Caltex in South Africa
A South African Investment American oil companies Texaco and SoCal (Caltex) were refining oil in South Africa. They planned to expand their refining capacity. However there was numerous discrimination issues pertaining to the status and treatment of the black citizens. At the time, the South African government maintained an apartheid system of governing their nation. Caltex was under scrutiny by American political parties and its stockholders for the way African workers were treated. Whites ruled South Africa’s apartheid government, blacks could not vote, and had no political rights.
They also had little freedom, were forced to live in segregated areas and were paid a low salary compared to whites. They were not allowed to own their own land or homes. (Velasquez 2006 pg. 59). By Caltex doing business in South Africa, their long-term intent was to eventually change the apartheid government to a more equality based one, such as that of the American government. From a business standpoint, the benefits of Caltex being in South Africa outweighed the issues of violating human rights and moral ethics.
Caltex assumed that if they pulled out of South Africa it would be a detriment to the African government and economy.
By Caltex doing business there, they offered jobs to the poor and needy, they would also increase the economic and political growth. Even though the African government was harsh and unfair to the black people, Caltex presumed they would influence them in a positive way. If Caltex were to pull out of South Africa the effects would be more detrimental to the government and people.
The poor and middle-class would no longer have jobs and the blacks would be forced to live on the streets rather than the segregated communities they currently lived in. Caltex claimed they complied with the Code of Conduct established by Reverend Dr. Leon Sullivan.
The code incorporated six principles that corporations were to abide by. The principles were based on equality and fairness for all workers, non-segregation for all races and equal pay for equal work. The principles also included training and education that would provide promotions of blacks and non-whites into supervisory and secretarial positions. By improving and educating the people, the improvement of their lives would be exponentially greater. (Smith 1977 pg. 59-60) Caltex’s decision to stay in South Africa was fueled by its desire to influence and ultimately change the racist government.
They lead by example by applying the six principles to their own corporation. Caltex hired black workers and valued the relationships they had established with them. (Velasquez 2006 pg. 58). They also emphasized the care of all races. This act is known as “ethics of care” and being concerned for the well being of others. (Velasquez 2006 pg. 60). If Caltex were to pull their business out of South Africa the blacks would be the affected the most. Therefore Caltex strived to convince the South African government and stockholders of the benefits of doing business there.
As a stockholder an individual could assume that
- Caltex should in fact leave South Africa due to the injustices and inequality of the citizens. Caltex treated their workers fairly, however they had no control over the way the government treated the blacks when they were not working. Oftentimes they were imprisoned and killed for a variety of reasons.
- Although Caltex played a role in liberating the citizens of South Africa, they also played a monetary role in supporting the government by selling oil to the African government and military. This in turn supported the utilitarian apartheid system of governing the citizens.
- Asking Caltex to support the Tutu rules does not resolve the issue of the government. Caltex provided jobs and equal pay however after hours the police and government subjected the blacks to abuse. According to Tutu’s beliefs the racist regime of the South African Government needed to be eradicated other wise companies are just “Attempting to polish my chains and make them more comfortable. ” (Velasquez 2006 pg. 59).
Caltex helped the blacks to have better working conditions, pay and housing. However the apartheid government had the ultimate control. The importance of American companies doing business in South Africa grew. Attempts at resolving issues between citizens, government, companies and shareholders grew. Several resolutions were proposed however some were defeated. Stockholders of Caltex defended the principal of equal liberty “The claim that each citizen’s liberties must be protected from invasion by others and must be equal to those of others. ” (Velasquez 2006 pg. 96).
Caltex provided wealth to South Africa and its citizens however when the situation turned for the worse they should have withdrew their business. They helped the country and the government in a monetary way, which in turn helped and also hindered its citizens. Caltex used the difference principal in the claim that a productive society will incorporate inequalities, by improving the most needy members of society, which were the blacks. (Velasquez 2006 pg. 97). The resolution indicated that the South African government was to take action of dismantling the apartheid and the influx of control laws.
When this did not take place, the American companies were to start the process of withdrawing their business from South Africa. Several attempts to rectify the issues went unresolved. Even though there was a high vote from shareholders the problems worsened. Companies are not solely responsible for a high return on investors’ money. Although they want the best for their clients they do not control nor time the markets. Managers constantly have to make choices between comparative alternatives and the governing of state and federal laws.
Their purpose is to make money for their clients and for the business. Often times they have to choose the best rate of return for the stockholder. The rate of return is the ratio of money gained or lost on an investment. This determines how well a stock is doing and if shareholders want to either buy more stock or sell. Managers are required by law to document and monitor their investment process. All mangers must comply with SEC regulations, investment policies and guidelines. They are also obligated to comply with bank policies and private companies.
