STATEMENT OF RAYMOND F. JOHNSON CHAIRMAN AND CEO

Transcription

1 STATEMENT OF CALTEX PETROLEUM CORPORATION RAYMOND F. JOHNSON CHAIRMAN AND CEO SUBMITTED TO THE HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS SUBCOMMITTEE ON MINERALS AND RESOURCES HEARINGS ON H.R APRIL 12, 1988

2 WRITTEN STATEMENT CONCERNING HR 3317 ANTI-APARTHEID PETROLEUM SANCTIONS ACT MR. R. F. Johnson Chairman and Chief Executive Officer Caltex Petroleum Corporation Caltex Petroleum Corporation, through its subsidiaries, has operations in 54 countries throughout the world. One of these subsidiaries has been in South Africa for more than than 75 years. Additionally, Caltex has operations in countries surrounded by South Africa and in the Frontline States. Accordingly, I am pleased to respond, on behalf of the company, to the Committee's invitation to comment on HR 3317, "The Anti-Apartheid Petroleum Sanctions Act". With such a long history of commercial involvement in the area, we are fully aware of the complex political and commercial inter-relationships that exist and of the importance of a peaceful, democratic solution to the very difficult problems in South Africa. Caltex views its continued operations in the area as part of the solution, not as part of the problem. We recognize that South Africans of all races will decide their own future. We also recognize, however, that the efforts of all concerned Americans should be directed towards assisting responsible South Africans in their efforts to peacefully resolve their problems. It is for this reason that Caltex opposes HR The author of HR 3317 testified recently to the Subcommittee on Africa of the House Foreign Affairs Committee, that the purpose of the bill was to send a message to the black majority that we oppose apartheid and, by withdrawing capital and expertise, to cripple South African energy production and force the government to negotiate reform. The Committee must consider whether the bill can achieve these purposes. Forcing Caltex and other American oil companies to leave South Africa will have no long term impact on South Africa's energy situation. The facts are that South Africa is almost totally independent of imported crude oil for its energy requirements. A recent article in "The South African Energy News" confirms that only 16% of South Africa's total energy requirements are derived from imported crude oil. The import of crude oil, such as it is, is under the control of the Government, not of oil companies operating in South Africa. Caltex does not sell or supply crude oil to South Africa, nor has it done so for many years. Moreover, public documents indicate that South Africa supplies virtually 100 percent of the petroleum needs of Botswana, Lesotho, Swaziland, Namibia and Malawi, as well as most of Zambia's lubricants. Presumably, any temporary shortfalls in South Africa would come at the expense of these countries.

3 -2- Regarding capital availability, there is ample evidence that South Africa has sufficient public and private resources to purchase and maintain the facilities of the disinvesting U.S. companies, particularly at the fire sale prices that would result from this legislation. Certainly, there has been no lack of buyers of other major American companies that have already disinvested. South Africa is a major exporter of gold, diamonds and platinum, as well as many other high value minerals. Their trade surplus for 1986 and again in 1987 was more than $7 billion. There is no question that South Africa has the skill to operate these facilities. They are world leaders in the technology of converting coal to oil and refining that oil to finished products, and, of course, they operate their own crude petroleum refinery which is part of the Sasol complex near Johannesburg. It should be remembered that the management and staff of the American oil companies are highly skilled South Africans of all races. The evidence is clear that economic pressure on the South African Government will not produce change for the better. The action of that government since the implementation of the Anti-Apartheid Act of 1986 indicates that such pressure may be counter-productive, forcing the government and many white South Africans to concentrate on what they perceive as survival against foreign threats rather than eliminating apartheid and establishing an open and just society. While in many ways the races may be separate in South Africa, the economy is homogeneous. There is no way you can economically punish one race without harming all races. Indeed, one could make a strong case that it is the driving force of economic reality, not rhetoric or pressure from the outside, that has resulted in the abolition of the influx control systems and the pass laws and in the increasing disregard of the Group Areas Act. The highly respected South African author and emigree, Merle Lipton, makes this point in her recent study for the Economist Intelligence Unit where she notes that while foreign capital increases the resources available to the country, it also contributes to the erosion of apartheid, "...for example, by increasing the demand for skilled labor and larger markets and by creating an urbanized and increasingly well paid and well organized black work force." One effect Lipton points out is that, among Afrikaners, it is mainly South African businessmen and intellectuals (i.e. those most involved with the modern sector) that have been pressing for reform. Ms. Lipton concludes that sanctions might in the long run help to erode white control, but she fears they might also erode the economic bonds that draw all South Africans together. Instead of more punitive laws against all South Africans, we would urge the Congress to enact positive legislation which would seek to increase continued black economic empowerment. Such a program would provide incentives for U.S. business and institutions to promote black business, education and management development, as well as establish financial grants in these areas.

4 -3- Many people feel that this legislation will send a message to the black majority in South Africa that Americans deplore the repressive apartheid regime. Caltex has been sending that message for many years. Black South Africans know that Caltex is opposed to apartheid and is working for the economic empowerment of the majority black population. They know that Caltex was among the original 11 Signatories to the Sullivan Principles, and has led, and continues to lead, through example, in the struggle to eliminate apartheid and to bring about a just society. The conduct and operation of American companies abroad goes beyond the profit motive. Such companies carry with them the basic principles of American democracy. They are working examples of the success of the free enterprise system. These factors are not lost on black South Africans. Regretably, HR 3317 does not consider the nature or character of the companies it would punitively force to disinvest. I feel strongly that the Committee should consider these factors. Caltex has an extensive corporate social responsibility program that has dispensed millions of dollars and has involved untold hundreds of employee man-days to assist black South Africans in their struggle. More than 35,000 pupils, students and teachers have benefited directly from the Caltex Adopt-A-School project and educational support programs. The active participation of Caltex in the Small Business Development Corporation has generated approximately 60,000 job opportunities. Over 1,250 families have been housed in Caltex sponsored homes and housing estates. At the university level, Caltex has granted scholarships that support more than 250 students. Major contributions and effort have been exerted in the field of social justice promoting racial integration and strengthening political and civil rights. For example, Caltex has constructed dormitories at so-called white universities and required that they be non-racial. While Caltex has always been rated as one of the most progressive companies in the Sullivan Signatory Program every year since its inception, the comments of the people affected by its programs are even more rewarding. The people benefiting from these programs are not abstractions to us. They are real, live people dealing with real community problems. Here are just a few of the many statements they have made to Caltex: Mr. Sam Matlou, Principal, Witkoppen Farm School. "Companies like Caltex are godsent to us. Without them we would not be able to offer such a high standard of education to our children. We would not even be able to feed them." Sister Christine Jacobs, Principal, Mmakau Adult Centre in the Northern Transvaal. "Through Caltex f s untiring support, we have been able to extend our ministry to the local people in a much more meaningful and rewarding manner." Mr. Peter Motale, owner and chief executive officer, Motale's Bus Service operating 40 buses in the Cape Town area. "Without Caltex f s help I would have been bankrupt."

5 -4- Mr. David Motlatla, Chairman of the Black Management Forum. "The support of companies of the BMF's initiatives means we are able to increase our participation in the business world. We certainly appreciate whatever companies do to assist us to make a meaningful contribution to the economic development of our country." Professor Louise Tager, Professor of Law at the University of Witwatersrand and head of the Law Review Project. "Without the support of the private sector, the LRP would just not exist. It is only with the continued support of concerned business corporations such as Caltex that the Law Review Project can pursue its objectives in bringing about normality and justice in our society." Twelve of the last fourteen polls conducted in South Africa have shown clear opposition to disinvestment by rank and file blacks. We expect that this conclusion will be supported by the recently commissioned General Accounting Office report on sanctions. Many black and white anti-apartheid leaders such as Helen Suzman, Alan Paton, Gabby Magamola, Chief Minister Buthelezi and Fredrick Van Zyl Slabbert have publicly stated that, more involvement of Americans and American companies is important to the success of their effort, not less. Caltex is proud of the accomplishments of its corporate social responsibility programs in the past and intends to continue and to intensify such programs in the future. In conclusion, Caltex believes that HR 3317 will not achieve the benefits intended. I sincerely believe that the bill would be counter-productive to the goals of both the U.S. Congress and Caltex, that is, the rapid peaceful elimination of apartheid and the establishment of a free, democratic society in a viable economy. If it can be said that "constructive engagement" has not succeeded, we must be very careful not to replace it with "destructive disengagement". WCD/kk:1972E