestock breeding. Men were then shipped, on order, to workers' compounds hundreds of miles from the reserves where their families were forced to remain.

Labor contracts ranged from 12 to 30 months. It was a criminal offense to break a contract, to leave designated compounds, organize unions, or strike. Prior to 1966, the South African government informed the World Court that minimum wages were from $8.50 to $15.40 a month.

In December 1971, the Namibians protested the contract-labor system in a massive strike, and the South African government was forced to manufacture some reforms. SWANLA was abolished, its duties delegated to decentralized labor bureaus in the reserves; Africans were given the right to terminate contracts, to look for new jobs (within time limits set by pass regulations), and to make contract changes (subject to permission of the labor board).

Demands for permission to live with families, equal pay for equal work, employment security and rights to live in urban areas were denied. John Kane-Berman of the South African Institute for Race Relations remarked sadly, "The worst features of the old system are still there: the compounds, the low wages and the separation of families."

THE WHITE sector of Namibia has enjoyed a boon economy since World War II due to increasing numbers of foreign corporations investing in mineral extraction. Meanwhile, the South African government has given no consideration to reserving Namibia's resources.

The U.N. stated in 1964, "The Territory's mineral resources are being rapidly exploited by foreign companies. The two mining operations which are at present yielding the most fruitful returns will probably be worked out within 25 years. Thus the country runs the risk of finding itself in the not too distant future without the raw materials that now provide the main support for the money economy."

Four U.S. corporations investing in Namibia are facing shareholder proxy resolutions this year. Two companies have maintained large operations in Namibia since 1946, and two are considering new investments.

American Metal Climax Inc. and the Newmont Mining Corporation each own 29 per cent of the Tsumeb Corporation. Tsumeb is Namibia's major base-mineral producer and largest employer, with 5000 black employees included on its payroll. Proxy resolutions call for both corporations to withdraw. (Another resolution asks Newmont, which manages the mines, to establish equal opportunity in its worldwide operations.)

The Tsumeb mines have voluntarily used the entire system of contract-labor and skilled jobs reserved for whites since the mine began operating in 1947. No law forced this practice until the Mines and Works Mineral Ordinance No. 20 of 1968. Tsumeb's workers were among the first to strike in 1971.

In reference to the food and housing Tsumeb provides in the workers' compounds, "They are the equal of any similar community of Southern Africa," Newmont states.

R.J. Ratledge, Tsumeb's general manager, stated in March 1971 that the average black wage was $28 per month with a minimum of 70 cents per day ($21 per month). The lowest paid white worker, who supervised laborers and handled explosives, received starting wages of $444 per month.

As a result of the strike, Tsumeb drew up a new contract which spells out benefits, overtime and hours of work for Africans. The company raised the minimum wage to 93 cents for surface work and $1.03 for those underground.

Though the Mines Ordinance limits the types of jobs blacks can take, it does not make any statement about their level of wages. Tsumeb claims that the present level of wages is adequate because wages are supplemented by "free" food and medical care.

From 1946 to 1970, Tsumeb paid South Africa approximately $140 million in taxes. Ratledge claims that the building of the Capetown to Luanda Highway (a strategic supply route to the Portuguese in their fight against the Angolan liberation movement and an element in South Africa's defense of its northwestern boundaries) was financed with Tsumeb's contribution.

In response to the U.N. and World Court decisions, American Metal stated, "All these are political claims in the international arena and are well beyond the scope of any commercial corporation and normal business operation." Newmont stated that it complies with the law of authorities in de facto control or all countries where it does business.

THOUGH Harvard is not involved in Newmont or American Metal, it does own stock in Phillips Petroleum and Continental Oil. Shareholder resolutions ask these two companies to cease all onshore and offshore explorations in Namibia.

Phillips and Continental each own 37.5 per cent in a consortium made October 1972 to explore a sedimentary basin off Namibia's shore. The lease concession covers nine years and entitles the South African government to a certain percentage of oil production and royalty fees. South African exploration represented less than 1 per cent of the total exploration budget for Phillips in 1972.

Phillips sees its agreement as having little effect on the situation in Namibia. No major extraction could possibly take place until 1980. Phillips claims that there are a limited number of sedimentary basins and that another company will pick the lease up. Phillips only hires a small number of technical personnel, no blacks.

Phillips representatives maintain that the company is not in conflict with U.S. policy because the U.S. does not prohibit but merely discourages investment in Namibia. The effects of U.S. restraints on these companies are minimal.

Advocacy groups point out that the concession is illegal and that the possible participation of the South African government in production would be illegal. They claim that though the belief that other companies will take the place of Phillips and Continental is realistic, it is not responsive to the strong moral concerns of this case.

Investment by these companies provides incentives for the continued South African presence. The continuation of corporate activity is contrary to the stated desire of representatives of the Namibian people, who feel that corporations are depleting their natural resources.

Furthermore, advocates believe that the terms in which corporations discuss their positions are misleading. To discuss minor improvements in social conditions and the lack of positive harm being done obscures these companies' support for white minority rule, according to Timothy Smith, an associate of the Interfaith Committee on Social Responsibility in Investment.

So far, clear-cut issues of international law have enabled Harvard to avoid questions of political legitimacy and the morality of exploiting blacks, even when apartheid or colonial governments decree such exploitation is "legal." Harvard's vote this week on Exxon operations in Angola may reveal more clearly whether Harvard's idea of "shareholder responsibility" encompasses moral responsibility, as well