Fifty-two witnesses present testimony during four days of hearings.

Fifty-two witnesses present testimony during four days of hearings

During the four days of public hearings, 52 persons presented a variety of views on the role of TNCs in South Africa and Namibia. They included representatives of Governments, non-governmental organizations, businesses in and outside South Africa, anti-apartheid groups and liberation movements, parliamentarians, civic leaders, labour unionists, churchmen and individuals with particular knowledge of South Africa and its economic relationships. Testimony was made orally and in writing.

The witnesses were unanimous in their condemnation of apartheid and the occupation of Namibia and recognized that both had to be brought to an end as soon as possible. Views differed, however, on how those two objectives could best be achieved. Material presented to the Panel indicated that the situation in South Africa and Namibia had deteriorated over the past few years. Particular concern was expressed regarding South Africa's decision to deprive most of the country's black population of South African citizenship.

According to some, the industrialization process and the modernizing of the economy by TNCs would, in the long run, erode the apartheid system. TNCs, some maintained, provided employment opportunities for black workers, often improved their welfare through desegregation, did away with discriminatory practices in the workplace, and improved opportunities for the advancement of black workers. It was suggested that any international action taken against TNCs in South Africa or Namibia would have an immediate adverse impact on the black population as well, particularly that portion employed by TNCs. Neighbouring States would also face some difficulties.

Others pointed out that the same processes of involvement by TNCs sustained in apartheid system and the occupation of Namibia, directly and indirectly. By providing capital and technology, TNCs benefited and strengthened the minority regime and provided it with the resources to enforce apartheid. Transnational banks provided the economy with financial resources, while taxes paid by all foreign entities assisted in maintaining the military, police and security forces used to enforce apartheid and the occupation of Namibia. Whatever benefits employment with TNCs offered, less than 5 per cent of the black labour force was affected. In any case, the amelioration of employment conditions for black workers had not changed the system of apartheid as such. Neighbouring States had publicly and collectively announced that they were willing to share with black South Africans the burden of eliminating apartheid.

Following are summaries of a sampling of testimony presented to the Panel:

Wolfram Kistner, Senior Director of Justice and Society for the South African Council of Churches, said that during the 1950s and 1960s, TNCs had tolerated repression and had even called upon the South African police during labour unrest. During the 1970s talk of reform began. While only a small number of blacks benefited from those reforms, neither repression nor the security laws had been abandoned. The use of repression and reform by TNCs was a strategy for preserving the status quo.

Asked whether the TNCs were integral to or alien from the South African community, Mr. Kistner said that the TNCs were oppressive in so far as their presence helped maintain apartheid. As for profits and the need to obtain credit from foreign banks, Mr. Kistner said TNCs had profited from the "homeland' system, which provided them with a pool of cheap labour.

United States Congressman Mickey Leland said South Africa's economic health "relied heavily on foreign investment'. The presence of TNCs strengthened those who enforced apartheid. Although its $14 billion in South Africa represented only 1 per cent of all United States investment abroad, that investment carried "great symbolic weight' in the South African economy. President Reagan's September executive order banning loans and computer exports had been an "extremely superficial response to the moral dilemma of United States involvement in South Africa'.

Asked why the United States was so reluctant to divest if only 1 per cent of all its foreign investments were there, Mr. Leland, who is Chairman of the Congressional Black Caucus, said decision-makers had become involved in "relationships which had led them to become sympathetic' to South Africa's policies. Asked if the Sullivan Principles were not "tiny islands of justice in a sea of injustice'?, Mr. Leland replied that those Principles had improved corporate behavior but were "not an effective means of combating apartheid'.

Describing TNCs as "pillars of apartheid', Peter Sluiter, Secretary-General of the Association of West European Parliamentarians for Action Against Apartheid, said codes of conduct made no difference to most companies and there should be no illusions about their significance. The best way to dismantle apartheid was to support those who had been fighting against it; to press for divestment and sanctions; and to come to terms with blacks. The European Parliamentarians had decided unanimously that sanctions should continue. Not all members of the European Community had agreed on sanctions, but taking individual measures would provide impetus for others. Less had been done in Europe than in the United States.

Graham Hatton, editorial and research director for Africa for Business International, said South Africa's long-term economic performance had been very good, and its potential for long-term economic growth was "still enormous'. Economic models suggested that without foreign capital and technology, South Africa could maintain a growth rate between 3 and 3 1/2 per cent, but there would be no improvement in living standards or in employment opportunities.

Questioned about South Africa's economic vulnerability, Mr. Hatton said the refusal of foreign banks to renew South Africa's credit was "the worst blow the country had suffered, far worse than the impact that any sanctions had had'. But if the price of gold doubled, that would compensate for any loss of investment. Asked whether TNCs would support apartheid while it was profitable and turn against it when it was not, Mr. Hatton said TNCs had become concerned about the political situation only recently, once they saw it as a source of economic instability.

Andrew C.E. Hilton, Editor-in-Chief of the International Reports Group, a subsidiary of the Financial Times, said two New York banks had put South Africa on the defensive "in a way that 10 years of political pressure had not'. Elimination of bank credits had made South Africa an economic pariah. Its ineptitude in declaring a debt moratorium questioned its reliability in honouring contracts. Lower growth rates and stringent economic measures would make investment increasingly unattractive for foreign companies, which would continue to divest. The myths of South Africa's security, prosperity and competence had been stripped away.

Asked whether TNCs would take any humanitarian actions in response to the crisis, Mr. Hilton said that the corporations were not motivated by morality and would reassess their priorities from a business point of view. Asked what would happen if other major banks followed Chase Manhattan's refusal to extend further credit to South Africa, Mr. Hilton said many deals could be made for South Africa to get credit at higher, but not prohibitive, costs. The United States and the United Kingdom had legal means to prohibit loans, but Switzerland had neither the means nor the inclination to prohibit loans to South Africa. Tougher sanctions by the United States would be "a serious blow to South Africa and a signal to the rest of the banking community'

James Victor Gbeho (Ghana) of the United Nations Special Committee against Apartheid, said only a "fundamental reversal' in South African policies would

bring about meaningful change. The General Assembly and the Economic and Social Council had adopted progressively stronger resolutions against apartheid, a boycott of South African goods, and oil and arms embargoes. The Security Council had been asked to adopt sanctions against South Africa. But the West's financial stake there had steadily increased. TNCs claimed they had introduced fair labour practices, but those black workers who benefited were a minority within the black population. Low wages were a main attraction for foreign investment. South Africa would not dismantle apartheid on its own; the threat of sanctions had proved ineffective; Chapter VII of the Charter had to be invoked.

Asked about oil embargo violations, Mr. Gbeho said monitoring of that embargo was "a shameful scandal'. Countries publicly condemned South Africa yet sold oil to it covertly. Although the United States had the technology to monitor transfer of oil at sea, it lacked the political will to do so.

Francois Ceyrac, of the International Chamber of Commerce (ICC) said TNCs were helping to eliminate apartheid, a system "fundamentally irreconcilable with the principles of free enterprise'. The entire South African business community supported demands for change. The ICC felt that TNC disengagement from South Africa would lead to a "siege mentality', destabilize South Africa and deprive blacks of gains they had already won. TNCs in South Africa did not support the status quo, but were promoting change.

Asked by several panel members what TNCs had done to end apartheid, Mr. Ceyrac said that by providing vocational training, TNCs indirectly supported the struggle against apartheid, but they could not directly participate in the political struggle. The ICC had condemned apartheid as "contrary to the market economy and generally counter-productive'. TNCs had been "prompted by social conscience' to reduce apartheid's inequities. Questioned about the moral limits of neutrality, Mr. Ceyrac said that TNCs had a duty to respect the laws of the host country, even though they might condemn them. The TNCs had affected domestic legislation in a positive way, and had not inhibited social progress.

Metropolitan Paulos Gregorios, President of the World Council of Churches (WCC), said TNCs had done some good in South Africa, but the time had come for change. The Sullivan Principles had been "cleverly devised to confuse the public and to prevent divestment'. TNCs had not created jobs in South Africa. General Motors--on whose board the Reverend Leon Sullivan, the originator of the Principles, sat as a director--had recently invested in a new assembly line operation in South Africa. Its automation caused General Motors to lay off 10 per cent of its work force, without giving them reemployment guarantees. Nothing in the Sullivan Principles would help those 465 workers who had lost their jobs. The question was not whether sanctions should be applied, but rather what type of sanctions.

Asked whether churches could bring pressure on South Africa by divestment, Metropolitan Gregorios said the WCC had withdrawn its investment in banks operating in South Africa, and many Christian churches had done the same.

Ahmed Tawfik Khalil (Egypt), on behalf of the Group of 77, said TNCs had significant roles in the most strategic sectors of the economy, enabling South Africa to bolster its military capabilities. The argument that sanctions would hurt those they intended to help was false; the Group of 77 believed sanctions were crucial at this stage. Asked by the Chairman and others whether TNCs could be "forces for good' if they contested apartheid, Mr. Khalil said a change of attitude would be a start, but would not be enough.

Ahmed Gora Ebrahim, of the Pan Africanist Congress of Azania, said Chase Manhattan Bank and Citibank had prevented capital outflow from South Africa after the 1960 Sharpeville massacre and the 1976 Soweto uprisings. South Africa's latest efforts to secure loans had been unsuccessful, but foreign banks were probably "still conniving behind closed doors' to help South Africa. He was "shocked' at suggestions that TNCs could improve living conditions within the apartheid society, which would create a "transnational bantustan'. TNCs were in Azania not to be philanthropists, but to reap profits. The United Nations Centre on Transnational Corporations should develop effective monitors for sanctions, including a "blacklist' of corporations doing business with South Africa.

Asked what could be done to allay the fears of TNCs about their $22 billion investment in South Africa, Mr. Ebrahim said they would be given consideration in a free Azania if they supported its cause.

Thomas Conrad, of the American Friends Service Committee's National Action/Research on the Military-Industrial Complex, said TNCs had been an "important conduit for the supply of strategic arms technology to South Africa'. As a result of the arms embargo, South Africa had become the world's tenth largest arms manufacturer and a net exporter of weapons. The United Nations had provided moral leadership for the arms embargo; now it was time to enforce it. Asked which companies had provided arms to South Africa, Mr. Conrad said the top 100 contractors to the United States Department of Defense had subsidiaries in South Africa. Also, IBM, Control Data Corporation, Hewlett-Packard, NCR, Burroughs and General Motors supplied high technology to South Africa.

Bonnie Green, Vice-Chairperson of the Task Force on Churches and Corporate Responsibility, said several Canadian mining and manufacturing firms in South Africa were strategically important to the South African military. Rio Algom mined for uranium in Namibia; Menorah Resources had provided hydrocarbon technology to help South Africa become self-sufficient in oil; Massey-Ferguson had provided technology needed for self-sufficiency in diesel-engine production; Ford Motor Company sold vehicles to the military. Also, Canadian banks had loaned to "parastatal enterprises' in the nuclear and military sectors.

David de Beer, on behalf of three anti-apartheid groups--the Working Group Kairos, the Shipping Research Bureau and the Holland Committee on Southern Africa--said energy was a vital South African interest and its security legislation had specifically included energy-related TNCs. Its National Supplies and Procurement Act of 1970 permitted South Africa to dictate TNC manufacturing; the 1977 Petroleum Products Act enforced oil trade secrecy; the 1978 Protection of Business Act stipulated that TNCs could not provide information to their home offices without Government approval; the National Key Points Act of 1980 listed 337 firms obliged to provide weapons to the military, if necessary. The oil embargo had cost South Africa nearly $2 billion per year for smuggled oil.

Asked how much oil South Africa had stockpiled and who were the worst offenders in the illegal oil trade, Mr. de Beer said the estimated stockpile was from one to two years' supply. The Netherlands and Norway had not enforced oil sanctions because their shipping businesses depended so heavily on oil trade. Oil was also smuggled against exporters' wishes. With no monitoring systems, oil was sometimes pumped from one ship to another at sea. Ships also sometimes changed names at sea to avoid detection.

Jurgen Ostrowsky, spokesman for the Committee of Anti-Apartheid Movements of the Federal Republic of Germany, said there was "ample evidence' of large-scale collaboration between companies based in the Federal Republic and the South African Government. Banks in the Federal Republic had provided 63 per cent of all international loans to South Africa between June 1982 and December 1984. Daimler-Benz AG, Farbwerke, Hoechst AG, BASF and Siemens AG provided South Africa's arms industry with engines, explosives, trucks, electrical equipment and chemicals. There was also evidence--in spite of repeated denials by the Bonn Government --that some companies were collaborating with South Africa in nuclear research and technology.

Abdul Minty, Director of the World Campaign against Military and Nuclear Collaboration with South Africa, testified that growing military confrontation in the country made it important to identify TNCs which operated in the South African military sector. The arms embargo had been seriously weakened by clandestine exports and by corporations that labelled goods "dual purpose' to bypass export regulations. He said South Africa did not observe the nuclear Non-Proliferation Treaty, but had secret enrichment plants and benefited from being a member of the International Atomic Energy Agency.

Asked how to prevent export of "dual-purpose' military equipment, Mr. Minty said Western countries had solved that problem in regard to export of strategic materials to some socialist and Arab countries. The United States had prevented shipment of certain computers to the Soviet Union via the Federal Republic of Germany and Sweden, and thus could surely take similar steps vis-a-vis South Africa.

The Association of R.W.K. Parsons, Chief Executive of Chambers of Commerce of South Africa, said sanctions would make it difficult for business to achieve reform. Business was determined t "make a positive contribution to change and constitutional reform' because survival of the private enterprise system in South Africa was at stake.

Johan Van Zyl, Chief Executive, South African Federated Chambers of Industry, said internal pressures were now sufficiently powerful to sustain change, but the business community worried about a "siege society'. South Africa should monitor its own change; sanctions and disinvestment would be costly and make the progressive role of business more difficult; international and internal pressure would be more useful in pursuing reform.

A. Hammond-Tooke, Chief Economist of the South African Federated Chambers of Industries, said business proposals regarding housing, urban development and education had been late, but substantial.

Asked about a conflict between the approach of businessmen and that of the ICC which argued strongly for TNC neutrality, Mr. Van Zyl said it was not possible for the South African business community to remain neutral. Questioned on change the business community had so far wrought, Mr. Parsons said that major studies on constitutional reform had been launched, stimulating debate among whites and blacks. Mr. Van Zyl added that business had also influenced the Government to restore citizenship to people in bantustans and to repeal some discriminatory legislation. He hoped business could establish a "bridge of conditionality' between the two cultures in South Africa. Asked what "conditionality' meant, Mr. Hammond-Tooke said it did not mean conditionality of whites over blacks, but referred to recognition that a middle position could be found. "The South African business community did not want to destroy the economic machine while destroying the apartheid system.' He also said business had called for one-man, one-vote in South Africa albeit not in a unitary system.

Bertil Bolin, Deputy Director-General of the International Labour Organisation (ILO), said living and working conditions of black TNC employees raised serious doubts about the effectiveness of the Sullivan Principles and the European Community's code of conduct. Although South Africa was no longer a member of the ILO, that organization provided technical assistance to South Africa's national liberation movements to prepare the black population for self-government.

Phiroshaw Camay, Secretary-General of the Council of Unions in South Africa, said TNCs supported apartheid by using cheap labour to make large profits. It exploited the unequal education system by paying unequal wages. Union organizers and workers were harassed and their activities disrupted. Many TNCs operated in the "homelands', from which trade unions were barred. Asked whether his organization supported divestment, but not withdrawal of capital from South Africa, Mr. Camay said that his organization's official position was against divestment. To support it would violate the Internal Security Act.

Maxwell Xulu, an organizer with the Metal and Allied Workers' Union, Federation of South African Trade Unions, said codes of conduct for TNCs did "little more than provide cover for the anti-labour activities of the transnational corporations'. His union supported sanctions but did not want TNCs to withdraw from the country--they would be needed for the economic and political reconstruction of South Africa. Black workers believed the profits, wealth, factories and machinery of TNCs should remain in the country. Asked about charges of TNC involvement in torture of workers, Mr. Zulu said even though TNCs themselves did not engage in torture, they did call in the police, who took dissident workers to police stations. Three union members had died in recent upheavels, he said.

As for workers' legal rights, Mr. Xulu said those that did exist were vague. Salaries had to be negotiated on a year-to-year basis and there were no guarantees against retrenchment. There were three types of work contracts in South Africa, none of which was satisfactory. Black trade unions were forced to sign agreements without negotiations.

New York City Mayor Edward I. Koch said he believed what was happening in South Africa could be compared to the situation in Nazi Germany in 1933. New York City's pension fund was divesting its $750 million investment in South Africa. The City had also refused to buy fire and police radio equipment from Motorola Corporation until it refused to sell to the South African military. Motorola had complied.

Asked what he would advise President Reagan regarding TNCs in South Africa, Mayor Koch said he had urged the President to seek economic and diplomatic sanctions. Asked for his advice to shareholders of firms doing business in South Africa, Mayor Koch said he would urge them to "divest now before there was nothing left for them to take out'.

Audrey Smock, World Issues Secretary of the United Church Board for World Ministries, United Church of Christ, said the church had focused its divestment efforts on 12 American corporations that made their technology, services and resources available to the South African military and police-- Burroughs, Chevron, Citicorp, Control Data, Fluor, Ford, General Electric, General Motors, IBM, Mobil, Newmont Mining and Texaco.

Brajesh Mishra, United Nations Commissioner for Namibia, said that TNCs in Namibia supported South Africa's occupation of that country. Black workers in Namibia were paid subsistence wages and received no benefits or housing, while TNCs reaped "enormous profits' and invested nothing. Sanctions were a peaceful way to avoid a bloodbath in South Africa and Namibia. Of the 333 TNCs operating in Namibia, the three companies most heavily involved in mining were Rio Tinto Zinc, Tsumeb and Consolidated Diamond Mines.

Theo-Ben Gurirab, of the South West Africa People's Organization, said TNCs had not co-operated with the United Nations Council for Namibia. Namibia's resources were being stockpiled so that South Africa and the TNCs could manipulate Namibia's economy in the future.

Pallo Jordan, of the National Executive Committee of the African National Congress (ANC), said statements by South African big business to dissociate from apartheid were evidence that international pressure--not quiet diplomacy--yielded results. Approaches to the ANC by South African business were a new development, but there had been no change in their activities. Asked about forced labour, Mr. Jordan said there was no direct coercion, but the existing complex of laws forced blacks to leave their homes and work for TNCs,

making it impossible for the black worker to sell his labour to the highest bidder.

Photo: Mr. Kistner

Photo: Mr. Leland

Photo: Mr. Hilton

Photo: Mr. Gbeho

Photo: Mr. Ceyrac

Photo: Metropolitan Gregorios

Photo: Mr. Khalil

Photo: Mr. Ebrahim

Photo: Mr. Ostrowsky

Photo: Mayor Koch