A group of congressmen, joined by antiapartheid activists, charged yesterday that Ford Motor Co. has violated a U.S. law banning new investment in South Africa by transferring $61 million to its former South African subsidiary, now owned by a branch of the Anglo-American Corp., that country's wealthiest industrial conglomerate.
Ford made the $61 million transfer to Samcor -- an auto company owned by Anglo-American -- late last week after receiving assurances from Treasury Department officials that it would not be prosecuted for violating last year's South African sanctions legislation, a senior Ford official said yesterday.
The dispute over Ford's payment comes at a time when U.S. companies in South Africa are facing renewed pressure from Congress over their operations in that country. As part of the proposed federal budget package, a House-Senate conference committee recently adopted an amendment that would prevent U.S. firms from deducting on their U.S. returns taxes paid to the South African government.
The provision could deny foreign tax credits totaling $20 million a year to the 160 U.S. companies still in South Africa. It could also help spur a new wave of corporate withdrawals from that country, according to a spokesman for Rep. Charles Rangel (D-N.Y.), who sponsored the amendment.
In a statement issued yesterday, nine members of Congress, including House subcommittee on Africa Chairman Rep. Howard Wolpe (D-Mich.) and House Budget Committee Chairman Rep. William H. Gray III (D-Pa.), said they were "outraged" by Treasury's decision, calling the Ford transfer to Samcor "massive new U.S. financing for a rich and powerful South African firm."
The transfer -- and Treasury's approval of it -- could "establish a dangerous precedent under which U.S. companies could resume financing the apartheid system," the lawmakers charged. Also signing the statement were TransAfrica and five other antiapartheid lobbying groups.
Elliott Hall, Ford vice president for Washington affairs, angrily denied the charges yesterday, saying the transfer was an essential part of an agreement Ford had reached to pull out of South Africa. Anglo-American was threatening to shut down Ford's former factory and throw 4,000 mostly black workers -- and another 12,000 dealers and suppliers -- out of work if the $61 million payment was not made, he said. "That place was going down the tubes and we were not prepared to let that happen," said Hall.
The dispute raises anew a dispute over how U.S. companies withdraw from South Africa.
Of the 96 U.S. companies that have pulled out over the past two years, 45 have continued to maintain ties with their former subsidiaries by signing licensing and distribution agreements that ensure their products are still available to South African consumers, according to a recent study by the Investor Responsibility Research Center.
Ford's withdrawal fits that pattern. In late 1985, Ford first announced that it was merging its South African auto subsidiary with Samcor under a plan that would give Ford a 42 percent interest in the new combined South African company. Last month, it announced it would disinvest totally, placing 24 percent of the stock in an employe-owned trust while transferring the remaining 18 percent to Anglo-American for $1.
Ford, however, agreed to sign a five-year licensing agreement under which its parts would still be imported into South Africa so that Samcor could continue to manufacture and market Ford-brand autos.
Ford also agreed, but did not at first publicly disclose, that the agreement it reached with Anglo-American called for the $61 million payment, intended to help Samcor invest in new plant and equipment needed to stay competitive.
Hall yesterday said the agreement has been praised as a model for U.S. companies because it provides substantial equity ownership to the largely black work force.
"I don't think blacks own that much of any automobile company in the world," said Hall. "We have received outstanding support for this proposal."
But the plan ran into a possible roadblock because of the $61 million payment, which Hall said had been disclosed to congressional leaders.
Under the Anti-Apartheid Act of 1986, approved over the Reagan administration's opposition, U.S. companies are prohibited from making new investments in South Africa except "in the event of a flood, fire or other occurrence which would force the operation to shut down or operate at an uneconomical level."
Congressional drafters of the law have maintained that this exception was intended to apply only to help U.S. controlled companies, not South African-controlled firms such as Samcor.
Reagan administration officials, however, interpreted that provision so it could apply in the Ford-Samcor case.
A Treasury spokesman said yesterday that the Office of Foreign Assets Control, which enforces the sanctions law, had been informed of Ford's intended payment "and on the basis of what that office now knows, plans to take no further action."