While it is true that Black South Africans were undergoing through immense suffering as a result of the Apartheid rule, it was important for Chevron and Caltex not only to consider the position of South African market as a lucrative venture but also the humanitarian cost of doing business in the country. First the companies ought to have assessed whether their continued operation in South Africa was fueling the oppression of black majority and what would be the social economic cost of exiting the market to the country. On weighing the merits and demerits, as part of the corporate social responsibility I would vote against the first resolution to terminate the business operation in the country. By virtue of the company’s vast investment in the country and the large influence it had in both the political and economical realms, the benefits accruing from its operations outweighed the benefits that would come with its closure to the African native community. First and foremost, the corporations resolve to implement the principles of Sullivan was a clear demonstration of its commitment to improve both the living and the working conditions of the black employees. This meant that its continuous operations did not amount to endorsement of the apartheid policies.
Secondly a study carried out by the South African University of Port Elizabeth clearly came in support of the corporation’s resolution to stay put in that its operations advanced the welfare of the blacks. Within its ranks, 40% of its black employees had ascended to previously white held jobs with 29 out of the 742 black workers holding top four of the white collar positions. The equal opportunity policy was thus largely beneficial to the South African black employees and a clear departure from the archaic apartheid policies of segregations. Again it was clear that an exit of the corporation would spell doom to the wellbeing to South African economy as a whole and hence precipitate the expected outcome of influencing the policies of the government in support of the majority Africans.
Another reason why the move would be counter productive is due to the influential position it held in the economy. Its exit would probably cause anxiety in other foreign owned firms as a result of loss in confidence with the economy which would trigger a wave of departure from the country. This would be detrimental to the economic welfare of South Africans placing a heavier toll on the black population. The resultant would be massive losses of jobs and the subsequent decline of their welfare would definitely out weigh the benefits of closing shop and cause unnecessary suffering to the population. Looking at the unfair structure and the glaring disparity in the distribution of the country, it seemed outright that any economic shock in the country as result of sudden vacuum in foreign investment could have a clear catastrophic repercussion on the African majority.
Due to the influence of foreign firms, the incomes African industrial workers had drastically improved by 118% between the years 1970 to 1975. While per capita income had risen by 30% between the year 1975 to 1980 (Case Study 4: A South African Investment n.d.).The disparity between the incomes of the whites versus the black employees was also dramatically narrowing. This further emphasizes the importance of foreign investment to amongst the South African black populace. An exit of this foreign investment would bring down the economic growth from 6% to 3% sending away 60000 workers home jobless. This would eventually wipe out the already accrued benefits to the black South Africans.
Sale to the police and military
For various reasons, I would still oppose the resolution not to sell to the military or the police. The reason is because the south African economy derived 25% of its energy needs from oil which constituted quite a large proportion of the its energy demand. The government required a certain proportion to be reserved for its own consumption of which 7% of Caltex oil served the purpose making it impossible for the corporation to disengage from doing business with the military and the police. Besides, the government derived huge amount of corporate tax from the corporation. Due to the fact that Caltex constitutes 11% of the American investment in South Africa, they exerted a lot of influence on other companies and as I mentioned earlier, their departure would make other companies to lose confidence with South Africa hence leading to their dramatic exit. This would have dramatic results to the country’s economy and eventually the citizens’ welfare at large. Besides the supply restriction would amount to serious breach of the law. This was a very serious crime and committing it would put the company at odds with the government of South Africa. The repercussions involved would hinder the corporation from achieving its objective of social responsibility towards improving the welfare of the oppressed majority.
Considering the vast influence the company commanded in the economy as a result of its high leverage in the market, one would argue that Caltex and chevron stood a better position in influencing government policies towards the blacks. That could be true but for the astringent regulatory requirements and the humanitarian considerations that made it impossible for the company to hatch out an exit move or to impose supply restrictions on the arms of the government. For example, with the OPEC sanctions of 1978 the government responded by tightening controls over the oil industry. The foreign owned companies were forced to produce strategically important petroleum products. Restrictions on sale of oil products to credit worthy customers were also prohibited making it impossible for the company to choose whom to sell to. Further, amid fear of mass exit of foreign investors, the government enacted a law that required any exiting firm to dispose its assets in form of the South African financial rand which made it very costly as you had to wait for the next available buyer because transaction were only allowed in rand. Indeed without the foreign investment the country would not have advanced as much in economic growth (The case for mandatory sanctions against South Africa, 1980).
With intense lobbying from American companies the government responded to lifting some oppressive rules which included the lifting of ban on the African labor unions, restriction on job ascendancy to white collar jobs and finally the repulsion of the highly oppressive influx control laws. There was intense combination of discriminatory legislation and employer reliance on the use of cheap labor supplied by the blacks leading to poor enumeration, a situation which foreign firms were capable of changing (U.S. Library of Congress, n.d.). This further emphasized that the foreign owned companies would do better by lobbying from within South Africa than from outside.
Implementation of Tutu principles
Tutu principles would definitely earn my automatic vote based on the noble ideas it stood for. I strongly feel the principles represented the best interest of the company and would go along way towards advancement of the blacks’ social and economic welfare. By ensuring better working conditions and allowing workers to live with their families, the company would boost their social satisfaction hence boosting their morale in work. Recognition of black labor unions and abolishing influx control laws would ensure workers have better working conditions and their welfare is addressed hence increasing their productivity. This will obviously be good news for the company. By enforcing favorable labor practices and laying emphasis on the black education would result to building of their capacity through inculcating of knowledge and skills required in performance of tasks. All these would increase their productivity leading to better output from firms. With all these factors in mind, it can only make sense to vote for the resolution as it would serve the best interest of the company besides enhancing the company’s corporate social responsibility campaign.
In addition enhancing the black’s participation in the social economic and also the political, processes would further enhance their social welfare and also help them advance their knowledge and skills. Possession of better skills would be a supplement to the capacity building efforts of other stakeholders hence help achieve better productivity and a wider pool of local personnel. It also in the long run reduces the cost of operations because the need for engagement of expensive expatriates would be avoided. In effect by supporting the principles the company would boost its image around the world and also win the support of human rights crusaders who were opposed to continued operations of foreign companies in the country.
Reference
Case Study 4 (n.d). A South African Investment. pdf.
The case for mandatory sanctions against South Africa: Paper submitted to the International NGO Conference for Sanctions against South Africa (1980). Web.
U.S. Library of Congress (n.d). The Contradictions of Apartheid. 2009. Web.