Rev. Sullivan may scrap S.African business code, back pullout

One of the last moderate anti-apartheid voices today is expected to join the call for US business to withdraw completely from South Africa. The Rev. Leon Sullivan has exhorted American companies to be a force for change from within South Africa for more than a decade. But two years ago, he issued an ultimatum: Unless apartheid ended by May 31, 1987, he would call for tough sanctions and a corporate exodus.

The time is up.

Without the Rev. Sullivan, says Timothy Smith of the Interfaith Center for Corporate Responsibility, ``Citicorp, Mobil, Texaco, Chevron, and Control Data will no longer be able to hide behind the principles to obscure the concrete ways in which they support apartheid.''

In a recent telephone interview, Sullivan appeared to be wrestling with his own ultimatum. ``I'm praying'' about it, he said, but declined to elaborate prior to today's press conference in Washington.

In 1977, Sullivan, head of the Zion Baptist Church in Philadelphia, developed a code of conduct requiring corporations to desegregate, educate, and generally improve community and working conditions for blacks in South Africa.

Sullivan resisted calls for a complete pullout by United States business. ``If you can get workers to speak out for themselves in the plant, then they will speak out in society,'' he said. In 1984 Sullivan upped the stakes, requiring firms to actively try to reform the political system.

But a weak South African economy, increasing political instability, and the US anti-apartheid wave worked against Sullivan's efforts. Congress passed sanctions, and the pace of withdrawal quickened: Some 83 US companies have pulled out or announced plans to do so in the last 18 months, according to the Investor Responsibility Research Center.

If Sullivan is having second thoughts about his demand, they may be tied to the way US firms have left South Africa. Some firms, such as IBM, diluted the impact by keeping their products on South African shelves through licensing agreements. And some, now in the unrestricted hands of South Africans, have dropped black training programs. Funding for community development projects also has slowed or been halted.

Richard Hull, a political risk analyst with Frost & Sullivan, argues that disinvestment is working as a stimulus to the apartheid economy. ``South African managers are picking up US firms at fire sale prices,'' he says. ``There's no longer pressure to run costly community development programs. Profits don't have to be repatriated. And these companies are now free to engage in sanctions busting.''

Still, the tenor of Sullivan's recent speeches indicates he will call for the 127 Sullivan signators (out of 178) US companies remaining in South Africa to leave. In doing so, he is expected to urge that companies be sold to black businessmen and provisions be made for continued funding of corporate community projects.

In this country, that summons could spark a stock selloff. Five states and nine cities have allowed public pension funds to be invested in US companies as long as the Sullivan Principles were adhered to. Endowment money at 59 universities was similarly linked. An estimated $80 billion in equities could be sold if companies do not follow a Sullivan directive to leave.

Corporate officials may not be so easily swayed. Many indicate they have no plans to withdraw and will continue to follow the workplace code. But the principles, says Mr. Hauck at the IRRC, ``will lack the credibility brought by a black minister with a long civil rights record and known as a business community outsider.''

Still, the business community may have reached the limits of its ability to effect change. ``The government recognized business's innate expertise in managing workers and allowed companies to proceed with reforms faster,'' Hauck says. ``But in political and social concerns, it won't concede business has special expertise.''

This point was brought home recently. Some US firms have been quietly renting apartments for black workers in areas designated for whites only. The South African government last month threatened to prosecute any firm practicing this form of desegregation.

While weak in fostering black job training programs and promotion to management, the Sullivan code is praised even by its critics. ``They played a terribly important role in getting fair wages, community outreach, job equity, and even limited political lobbying,'' says Mr. Smith at the Interfaith Center.

The next step in the anti-apartheid campaign is likely to be selective purchasing rules. Michigan and Maryland and 20 cities have laws limiting or prohibiting public purchases of goods from any firm still in South Africa.

Eastman Kodak nearly lost a major copier sale in New York City before it announced its pullout. Last August, Fluor Corporation did lose a $310 million contract with the City of Los Angeles. Four months later, Fluor sold its South African subsidiary.