The history of multinationals in 20th century
South African history provides another example of the options facing multinationals.
In the 1950s, the Apartheid regime in South Africa
was created by a series of laws that enforced racial segregation,
that restricted the areas in which blacks and colored
could live and limited the jobs they could apply for.
There were many foreign-owned companies that had long been present in South Africa.
These companies had to obey the Apartheid laws.
As by common consensus in the world, beyond South Africa,
Apartheid was evil and the foreign-owned companies were not in a position to change it.
Question arose as to whether in conscience,
they should disinvest from South Africa.
In 1977, Leon Sullivan,
a director of General Motors,
a company that had a subsidiary in South Africa,
proposed a set of principles to govern its business in South Africa.
The principles amounted to a refusal to obey the Apartheid laws.
Segregation was not to be practiced in its plants and
staff was to be paid and promoted according to merit, not race.
They also imposed an obligation to improve the quality of
life in those communities in which companies did business.
Many multinational companies trading in South Africa signed up to the principle.
It was hoped that such large numbers were
discouraged the South African government from prosecuting
the companies for breaking the Apartheid laws
and other efforts might lead to the collapse of Apartheid.
However, in 1987, Sullivan declared that
the experiment was showing no signs of undermining Apartheid.
He claimed that American companies should withdraw from their South African operations.
Not yet, General Motors sold its holdings in South Africa, others followed suit.
Several years later, of course, in 1991,
the South African government began to repeal the Apartheid regime.
Nelson Mandela was elected president of South Africa in 1994.