College completes first phase of divestment plan
The College this summer began negotiations for the sale of its stock in Erico Products Inc. Erico is the only remaining company in the College's portfolio that is not a signatory to the Sullivan Principles governing the conduct of business in South Africa. Since the company is privately owned, selling the stock is more complex and takes longer than selling shares of a publicly held concern. Negotiations between the College and Erico are underway. With this divestment, the College will complete the mandate of the Board of Trustees that all non-signatory companies be eliminated from the College portfolio by July 1, 1986. When the Trustees released their policy in June 1985, 12 companies had nonsignatory status.
Since then four companies (AMR Corporation, Allis-Chalmers Corporation, City Investing Company, and Continental Corporation) withdrew from South Africa, and six concerns (Air Products & Chemical Inc., Beatrice Companies, Chesebrough Ponds Inc., General Signal Corporation, and Midland-Ross Corporation) subscribed to the Sullivan Principles. Only Erico and Diamond-Shamrock Corporation remained as non-signatories. The College sold its holding in Diamond Shamrock, valued at about $2.2 million, in June.
In December 1985, the Trustees announced that by the end of 1986 signatory companies must demonstrate progress implementing the Sullivan Principles or the College will divest these holdings from its portfolio as well. The Board's judgement as to adequate progress is based on annual reports issued by the Boston consulting firm of Arthur D. Little Inc. According to Trustee Robert Field, who is also the College's acting vice president and treasurer, the College has holdings in three corporations that received unsatisfactory ratings in last year's A.D. Little report. A new report is scheduled for release in November and unless the rating of these three firms improves, divestment will occur by the end of year.
The latest financial statement released by the College showed that as of June 30, 1986, the College owned securities in 60 companies with holdings in South Africa. These securities were worth about $65 million. In last year's report, that same category of securities was worth just over $63 million. Field explained that the increased value of the holdings reflected the rising value of the College's entire portfolio. As a group, companies doing business in South Africa comprise about 13 percent of the endowment portfolio. Last year that figure was 15 percent.
The Trustees also left the avenue open for stronger action. They said last December that if the South African government did not make positive changes to bring an end to apartheid, Dartmouth would consider other means of using its investor position to eliminate apartheid. President McLaughlin has said that the Trustees have "a commitment to use our investments to achieve political and social change in South Africa while still fulfilling their fiduciary responsibility as stewards of Dartmouth's endowment." Against the backdrop of growing turmoil in South Africa, the Trustees will discuss the South African issue during their August retreat and again at their November meeting.
In another forum, President McLaughlin joined 94 other college presidents in signing a letter sent to Congress urging both houses to impose sanctions on the South African government. The letter stated, "Although no one can state with certainty what steps will bring justice and peace to South Africa quickly, we believe that legislated sanctions offer the best chance we have of encouraging change."
