General Motors Corp., responding to pressure from anti-apartheid activists, is expected to announce this week that it will soon stop selling vehicles to the South African police and military, according to knowledgeable sources.
The new policy would end a small, but intensely controversial, aspect of the company's business relationship with South Africa. GM sold about 2,000 vehicles to the South African government last year, including about 900 cars, vans and trucks to the military, police and internal security forces. Some of GM's trucks have been outfitted with cages and used by security forces to round up protesters.
Although this represents a minor portion of the 35,000 vehicles the company sold in that nation last year, the sales to police and military have made GM a prime target of so-called "disinvestment" laws that are being passed by an increasing number of local governments.
GM spokesman George Schreck said yesterday that the issue of police and military sales is on the agenda for the company's annual meeting Friday in Detroit, and will be addressed by company Chairman Roger B. Smith. He declined to provide details.
But a knowledgeable source said yesterday that a GM official recently told an institutional investor that the company will make a policy announcement at the meeting that should remove it from lists of companies targeted for disinvestment based on their sales to South African security forces.
General Motors officials have contended in the past that the vehicles it sells to the South African military and police are standard vehicles that have no specific military or security purposes. They have also contended that, because of government regulations, the company could not stop selling to the police or military without giving up all its government business.
Schreck confirmed that GM officials in South Africa, along with officials from other U.S. companies, have been negotiating with the South African government to change those regulations.
"We have been having discussions with them for procedures that would permit us to continue sales to the government" without selling to the police or military, said Schreck.
Moreover, GM officials have publicly expressed misgivings about the sales. In a recent interview, GM spokesman Art Tregenza in South Africa said that, while driving to work in the morning, he has occasionally seen GM pickup trucks, outfitted with cages, being used as police paddy wagons. "It makes you uneasy," Tregenza said.
GM's operations in South Africa are among the largest of U.S. companies there, with about 3,500 employes at two auto plants in Port Elizabeth, and between $300 million and $350 million in annual sales.
Its new policy comes at a time that it and other U.S. companies in that country have been playing an increasingly active role in opposing South African racial policies. The managing director of GM's South African subsidiary, for example, recently attracted official government criticism when he pledged legal and financial support for any black employes who violated a local ordinance in Port Elizabeth enforcing segregation on the city's beaches.
But some anti-apartheid groups noted that GM also is concerned about the growing number of local disinvestment and procurement laws targeted at companies doing business with the South African government. The city of New York, whose pension fund owns about $31 million worth of GM stock, has passed laws that would require the pension fund to divest itself of GM stock and could prevent the company from bidding on city contracts if it continues selling vehicles to the South African police and military.
Indeed, it is the city's pension fund that has sponsored the resolution placing the issue before the GM shareholder meeting Friday.
"Any company that sells to the police and military is becoming a prime target for selective action," said Tim Smith, executive director of the Interfaith Center on Corporate Responsibility, an anti-apartheid group. "GM could potentially lose some very big business if they didn't do this."