The Case of General Motors and Apartheid

In 1926 General Motors opened its first factory in South Africa. It preceded by many years the
introduction of what were to become known as apartheid laws, which began to be passed in 1948. In
1950 the South African Group Areas Act designated areas by race. In 1953 the Reservation of
Separate Amenities Act mandated racial segregation. The 1956 Labor Relations Act reserved certain
jobs for whites. These and a host of other laws enforced racial segregation and guaranteed white
domination.

Under apartheid, the blacks in South Africa suffered extreme oppression. Although they constituted
the overwhelming majority of the population, they were allowed to live on only 13 percent of the
land. The other 87percent was reserved for the whites, who constituted only 17 percent of the
population. The whites controlled the gold and diamond mines, the harbours, and the industrial areas.
Blacks who wished to work in these areas were required to live in townships outside of the
major cities. Because only males were allowed in the townships, the workers were separated from
their families for the major part of the year. The blacks could not vote, own property, organize
politically, or join unions. They were systematically paid less than whites for the same work. They
were not allowed to hold managerial positions of even the lowest kind. They were forced to use
segregated eating, dressing and toilet facilities.

General Motors, like many other foreign-owned corporations in South Africa, did not have nay part in
passing the apartheid legislation. Yet they were all bound by the laws, just as were the local firms.
The laws were passed gradually, and the society changed accordingly. As each of the apartheid laws
was passed, it could be ethically faulted. Should General Motors or any of the other foreign
companies have obeyed the laws? Could they have done otherwise?

The answer to the second question came in 1977 from Leaon Sullivan, a black Philadephia pastor and
a member of the GM board of directors. Convinced that apartheid was immoral and that GM could
not morally follow the apartheid laws, he proposed a set of principles, known as the Sullivan
Principles. Among other provisions, these principles prohibited GM from following the apartheid
laws and required non-segregation in the company’s operations, equal pay for equal work regardless
of race, and the promotion of qualified black workers over white workers. Sullivan’s proposal was not
only that GM follows the principles but also that other American companies band together to follow
them. In this way it was both less likely that the South African government would prosecute any
company for breaking the law and possibly that the apartheid laws could be undermined from within. 1

Both deontological and utilitarian arguments were employed to justify companies that followed the
Sullivan Principles operating in South Africa. From a deontological point of view, the companies
could correctly state that they were not engaging in either racial segregation or discrimination. From a
utilitarian point of view, they could argue that they were producing more good than harm for all
concerned and especially for the blacks and for South Africa.

Sullivan initially proposed the principles to twelve major American companies. By 1986, of the 280
American companies operating in South Africa, 172 had become signatories of the principles. In
addition, in 1985 Roger Smith, chairman of the board and CEO of General Motors, helped found the
U.S. Corporate Council on South Africa to apply pressure on the South African government to end
apartheid. Most of the black nations of South Africa had already imposed economic sanctions on
South Africa, as had most countries of Western Europe. In 1985 the United States froze new credits to
South Africa, and in 1986 the U.S. Congress passed legislation restricting trade, investment, and
lending.

Nonetheless, in 1987 Sullivan declared the ten-year experiment in following the principles a failure
because it had not succeeded in undermining apartheid from within. He held that following the
principles no longer constituted a justification for companies operating in South Africa, and he called
for their withdrawal. In doing so, he joined a large number of other observers who claimed that nay
American company in South Africa by its presence and its taxes lent unjustifiable support to the South
African government and in fact did more harm than good.

In 1987 General Motors sold its holdings in South Africa. Whether or not the sanctions and the
Sullivan Principles were effective, in 1991 the South African government began to repeal the
apartheid laws. In 1993 the white rulers agreed to end apartheid completely and to allow universal
elections under a new constitution. Thereupon most countries rescinded their sanctions, and some
American companies that had left South Africa began returning. In 1994 apartheid officially ended.

Was General Motors justified in staying in South Africa as long as it did? Would it have been justified
in staying on longer?

1
For details of apartheid and a list of the Sullivan Principles, see Oliver F. Williams, The Apartheid Crisis: How We Can Do Justice in a
Land of Violence (San Francisco: Harper & Row, 1986).