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PLEASE RETAlN ORIGINAL ORDER

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/ '-/ (J 1/J 175~ -JS SEY{ r77?

UN ARCHIVES SERIES 5-0C//D BOX / --FILE ~ ACC . . ~

UNITE~NATIONS ., CENTREONTRANSNATION CORPORA~NS

:~~~~~. U~'.~~. ,w:: ::..~~.:~~ ~~-~ LES SOCIETES RANSNA TION/ES CA ■ LE ADORIESS -AOAIESSIE TELlltGIIIA~l·HQUIE: UNATtONa NEWYO"K

WITH THE COMPLIMENTS

OF

GUSTAVE FEISSEL

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ME~ORANDU~ Of' UNDERSTANDING

9 November 1979 1 Beijing

Mr. Gustave f'eissel, Associate Director of .the

tinited Nati9ns Centre on Transnational Corporations

(UNCTC) and Mr. Chen Xingnong 1 Director of the 6th

Department of the Ministry for Economic Relations with

foreign Countries of the People's Republic of China .

(the ~inistry) conducted friendly negotiations ?n workshops to be organized by the UNCTC at the request

of the ~inistry, on 5-9 November 1979 in Beijing and

reached the following understanding:

I. Both Parties agree that two workshops will tnke

place in Beijing ~990. One is on regulating and negotiating

with Trnnsnational Corporations and will be conducted from

7-26 January; The other is on regulating and negotiating

petroleum exploration and development arrangements with

TNCs and will be conducted from 1~-26 January.

I~. The specific progra~mes of the workshops and

the lecturers will be agreed upon jointly by the ~inistry

and the UNCTC.

III. For each workshop the ~inistry shall be

res~nsible for:

1. Selection of about 40 participants having direct

. relevant responsibilities in the various Government

ministries, agencies and corporations dealing with

matters related to regulating and negotiating with T!,Cs;

2. Provision of one conference room at an appro~riate ·

location;

~- Provision of ~ne coordination officer, one

assistant and two interpreters (Chinese/gnglish

2

English/ Chinese)

4. Provision of conference room facilities (i.e.

blac~ _boards , overhead projector, pdper, pencils

etc);

5. Access to and use of telephone, telex and

photocopy facilities;

6. Transportation for lecturers from airport to

hotel and from hotel to workshop sites;

7. Hotel reservations for lecturers;

B. Facilitatirn of the issuance of visas to lecturers;

IV. Th~ ~NCTC will be responsible for:

1. Organlza ':ion of the two workshops and nomination of

the workshop directors;

2. Provision of necessary documentation in English to

be issued to the participants;

3. All costs related to the remuner~tion, tra~el and

per diem of the lecturers.

Gust~ve Feissel, Associate Dir e ctor on behalf of the Ui:c:-c

' . .•

Chen Xingnong, Director of the 6th Depart~ent · on behalf of the Ministry for Economic Relations with Foreign Countries of the People's Republic of China

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l7 Sept. 1979 JP BARRE/JH

OSG/EOSG

M. AMADOU-MAHTAR M'BOW DIRECTEUR GENERAL UNESCO PARIS (FRANCE)

MON CHER COLLEGUE,

3855 B 5604

e ~,.. er b/f~i -cc: SG FUe:Tra s tionals XRE.!f: UNESCO,

ME REFERANT A VOTRE LETTRE DG/3.5/05/3.S CONCE:RNANT LES RESOLUTIONS

DE LA CONFERENCE GENE:AALE DE L'UNESCO SUR LES SOCIETES TRANSNATIONALES (RESOLUTIONS 20 C/3/3.1/2 ET 20 C/9.1), J'AI LE PLAISIR DE VOUS INFORMER

QUE '.CBS TEXTES SONT EN COORS OE DISTRIBUTION A TOUSLES MEMBRES DE LA COMMISSION SUR LES SOCIETES TRANSNATIONALES, AINSI QU'AU GROUPE DE TRAVA INTERGOUVE.RHEMENTAL SUR LE CODE DE CONOUITE ET SERONT AINSI A LA DISPOSI

TION OE TOUTES LES DELEGATIONS IN'l'ERESSEES LORS DES PROCHAINES SESSIONS

DE CES ORGANISMES.

HAUTE CONSIDERATION • .

LE SECRETAIRE GENERAL DES NATIONS UNIES

KURT WALDHEIM

Albert Rohan - Directeur EOSG

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UNITED NATIONS{~) NATIONS UNIES ~ jJ~tj CENTRE ON TRANSNATIONAL CORPORATIONS~ CENTRE suR LES socIETES TRANSNA noJ. lEs

TO: A:

THROUGH: 9/C DE:

FROM: DE:

SUBJECT: OBJET:

INTEROFFICE MEMORANDUM

Mr. Rafeeuddin Ahmed Chef de Cabinet

MEMORANDUM INTERIEUR

Executive Office of the Secretary-General

Klaus A. Sahlgren ///i j /,J _ Executive Director '{,(,(,t,.4 ~

25 September 1979 DATE: ________ _

REFERENCE: ______ _

Please find attached our proposed reply by the Secretary-General

to the letter of Mr. M'Bow, Director-General of UNESCO, concerning

two UNESCO resolutions on transnational corporations. We feel it

appropriate to have the reply sent by cable since the Executive Board

of UNESCO is presently in session and Mr. M'Bow would like to

communicate this information to the Board.

The above is suggested after consultations with the Office of

Secretariat Services for Economic and Social Matters (Mr. V. Voronin).

cc. Mr. Diego Cordovez

Mr. V. Voronin

.,.

DRAFT

UNESCO PARIS {FRANCE)

1vv,-tl~~ !~<A.-\ ' .f --~'BOW, DIRECT~-GENERAL:2SCO 4--;~FERENCE VO.;;E LETTRE DG/3.5/O5/3.5

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CONCERNANT.7IBS"OLUTIONS-D UNESCO SUR SOCIETES TRANSNATIONALES? I AI :PLAISIR £f b/l \.i

VOUS INFORMER QUElCOPIES DE LA RESOLUTION 3/3.1/2 ET DE L'ALINEA {J) DU .Jn)- ~- e'-' Crtvl ✓ !1ti ~A,, 1, ..... Ji.,-:..

PARAGRAPHE 2 DE LA RESOLUTION 9.1 S~S -A TOUSLES MEMBRES DE (h

LA COMMISSION SURl SOCIETES TRANSNATIONAI$S AINSI Qll' A1! GROUPE °9E ~VA~~ • ~../. /_1tt,,,A•J ti e,/- f"._/"W'I...J-· ~--- Ii -:.~ '-'\ .. ~.t? l- r,,. , t--- P·{ r•

INTERGOlNERNEMENTAL SUR\ CODE DE COl'IDUITE A LEURS PROCHAIJll'ES SESSIONS, £, ~ ,.,_. , CONSI~~Dis~ . ~~ •--i ·,-~t4~-~:J ·-

• •·• "'\ "c'I' • I .r: ,I • • • ,t' - .•-f t," .& j, SECRETA.!1~ G.fi~"£ML &;r,­KURT WALDHEIM

united nations educational, scientific and cultural organization

organizaci6n de las naciones unidas para la educaci6n, la ciencia y la cultura

organisation des nations unies pour )'education, la science et la culture ,

7, place de Fontenoy, 75700 PARIS ' t 'I' h . na~io11al ( l) S 77 .16. lo e ep on~ · iniemutio11al + Jl· l ·S 77 .16. I 0

adr~sse tehlgraphigue : Un~sco Paris telex : 204461 Paris . .. .. ,

Le Directeur general

reference: oq/3. 5/05/3. 5'

) 0 SEP. 1979 --Monsieur le Secretaire gen~ral,

Par lettre DG/3.5/05/3.5 du 3 avril 1979, je v9us ai adresse copie des deux resolutions de la vingtieme session de la Conference generale concernant les activites des entreprises transnationales (resolutions 20 C/3/3.1/2 et 20 C/9.1).

En meme temps, je vous demandais de bien vouloir cornrnuniquer ces textes a la Commission des Nations Unies sur les sobietes transnatio­nales, en lui indiquant que le Secretariat de l'Unesco se tient a sa disposition pour lui fournir les elements d'information qu'il possede deja et ceux qu'il se propose de recueillir sur les effets de l'acti­vite des entreprises transnationales dans les domaihes de competence de l'Organisation, et l'aider a formuler les textes normatifs corres­pondants.

Etant donne que le Conseil executif, a sa 108e session (19 septernbre-19 octobre 1979) ,doit etudier la "contribution de l'Unesco a 1'€laboration d'instrurnents internationaux pour la reglementation et le controle des activites des societes transnatibnales", il me serait tres utile de savoir quelles suites ont pu etre donnees a ma demande.

Je vous prie d'agreer, Monsieur le Secretaire general, l'assu­rance de ma haute consideration.

Monsieur Kurt WALDHEIM Secr~tairc general de l'Organisation des Nations Unies NEW YORK, N.Y. 10017 Etats-Unis d'Arnerique

Arnadou-Mahtar M'Bow

united nations educational, scientific and cultu_fat QrgaifJ.iaticftt _ ;::'I organisation des nations unies pour l'educati' n: la science,d fa culture

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Le Directeur general I • -

reference : DG/3 • 5/05/3. 5 •11 k ... J

- - 3 AVR. 1979

Mon~ieur le Secretaire general, Ill.. if, l.. I/fir ... (~ ~

J'ai l'honneur d'appeler votre attention sur la resolution 3/3~1/2 et l'alinea (j) du paragraphe 2 de la resolution 9.1, par lesquels la Conference generale, ~ sa vingtieme session, a defini la part qu'il incombe a l'Unesco de prendre dans les travaux du systeme des Nations Unies concernant les activites des entreprises transnationales. Vous voudrez bien trouver ci~joint copie de ces deux resolutions. ·

Le plan de travail de la resolution 3/3.1/2 (par. 3227 du Programme et budget approuves) prevoit que !'Organisation renfor­cera sa cooperation avec le Centre des Nations Unies sur les societes transnationales en vue de contribuer a !'elaboration d'instruments internationaux pour la reglementation et le controle des activites des societes transnationales, entreprise par la Commission des Nations Unies sur les societes transnationales et, en particulier, par son groupe de travail intergouvernemental sur un code de conduite.

Je vous serais reconnaissant de communiquer le texte de ces resolutions a la Commission des Nations Unies sur les societes transnationales, en lui indiquant que le Secretariat de l'Unesco se tient a sa disposition pour lui fournir les elements d'infor­mation qu'il possede deja et qu'il se propose de recueillir sur les effets de l'activite des entreprises transnationales dans les domaines de sa competence, et l'aider a formuler les textes normatifs correspondants.

Je vous prie d'agreer, Monsieur le Secretaire general, !'assurance de ma haute consideration.

OFF!CIAL CORRESPONDENCE co•HIIOL NO . • ...

' :··•T 8E RHUR?~£D TO .~l u, l~~ · G: TRCL.. R00~1 2074

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Monsieur Kurt WALDHEIM Secretaire general de !'Organisation des Nations Unies NEW YORK, N.Y. 10017 Etats-Unis d'Amcrique

Amadou-Mahtar M'Bow

9 Contribution de l'Unesco a l'instauration d'un nouvel ordre 6cono1nique international'

I). I / .ii C111!f1:r('IIC'C' g1:11,:ralc.

Co11.tcil'11ll' ,lu ri>ll• i111porlan1 dcvolu i1 l'Uncs<.·o pour l'C 411i est de crccr un dimal moral :1ppri,1,ri cl suscilcr de 111111vclks allil udcs ch;:z lous ccux lfUi s'al lad1cnl :i promouvoit le dcvcloi,1"1C111cn: la pai:t cl rinll:grilc c11l1urdk Jes pcuplcs,

Rllflf1t·l1111t lcs rcsolulillllS 3201 cl 3202(S-VI) rdatiw, ;1 la l>l'.:cl:1ra1ion cl au l'wgrammc d"ac11,,n st: l'ins1aura1i1111 d'un nouvd 11nlrc c1.·0110111iquc i111crn:11io11al, la rcs11lu1id11 J2Sl(XXIXI .I· 12 dccL·rnhrc I 1>74 c11m:crnanl la Charle des droils cl Jcvoirs cconomiqucs des Eta ts. airhi quc I fC\Olulion }J62(S-VII). :,doph:cs par l'Assemhll!C gcncralc des Nations Unics.

llll/'l'c-fllll( la rC'llhllHlll 9.11 adoplcc par la ConfcrClll'C gcncralc ;\ sa dix-ncuvicntc scs-.icm. ain,i ljt:

la rcs11lu1i1,11 12.1 ad,,plcc par la C'onfcrcncc gcncralc :i sa dix-hniticmc sdsion, !>llf l;i t:11111r h111ion de l'Unesco :'1 l'in,lauration ll'un nouvd ordrc cconorniquc intcrnalillftal.

Cm1.,·1·i1'11tc• des ~ran,ks oricnlali1111, contenucs dans 1'11uvrage / .1• 11111111/,• c11 d,·,·,·11ir, l'I 1,·11,1111 n,111r1

du Pl:tn :'i rnoyen tcrmc ( I lJC/4), du Projct d'aju~1cmc11ts a\J Plan :1 nwycn 1crn1c (W('/-11 cl ll Projcl 1lc pr,1gr:1mmc ct de budget pour I 979-1980 (20C/5),

Vu le r.ippurt d11 Dircl:leur !!Cncral sur l':1pplica1ion de la rc~olution 9.11 adoptcc par la Confi:•rem gcncralc a sa dix-ncuvicmc scs~ion,

So11/fi:1u"1f quc ks ctforts dcploycs en vuc de mcllrc en n:uvrc lcs resolutions conccrnanr l'in,1:,ur;iti,1 t1·un nom·cl oalrc cc,inomiquc international n'onl ras cu lcs clfots pratiqucs csc,,mptc-s. 111~111 :-i le~ prohlcrnc,. prim:ipaux ont fill ctrc identifies.

Cmuitl,:rallt quc l'cc:1rt C'nlrc les pays dcvcloppcs ct lcs pays en dcvclorrcmcnl dans ks dornaim ,ocio-ccono111iq11cs ll\.· l'cJucatit111. de (;i ,ciencc. de la culture ct de l:J c,,m1111111ica1i,m fl'prc,.:11! unc 111:inifrstalion imrortante des incgalitc~ l'lltrc lcs rcrsonncs, lcs groupcs ct lcs 11:.111111,.

C1111.Iid1;ra11t quc le conc;:pt de << hc,;oins c~scnticl~ de l'hommc 11, invoquc comm.: 1111c des ha,e, 1k I ,1ra!cgic du ilcvcloppcrm:nl. ne 1-icut ~c s111>,1i111cr :&ll't concepts cl prinl·ip;:s reels sur k~quc ,h:vrail clrl· fon,lc 1111 nouvcl ordrl· ec111111miqul' i111c111alitlnal.

l'r,·1111111 rn co11.1id,:rati1111 le n>lc qu·unc c,1opcr:1ti1111 intqrnationak fondcc sur les pn11c1p,·. tic 1·cg:ili1, de la ,olidaritc ct dc la ju'-11.:e pc111 c,crccr dari~ b 1ransl'or111alion p11si1i,·e de l'l'thcmblc llr rdallon, 111ln11a1i1111ales, It,

C111111·il'l1t,· du r,·,tc i111p11rl;tr1l de J'Uni:,.:11 tlar" la pn ~I• ,111,11 cl la rni~c e11 o:u•;f·e des pmwq,i:, ~•

ll:,q11d, .l,:v1ai1 ri:p,"cr 1111 111111\'cl ordrc c.:1111<1 ,Lquc i111crnati11nal. d:111, la rcali!.atu,n tk S< I

,,hj,·ctil', d d:11i-le .t.:111arr:,;,:c de, acti,111, t.:1111d, •~.1111 ;'1 s,111 i11st:111rati,111, C11mid,:,,m1 ,pn.· l'iri-1a11r;1tn111 <l'1111 no11\d or.Ire ci:nn :pique international csl i,cscparahl\! 1k-l\:li111

11.11u•11 ,k 1111" lcs l:1dcur~ q11i 1m·11ace111 la p;1i, ";1 la ,ec11ri1c intcrnationah:~. t.:llllllllt: la Cllllf

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l.tt C,111Rc,•1,c,: grnhule, . . . I ~... t"tre du l'r11J!r:IOIIIIC' cl hllll~cl pour l'J7'J-'• • I .,· ·rscs re1;olut1om; al uplc.:s .,u ' .

Pren,ti,t ,.,, ,,on.ri, t"rUl/011 C'S ulVC ' · . . ' , .1 • I C 1l ;quilibrc cm.logche cl centre . ,. - ., I· ~·rspecuvc d un ucvc oppcm I c .' · . .

1980 qu, s inscnvcnt uans ,l ,·- . . . • . hi . : .. d ;vclo"[X·mcnl c:t ch partu:ulicr ., · . ~ •r I •s cond1t11111s lavl1r,1 cs ., 1:c c ,.

sur l'homme ct tenucnl a t:rcc c. . '.. .. ·t hui1icme alincas du prcambule . /I 1/3 "1/1 4'0 I s1x1emc scpucme c

lcs resolutions 3/3.1 ct - ·- • 1 • • • • ·r'd I cction 111 4/1 2/1 alinca(b). 4/9.1/1, de ht section II el ;alincas 3 (b) ct (f) du disp0Mt1 . : as • . •

.• 1. • ., •. •r· phc I ct 4/9.3/1. ahne:i 2 1.h). dcu:ucme a rnca uu p.tr,11,; a • . ·1 .. t'f sur le ProJ·et de programme cl

. /' I· Obscrvauons du Consc1 cxccu , . •. Tr11arit compte en par11cu ,er, l. cs, ~/5) 20C/6 Add .) dans lcsqucllcs le Conscil !-Oulig11e <l I impor-

dc budget pour 1979-1980 (~Ol l . ·. < d'·,dupter des apprbchcs tenant tancc des ctudcs sur ks socictl!s transnauonalcl_s _>• cl sugtgqcr11~1 'pou~raicnt prcnd re en considcra•

.·. . lturcls cl po 1t1qucs, c comptc des contcxtcs sm;1.1ux. t:u . . . . . .. . ·. : pmmuuvoir le dcvclop-tion i.L possibilitc d'inllcchir l'iullucnce de ccs soc1ctcs, de m.11111.:re a

pcmcnt endogcne »,

"1'\

J .\',-ir11,·rs s11rittlr., "' ,1pplirutivm J.- rr:s ·"·i,:nrr.,

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I I

l

Tenant <1,:ah•111r11r comptt des preoccupations du Groupe des 77 contcrnant les ,lctivitcs Jes socicti:s

tr:111sna1ionalcs dans lcs pays en dcvcloppcmcnt, cxprimccs l6rs de plusieurs rcuni,m~. ct Ju

programme des 1< onze rc.,·cndications majeurcs » d:i.ns cc do1rlainc, qui a etc rcdigc lors de la

Conference de Lima en mars 1976, sous la formc d'un code destine aux pays d';\mcriq:ic latinc ct de la region des Caraibcs,

Co,mziflClle que lcs efforts dcploycs par l'Uncsco pour promouvoir un dcvcloppcmcnt cndogcnt',

cquilibrc ct centre sur l'homme rcndent nc:ccssairc la contribution de ccllc-ci a l'clabur.itiun

par !'Organisation des Nations Unics des instruments internaiionau:<. destines it la rcglcnu:n• talion ct au controle des artivitcs des socictcs lransnationalcs,

T,·11m11 cumpt,· des progrcs faits lians lcs ctudcs ct la rctlcxion lie l'Org,inisation dans cc durnainc

dcpuis l',uloption de la resolution 3.2J'.! par 1:t C,,nfcrcncc gcncralc :\ sa dix-l11111ii:111c sc~.,,on,

Cl ,f(' j i111,l,111t 1>llr lcs rcsultats de la rct111i1111 11\:.~pcrls, tcnuc :'1 llclsinki en a~111 j1J7/i, ~ur l'impal.·t des sucictcs 1ra11\natiu11alcs dan, lcs domaines de co111rictcncc de l'Uncsc11. 1 l!1111iun

~1ui rcco111111amlait a l'U11cs~:o de parl11.:ipa :'t l't:lahoratiun par l'Organisalion de~ Nations

Unics 11'u11 l.'OdC de copduitc tkvant n.:glcmcnlcr ks :Lctivitcs Jes :,m;ictcs transna1i11nali:s (20C/XJ. par. JJ ct J4 .c).

C1111mim·11c.• de l'opp11rtunitc cl tic l'urgcncc Jc t:clle t;ichc, ct ,:omi,1<:,w,1 le dcgrc cJ'avat1l..'CllTeftt•d~jl

allc1111 par l'Organis:111011 dl·s Nation:. lJ11il·:; dans les travaux qu'cllc 111cnc dam, cc du111;11nc.

I . /11ri1c le l>ircctcur gcncr..il :, prcn,ln:, uJn, le 1:adrc du l'rogramnlc ct bud!!ct :IJ,prou"c. p tr lcs

r11oyc11~ qui 1111 parairrnnt h:~ plus a11~1'11pric~ d en tenant tout ~rcciak111c11t cornr,le des :lClt-'

vitcs c11v1s.agi:c~ au lllre du Iheme J~ ·.' o., . lcs d i~po:.iriom rcqui~cs f'lllllt clutl,cr le~ ;u.:1i,·11cs

des socictcs lra11~nat11111alcs _dans lcs t{1111~;1111cs_ J~ ~·coucatwn. Ile la science, Jc I;, cuhurc ~t de t~ l-lllllm1111rcatmn. ccllc ctudc dcv 'n t drc rcaliscc en co11su·1tat1011 avcc lcs 01 gam; , comf'C• lcnts Jc !'Organisation des Nations u [ ics, dans lcs formcs cl scion les mod..ilitcs lcs plus nr,1m>­pric cs puur g::ranlir unc co111ributio1:;,·tt·liica1.:c lie ru nc~co en la m,111crc;

1. Pric le Dircctcur !!Cncral J'informcr r,er ~, ~l1l111cmcnt le C'onscil c.~c1:11tif des progrcs rcafacs dans

l'cxccu1iu11 de la prcscnte rcsolutinn. /t de soumcttre iL la vangt et un,cme sc~s1on de la Conr'c•

rcncc gcncralc un rapport sur lcs rcs1::i'«:tts obtcnus. accompagric des commcntaircs ct ohscr• v:uions du Conscil exccutif. 1 ;'

I •

·• .•ift:Jt .... UZW &:IN ..,».-«taww:uweuc:u !WZWWW-Za as ·-

CONFIDENTIAL

Note for the file

Mr. Chou Nan, Counsellor of the Permanent Mission of the People's Republic of China to the United N~tions, raised with me today the question of the replacement of Mr. N. T. Wang by another Chinese candidate, Mr. Xu Naijiong, as Director

~~ of the Information · Analysis Divi~ion ·in the Centre on Transnational Corporations. Mr. Chou Nan stated that the Chinese Mission had held many talks with Mr. Sahlgren on this _ matter and recalled that thataurriculum vitae of Mr. Xu had been contained in the note verbale submitted to the Secretary­General pravioualy by Ambassador Lai Ya-li. ·1n June, Mr. Sahlgren had visited Peking, where he had asked Mr. xu to complete a Personal History Form and had also interviewed him. After that interview, Mr. Sahlgren had told Vice Poreign Minister Zhang Wenjin that he would be vay , glad to recamnend Mr. XU for this post. The Chinese Government, thereforeJI hopes that the matter will now be settled as soon as possible in view of Mr. Wang's retirement effective end-July.

cc. Mr. H. Debatin Mr. K. lahlgren Mr .. J. Jonah .

Rafeeuddin 7Ahmed · 30 July 19 9

UNITED NATIONS~ NATIONS UNIES /,/!;!_ii~) CENTRE ON TRANSNATIONAL CORPORATIONS~ CENTRE SUR LES socM1TE~NSNA'2'1~~ LES

TO: A:

THROUGH: S/C DE :

FROM: bE:

SUBJECT: OBJET:

INTEROFFICE MEMORANDUM MEMORANDUM INTERIEUR

Mr. Rafeeuddin Ahmed, Chef de Cabinet Executive Office of the Secretary-General.

Gustave Feissel, Officer in Charge UNCTC

Post of Director of the Information Anal sis Divisio

REFERENCE : ______ _

CONFIDENTIAL

I am pleased to acknowledge receipt of your note for file dated 30 July

on the recent visit by Mr. Chou Nan, Counsellor of the Permanent Mission of

the People's Republic of China to the United Nations, concerning the

candidature of Mr. Xu Naijiong for the position of Director of the Information

Analysis Division in the UNCTC. I have drawn this note to the attention of

Mr. Sahlgren who is on homeleave in Finland. He has asked me to advise you

that his discussion with the Vice Foreign Minister, Mr. Zhang Wenjin, must

have resulted in a misunderstanding. Mr. Sahlgren informed me that he

advised the Vice Foreign Minister that he would report on his interview of

Mr. Xu to the Secretary-General., but he gave no indication or commitment to

recommend Mr. Xu for the post in question.

Copy to: Mr. H. Debatin Mr. J. Jonah

I

Press Release Department of Public Information~ Press Section United Nations, New York

Round-up of Session TNC/185 29 Hay 1979

FIFTH SESSION OF COMNISSION Qt; TRANSNATIONAL CORPORATION

New York, 14-25 ~9.19-

'J'he .progress made towards the elaboration of a code of conduct on transnational corporations ,..1as reviewed during a two-week fifth session of the Commission on 'l'ransnational Corporations, which was held at Readquarters from H to 25 Nay.

In considering this item, which the Commission considers to be of top priority among its tasks, it agreed to request the Economic and Social Council to grant three more sessions to the Intergovernmental r,Jorking Group on a Code of Conduct ..-,hich has been given the task of 1rafting the code. The completed draft coce will then be submitted to the Commission at its sixth session.

During its final meeting on Friday, 25 May, the Commission decided to suspend the session and to resume it, possibly on 3 July, at which time it is to adopt its report. The Commission took this decision in view of the fact that the draft report of 'the session uas not available in all working languages. Once adopted, the draft rP-port will be presented to the F.conomic and Social Council at its July/August session in Geneva.

'rhe 48-member Commission also anopted, on the closing day of its suspenned ses~ion, a resolution which would have the Economic and Social Council state that the activities of transnationRl corporations and their collaboration with the racist minority regimes "are c.etrimental to the interests of the oppressed peoples in South Africa, Southern Rhodesia and Namibia" (document E/C.10/L.3«!). ~his action was taken by a roll-call vote of 30 in favour to 6 against, t1ith 5 abstentions.

On this item, the Commission had before it at this session an in-depth study prepare~ at its request by the the United Nations Centre on Transnational Corporations, which serves as the Commission's secretariat. The study, which considered the industrial, mining and military activities of transnational corporations in southern Africa (i1ocument E/C.10/51), was on~ of a series of stuaies which the Centre prepared on subjects relating to transnationals.

· (more)

_____ ......,__.. ___ ......., ____ .. _______ .................... " ...................... -... --.. -- .......... __ ,_, -, .. ,.,.) ... ,_, _______ _ For information media - not an official record

- 2 - Press Release TMC/185 29 r4ay 1979

Also at this session, the Commission examined the progress mane by the Centre to establish a comprehensive information system on all matters relating to transnational corporations (document E/C.10/47). Delegations expressed the view that such a system was an essential basis for the fulfilment of the Commission's objectives.

In discuss-ing this item, the Commission stressea the neecl to pay more attention to collecting, analyzinq and disseminating information on all:eady-estahlished transnational corporations, as opposed to those which were being estahlished. It also emphasized that the system should pay attention to th~ economic, political, social anct lP.gal aspects of transnational corporations. •

In that connexion, the Economic ~nd Social Council decision of 10 May to establish an Ad Hoc Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting was brought to the attention of the Commission. The Council's decision to establish thr? Working Group to review the situation relating to international standards of accounting and reporting was taken at the reauest of the Commmission.

The Commission agreed in that connexion to try to reach a consensus on the priorities for the first two sessions of the Working Group which are to be held prior to the sixth session of the Commission. It decided that if a consensus could not be reached, it would leave the oecision ot priorities up to the Horl<ing Group.

In establishing the Commission in J974, the Economic an<l Social Council decide~ that one of its basic reponsibilities shoulc be to strengthen the capacity of host countries, particularly developing ones, in their cealings with the transnationals by providing technical assistance to Governments requesting it.

After considering the proqress rei;,ort on the Centre's technical co-operation programme (oocument E/C.10/4 9), as ~ell as a report o~ a rounu-table convened by the Centre from 24 to 28 April 1~78 on strengthening the negotiating capacity of developing countries (document F./C.10/50), the Commission reaffirmed the great importance it ~ttached to this question.

Also at this session, the Commission continued consideration of the definition of a transnational corporation, decicHng that such a definition ,,,as imJpOrtant, particul~rly in the context of the preparation of a cocfo of conduct (documents E/C.10/~~ and 58).

On another matter, the Commission decided that clue to the fact that the report of the Committee on an International Agreement on Illicit Payments ( document E/C .10/5 7) , t•hich t·•as adopted on lfl r.,ay, was not available that it was not possible to consider the item. (In its ~ecision of ~- August 1978, the Ec~nomic and Social Council ~ecidea to establish the Committee for the purpose of advancing the work on an international agreement on illicit payments. The Committee t•Jas asked to report on the progress of its ,~•ork to the Commission an~ to the Council.)

(litore)

- 3 - Press Release TNC:/185 29 May 1979

Finally, req;irding the composition of the 16 Expert-Advisers who would assist the Commission in their ot-m personal capacity following the fifth session, the Commission decided to preoare a list of ~8 names, from which . 16 would be chosen. In that regard, the Commission decided to request the Centre to prepare papers on the mo~alities of participation of the Expert-Advisers in the \Jerk of the Commission, as well as to prepare a proposal on the modalities of tha functioninq of the F.xperts, including the principles of rotation and the duration of their perio~ of functioning.

Also at this session, the Commission approved a draft provisional agenda for its next session (c!ocument F./C.10/L. 35 as amendecl) t1hich is now to go

~ beforP the Economic and Social Council for a~option.

The Commission uas established by Economic and Social Council resolution 1913 (LVII) of 5 December 197-1. At its seconn session, held in Lima in March 1976, the Commission c~ecided that the objectives of its progr.amme of t·mrk should be to:

--Further understanding of the nature ana the political, legal and social effects of the activities of tr.ansnational corporations in home and host countries, an<l in international relations, particularly between developea and developinq countries;

--Secure effective international arangements for the operation of transnational corporations designed to promote their contribution to national developmental goals and Norld economic growth while controlling and eliminating their negative effects; and

--Strengthen the negotiating capacity of host countries, in particular · the developing countries, in their aealings with transnational corporations.

Cece of Conduct

The Commission at its first session in 1975 assigned top priority among its various tasks to the formulation of~ code of connuct on transnational corporations. The decision was reaffirmed at each session and endorsed hy the Economic and Social Council.

To expenite work on the code, the Commission established an Intergovernmental norking Group on a Code of Conduct composed of the Commission's 118 rnemhers. The Norking Group, which has been meeting intermittently since 1977, held three sessions since the Commission's last session in ~ay 1978.

At this session, the report of the Norking Group on the progress it made ~urinq those sessions was before the Commission (c"locument E/C.10/46). Acting on the report of the r·Jorking Group, the Commission clecidea to request the Economic and Social Council to request the l<Jorkinq Group to complete the basic draft code of conduct in three more Sflssions which woulcl meet prior to the Commission's next session.

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Effects of Transnational. Core9rations

Press Release TNC/185 29 r-"ay 1979

At its second session in 1976, the Commission called on the Centre to undertake a wide-ranging research Programme on a number of subjects relating to transnational corporations. Also, in a resolution adopted at its fourth session in 1978, the Commission instructed the Secretariat to continue research on activities of transnational corporations in South Africa, Namibia and Southern Rhor!esia a·nn requested the Centre to prepare an in-depth study on the extent of collaboration of transnational corporations in the industrial, mining and milit~rv sectors.

At this session, the Commission had before it the Centre's in-depth study on collaboration of transnational corporations in southern Africa (document E/C.10/51), as well as other studies which it consideren. The other stu~ies coi:icern: transnational corporations in world development (documents E/C.10/38 and 52); transnational corporations and the pharmaceutical industry (document E/C.10/53), transnational corporations in advertising (aocument E/C.10/5 4 );

social, political and legal impacts of transnational corporations (oocument E/C.10/55); and topics for further research (~ocument E;C.10/56).

In connexion with the i~-~epth study on transnational corporations in southern Africa, the Commission.adopted a resolution (document E/C.10/34), s~onsored hy 'J'unisia on beh~lf of the Group of 77. In aa~ition to requesting the F.conomic and Social Council to reiterate that transnational corporations t1ere detrimental to the interests of the oppressed people of southern Africa, the resolution also woul'1 have the Council recognize the urgent need to take "further and effective measures, includinq sanctions", in order to terminate that collaboration.

Also unc1er that resolution, the Council woul~ strongly condemn the continuea investments ano exploitation of black labour by transnational and other corporations which collahorate with the racist regimes in southern Africa, ther .etJy contributing to the perpetration of oppression against the majority of the oopulation.

The Council woulo also reaffirm the inalienable right of the oppressed peoples of southern Africa to self-cetermination and permanent sovereignty over their natural re3ources and all economic activities, and would call upon Governments to strictly adhere to ana ensure the implementation cf sanctions and decisions adopted by the United Nations.

It wonlo further con~emn recent laws and regulations adopted by the racist regimes, p~rticularly, South Africa, in orde to enlist the support of transnational corporations in perpetuation of its policies of apartheid and would call upon home Governments to adopt measures to ensure that their transnational corporations din not coll~borate in the enforcement of such laws and regulations.

Also, it iv0uld urge all transnational corporations to comply with the relevant United Nations resolutions i,y terminating all further investments in ti:he area and by ending their collaboration with the regimes and t-1ould call

(more)

•

- 5 - Pre~s Release TNC/185 29 •1ay 1979

upon Governments l'!hich had not yet rlone so to take legislative, administrative, judicial ana other measures in respect of their nationals and transnational corporations of their nationality who own or operate enterprises in the area in order to put an end to such activities.

In ad~ition, the Council would call upon all States to terminate aJ.l collaboration by their nationals and by tnmsnational and other corporations of their nationality Nith the racist regime~ and, among other things:

-- 'I'o refrain from supplying petroleum or petroleum products or other strategic materials to the regimes;

-- To refrain from eY.tending loans, investments and technical assistance to the regimes and to corporations and enterprises registern in southern Africa;

-- To prohibit economic and financial interests under their ·national jurisdiction from co-operating with the regimes an1 enterprises registerea in southern Africa; and .

-- ";o refrain from all activities vhich might contribute to the strengtheninq of the military capability of the racist regimes.

Finally, the Council would r~quest the Secretary-General: to instruct the Secretariat to continue its research on the activities of transnational corporations in southern Africa and their collaboration with the racist regimes; to submit to the Commission at its sixth session an in-depth analyis of the role of transnational corporations in the industrial, military and nuclear sectors of South Africa, Southern ·Rhodesia and Namibia; to update the list of transnational corporations which clid and c1id not recognize and negotiate ~ith non-whitP. and multiracial trade unions; to continue to publici?.e information on the activities of transnational corporations which collaborated with the racist regimes in southern Africa; and to organize symposia, ~-10rkshops, seminars and other public enlightenment programmes to educate the public of home countries of transnational corporations on the activities of transnational corporations in South Africa and the extent of their collaboration with the regimes there.

Draft Provisional Agenda

Unn.er the draft rlecision (document F./C.10/L.35) on the araft provisional agenda for the sixth session of the Commission, the Commission had recommended to the Bconomic ana Social Council that it approve the craft provisional agen 1fa. The draft provi~ional agen~a woulo inclune the following items:

Report on the activities of the United Nations C,:mtre on Transnational Corporations;

Work related to the formulation of a code of conduct;

Comprehensive information system;

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- 6 - Press Release TNC/185 29 May 1979

"'echnical co-operation activities of the Centre;

Studies on the effects of the onerations and practices of transnational corporations, including activities of transnational corporations

• in southern Africa and their: collaboration ,-iith the racist regime, as ••1ell as other stuaies and topics for future research;

f~1orlt related to the definition of transnational corporations; and

Work relatea to the elaboration of an international agreement on illicit payments.

Mem~ership ana Officers

The members of the Commission are: Algeria, Argentina, Benin, Brazil, Canada, Colombia, Cuba, Fiji, France, German Democratic Republic, Federal Republic of Germany, Ghana, Inc.ia, Inaonesia, Iran, Iraq, Italy, Ivory Coast, Jamaica, Japan, Kenya, Kuwait, Haaagascar, Mexico, Netherlands, Nigeria, Pakistan, Panama, Peru, Polann., Romania, Suriname, Sweden, Swaziland, Svitzerland, Thailan~, Tunisia, Turkey, Uganca, USSR, United Kingdom, United States, Venezuela, Yuqoslavia, Zaire and Zambia. (Two vacancies remain for Asian States.)

The Chairman of the Commission was Horst Heininger (German Democratic Republic). The Vice-Chairmen i.rere Miquel Rodriguez-l.\!endoza (Venezuela) , Ravi Shanker Bhatt (India) ~nd Isaac Odoi (Ghan~). The Rapporteur was Philippe Levy (Switzerland).

Taking part in the Commission's session "'ere 16 persons selected by the Commission to assist it in.'\ private consultative capacity. In 1974, the Ecqnomic ana Social Council instructea the Commission, in consultation with the Secretary-General, to "select persons on the basis of their practical experience, particularly from trace unions, business, public interest groups and universities, from both developen and developing countries, ,-,ho in a private consultative capacity, will assist the Commission and particip~te in its rliscussions". (The lf> persons are J.istei:1 in Press Release TNC/169 of 11 May.)

* *** *

• '

I

Dear Mr. Sahl.gren,

b{f:

File: Inv. µclLU.1 .1\.j

XRef :Transnatiooal.s

lt< 28 April 1979

'Ihank you for Y0UE' letter of 20 ).prll 1979. I have takm

mte of~ kind invitatim far the~ tx> attad a iw:,ept1cn <Xl 'l'bura:1ay, 24 May, txan 6 tx> a p.m., and w will lat

you knew whether he will be able to aacept, \JIXXl his return to

New York.

Mr. Klaus A. 8ahlgmn Kxecatlllve Dinct:or Centm al Transnat.irml cai:parat.ima United Nati.ala Reem BR-1001

Yours dnoarely,

Albert ItJtmn Direct:or

UNITED NA TIO NS

NA TIO NS UNIES

CENTRE ON TRANSNATIONAL CORPORATIONS

CENTRE SUR LES SOCIETES TRANSNATIONALES

P OSTA L A DD R E SS - A U R E SS E P O STALE : U N I T ED :-IATI O NS . N . Y . t00 l 7 CA BLE AD D RESS - A D RE SSE TEL EG RAPH IOU£ : UNATI O NS N£WY O RK

REFER E NC E

20 April 1979

Dear Mr. Rohan ,

On the occasion of the fifth session of the Commission

on Transnational Corporations, it is my intention to host a

reception for representatives of Member States of the Commission

as well as for senior officials from the Secretariat. The

reception will be held in the West Terrace on Thursday, 24 May,

from 6.00 to 8.00 p.m. I would be very grateful if the Secretary­

General could consider honouring the group with his presence on

this occasion.

Mr. Albert Rohan Deputy Executive Assistant to the

Secretary-General Room 3802A.

Yours sincerely,

!(µft I/flt✓ Klaus A. Sahlgr~n Executive Director

l

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COM.6 (2-78 1

• •

1 December 1978

United Nations Centre o Transnational Corporations

SUMMARY

Role

PROGRAMME OF TECHNICAL CO-OPERATION

The Centre has been mandated to provide technical co-operation on

matters relating to transnational corporations. ECOSOC has instructed the

Centre to organize and co-ordinate, at the request of governments, training

programmes and advisory services to strengthen the negotiating capacity: of

governments of developing countries in their dealings with transnational

corporations. The Commission on Transnational Corporations has endorsed

and strongly supports the direction taken by the Centre's technical co­

operation programme ~ which began its field activities in 1976.

Close contact is maintained with UNDP, which on 1 May 1978 issued a

Technical Advisory Note on Transnational Corporations to its field offices

to assist them in designing and monitoring projects; in the letter of trans­

mittal the Deputy Administrator -pointed out that operationally the Centre

acts as the focal point for UN system activities in the field of transnational

corporations.

Delivery

Since the inception of the technical co-operation programme, the Centre

has organized 44 consultancy missions and has at present 27 additional

missions programmed for the next six months. Thirteen countries have

received, or will be receiving, more than one mission. Two-thirds of the

- 2 -

missions have been undertaken by staff from the Centre or consultants on

retainer, and the remainder by consultants recruited specifically for single

missions.

The Centre also organizes training workshops. To date, eight "general"

training workshops have been held for some 250 participants from 43 countries

and regional organizations. Over the next year, an additional six work-

• •

shops are planned, for some 170 participants from a further 24 or so countries

and regional organizations. Three specialized workshops have also been held,

with 65 participants from 18 countries. Thirteen further specialized w:,ork­

shops are planned over the next eighteen months, for some 300 participants.

The Centre has also sponsored two interregional high-level round tables,

and more may be held during 1979-80. In addition, the Centre's technical

co-operation programme provides in-service training through lectures to staff

of government bodies dealing with aspects of foreign investment; supports

educational. institutions in designing and implementing aspects of their

curriculum dealing with foreign investment; and responds to government

requests for specific information on transnational corporations.

Content

Advisory missions have dealt with the formulation or revision of legis­

lation and regulations relating to transnational corporations either generally

or in specific sectors, or on specific issues (e.g., transfer pricing). They

have also involved assistance in evaluating the merits of various types of

contractual arrangements for specific projects, such as joint ventures,

licensing and management contracts. Other missions have provided advice on

- 3 -

the development of foreign investment evaluation, screening and monitoring

guidelines, and still others have been concerned with developing or

strengthening the relevant infrastructures, procedures and information

system in this regard. Finally, the Centre has also assisted governments

by undertaking staff work· in support of negotiations with transnational

corporations. A feature of the advisory missions has been the Centre's

ability to respond rapidly when necessary: by their very nature, requests

for assistance in this field are often urgent. In several instances a

consultant has been made available within two weeks.

The Centre's training programmes consist of preparing, organizing,

and conducting workshops on regulation of and negotiations with transna­

tional corporations in general, or workshops focused on specific economic

sectors and on specific issues. The workshops are organized at the inter­

regional, regional, sub-regional or national level, and are always conducted

at venues in developing countries.

The general workshops are interdisciplinary, involving economic, legal

and administrative elements and are designed to assist officials in dealing

more effectively with the main issues that arise in the relationship between

transnational corporations and developing host countries such as legislative

and administrative frameworks; issues of ownership, control and the division

of gains; forms of participation; taxation; transfer pricing; transfer of

technology; regional co-operation; the nature of transnational corporation

structures and operations (including DCF analysis); and negotiating procedures

and techniques.

- 4 -

The three specialized workshops held so far have dealt with negotiations

in the petrochemical sector, on mining legislation and mineral agreements,

and on the legal aspects of drafting agreements with transnational corpora­

tions. Workshops in the near future will cover the petrochemical, mineral,

fisheries, forestry and financial sectors, and Joint venture, transfer

pricing, information and disclosure, and labour issues.

High-level round tables aim to bring together senior developing country

government officials with extensive experience at the highest level on

matters related to transnational corporations for the purpose of exchansing

views and drawing conclusions regarding host government-TNC relationships in ·

specific contexts. To date, such round tables have been held on transfer

pricing and on negotiations. The proceedings of the round tables are to be

disseminated to governments of developing countries so that they may benefit

from the experiences of other high-level officials in dealing with these

issues.

Financing

The technical co-operation programme is largely financed through the

Centre's trust fund for technical co-operation, which has so far received

voluntary contributions or commitments totalling almost $2 million from

Sweden ($620,000), the Netherlands ($400,000*), United Kingdom ($365,000),

Norway ($290,000) and Switzerland ($200,000). The UN Regular Programme

has financed one interregional adviser post. To a limited extent, financing

* Including $150,000 from the original $500,000 contribution to the Centre as a whole.

- 5 -

has also been provided through UNDP's allocations to developing countries

(the country IPF's) and this source of funding is expected to become more

significant in the future.

* * * * * * * * * * *

- 6 -

THE TECHNICAL CO-OPERATION PROGRAMME IN DETAIL

Index

A. ADVISORY PROJECTS ••.• 7

8

13

15

17 B.

c.

D.

Type I: Policy advice

Type II: Evaluation/comments on (draft) laws and agreements

Type III: Staff work in support of negotiations

TRAINING PROGRAMMES •••••..•••••••••

Type I: Workshops on regulation of and negotiation with TNCs 17

workshops completed. • • • • • • • • 21

upcoming workshops 23

Type II: Specialized training workshops. • • . • . • • • • 24

Type III:

petrochemical sector

mineral sector

:fisheries sector

forestry sector.

Joint ventures

transfer pricing

information and disclosure

contract drafting ..••••

financial sector

TNCs and labour unions

specialized workshops in pipeline.

High-level interregional round tables

Type IV: In-service training

Type V: _Support for educational institutions ••

INFORMATION SERVICES

TECHNICAL CO-OPERATION PROGRAMMING ACTIVITIES.

25

25

26

27 27 27 28

28

29

29

29

30

33

33

35

36

• t.

..

- 7 -

A. ADVISORY PROJECTS

The general approach endorsed by the Commission points out that the

scope of the advisory projects can be as broad as the scope of governmental

measures and policies affecting foreign participation in various forms. It

may be provided by individual experts or by multi-disciplinary teams normally -

composed of economists and lawyers, and possibly with additional expertise

from engineers, financial analysts and accountants.

Advisory projects are designed to assist governments in exploring t~e

policy choices and range of options available for dealing with transnational

corporations. This may involve the formulation or revision of legislation

and regulations relating to transnational corporations either generally or in

specific sectors (e.g., natural resources), or on specific issues (e.g., trans­

fer pricing). It may also involve assistance in evaluating the merits in

specific projects of various types of contractual arrangements such as joint

ventures, licensing, management contracts, industrial co-operation agreements

and production-sharing agreements; as well as in developing foreign invest­

ment screening and monitoring guidelines and procedures.

The effectiveness of a host government's legislation and agreements with

transnational corporations depends to a large extent on the institutional

arrangements for their administration and monitoring. Accordingly, assistance

is provided to governments in developing or strengthening their relevant

infrastructures, procedures and information systems.

- 8 -

Finally, the Centre assists governments by undertaking staff work in

support of negotiations; this may include assistance in the formulation and

analysis of projects in so far as questions of foreign participation are

involved, as well as in analysing and commenting on proposed agreements with

transnational corporations.

To date the Centre has received the following requests for advisory

projects.

Type I: Policy advice

Ecuador - The Government of Ecuador received a consultant in April i978

to discuss various aspects of negotiations with transnational corporations

including joint-venture negotiations, information requirements for negotia­

tions and negotiating techniques, and an analysis of a recent unsuccessful

negotiation. In addition, a seminar attended by 20 government officials was

held (Mr. LiptoJ:.I).

Egypt - In December 1976 the Government was (i) assisted in reviewing

the merits and alternative approaches to providing protective tariffs in

favour of foreign investors -(Mr. Chudson), and (ii) advised on issues such

as management fees and the drafting of agreements (Mr. Lipton).

' Egypt - In November 1977 the General Authority for Arab and Foreign

Investment received a consultant to discuss procedures concerning negotia-

1/ Name indicates person carrying out the assignment. Names followed by 11:-c11 are external consultants specifically recruited for that assignment; others are staff or consultants on retainer to the United Nations .Centre on Transnational Corporations.

..

- 9 -

tions with transnational corporations, as a result of which Egypt requested

the Centre to organize a training workshop in November-December 1978

(Mr. Chudson).

El Salvador - A consultant visited El Salvador in May 1978 to review

with the Government policies on incentives and concessions for foreign invest­

ment (Mr. Chudson).

Honduras - The Government of Honduras received a consultant in April 1977

to review, with its Industrial Development Corporation (CONADI), agreements

involving joint ventures, licensing agreements and management contracts and

to advise .on certain ongoing negotiations (Mr. Chudson).

Indonesia - The Government of Indonesia received an exploratory mission

on foreign investment issues in October 1978 (Mr. Chudson).

This is being followed up by a two-man mission in May 1979 to review

foreign investment regulations, and financial and fiscal policies related

to transnational corporations (Mr. Chudson and a tax specialist).

Interregional: Pharmaceutical Sector - The Centre is participating in

meetings concerned with the development and implementation of a project to

develop domestic and inter-country purchasing, research and production capa­

bilities in the pharmaceutical sector in developing countries. The project

is being executed by the Government of Guyana, on behalf of the non-aligned

countries, with the co-operation of UNIDO, WHO, UNCTAD and the DTCD (Mr. Dell).

Ivory Coast - A request has been received from the Government of the

Ivory Coast for advice on policy alternatives in connexion with regulating

the access of transnational corporations to domestic - sources of credit.

Further specification of the request is awaited.

- 10 -

Jamaica - The Government of Jamaica requested in November 1978 a desk

analysis of comparative petroleum legislation and contracts; the following

provisions will in particular be identified and analysed: resource manage­

ment aspects, fiscal elements, exploration and relinquishment provisions,

production obligations, and issues of definition. The analysis will also

show the hypothetical _variability of production and cash flow under various

forms (and terms) of foreign participation, and an annex will show examples

of the most advanced types of legislation and contracts (Mr. Krueger -c).

This · study will be followed by advice on specific legislation and contracts

(see Types II and III below).

Mali - The Government of Mali has requested a consultant on foreign

investment. Further clarification is awaited.

Mexico - The Government of Mexico received a consultant in June 1978 to

review the fiscal and credit aspects of foreign investment as well as the

regulation of foreign portfolio investment (Mr. Vaitsos).

• l

Mexico - The consultant made a return visit in July-August 1978 to advise

the Ministry of Finance on methodological, data and analytical requirements

for studies being sponsored by the Ministry on the fiscal and monetary impli­

cations of operations of foreign enterprises (Mr. Vaitsos).

Mexico - The Government of Mexico has requested advice on certain issues

relating to transnational corporations, viz control in joint-venture agree­

ments and problems of market concentration. A preliminary response has been

made, and a mission is likely to take place in 1979.

Oman - A consultant visited Oman in December 1977 to discuss the develop­

ment of foreign investment activities. He advised the Government on sources

of investment promotion assistance and on training opportunities in this

field (Mr. Chudson).

- ll -

Papua New Guinea - The Government of Papua New Guinea requested a mission

to examine the legal and administrative controls on transfer pricing and

profit manipulation, and to compare these with such controls in force else­

where which might be relevant to the circumstances of Papua New Guinea. The

mission was undertaken in December 1977 (Mr. Roumeliotis -c).

Peru - The Government of Peru requested a consultant to discuss their

requirements for expert services concerning petroleum and mineral contracts

with transnational corporations and also the Centre's training services.

The mission took place in August 1978 (Mr. Lipton). Subsequently, requests

were received for a general workshop, three specialized seminars, and for a

review of an agreement (see Type II below, and section B).

Philippines - In March 1977, the Government of the Philippines received

a consultancy mission to advise on transfer pricing, the purpose of which

was to assess the extent of transfer pricing abuses, and in that light,

review the adequacy of existing laws and regulations, administrative mechanisms

and personnel needs for dealing with transfer pricing issues (Mr. Rowland -c).

Philippines - The Government of the Philippines has requested the Centre

to advise on alternative approaches to regulating the use of foreign

trademarks · and brand names. The Centre is undertaking an analysis of

the approaches to this question taken in other countries (Mr. Gabay -c).

Portugal - The Government of Portugal requested a mission to advise on

the regulation and negotiation of foreign investment, which took place in

November 1977 and resulted inter alia in a request for a training workshop

in June 1978 (see section B) (Mr. Chudson).

Portugal - Portugal also received a consultant in April 1978 to advise

on institutional requirements and policies related to the monitoring and

control of transfer pricing (Mr. Vaitsos).

- 12 -

Romania - A staff member visited Bucharest in March 1978 to review

requirements for assistance, and this resulted in the elaboration of a work­

shop on joint venture negotiations (see section B) (Mr. Chudson).

Saudi Arabia - The Government of Saudi Arabia received a mission in

October 1977 for preliminary discussions on technology transfer issues

(Mr. Lipton, Mr. Vaitsos) and a three-man mission on guidelines and model

clauses for licensing agreements will take place in December 1978

(Mr. Goekjian -c, Mr. Stein -c, Mr. Singh).

World Tourism Organization - Following~ visit by a Centre consultant

(Mr. Lipton, October 1978) in response to a request from WTO, the Centre has

been asked to comment on a draft report on hotel management contracts in

developing countries. WTO expects to send the draft at the end of 1978.

Thailand - The Government of Thailand requested wide-ranging consultancy

services for the Board of Investment to anal.yse existing legislation, policies

and experience with transnational corporations, make recommendations for

future policies, recommend guidelines, criteria and procedures for assessing,

screening and monitoring foreign investment and other forms of agreements

with transnational corporations, and for strengthening the institutional

capabilities of the BOI. An initial mission took place in October 1978

(Mr. Chudson, Mr. Singh) and a report has been submitted containing draft

policy recommendations. A follow-up mission is scheduled for January-February

1979. Subsequently, consultants may be provided to assist in (i) contract

analysis, and (ii) the implementation of new screening and monitoring guide-

- 13 -

lines and procedures. In this connexion a training workshop is also

planned (see section B).

Type II: Evaluation/comments on (draft) laws and agreements

Dominican Republic - The Government of the Dominican Republic has

requested a cons~tant to advise on contracts and agreements with transnational

corporations concerning bauxite mining, processing, and international sales

agreements. The mission will take place in February 1979 (Mr. Lipton).

Egypt - Evaluation of petroleum laws and regulations and of a new model

petroleum agreement was undertaken in early 1977 (Mr. Rouhani -c, Mr. Lipton).

Law of the Sea Conference - In response to a request from the Chairman

of Negotiating Group 2 of the Law of the Sea Conference, the Centre provided

comments in August 1978 on certain alternative draft provisions under dis­

cussion which relate to deep-sea mining (Mr. Lipton). In October 1978 the

Chairman requested additional support from the Centre concerning rates of

return achieved, and expected, by mining companies, on which a report will

be submitted to the Chairman by the end of February 1979.

Jamaica - The Government of Jamaica requested in November 1978 that a

consultant assist them in the development of new legislation concerning

petroleum exploration and exploitation. A mission will take place in eariy

1979. Subsequent support in negotiations has also been requested (see

Type III below).

Liberia - A draft offshore oil concession agreement was evaluated and

commented on in ~id-1977 (Mr. Rouhani -c, Mr. Lipton).

- 14 -

Namibia - The Commissioner for Namibia has requested the Centre to

analyse, advise and make recommendations to the competent authorities con­

cerning the provisions of current agreements between TNCs and the de facto

pre-independence administration of Namibia, in particular agreements in

respect of mineral prospecting, mining and marketing, with a view to increas­

ing the share of the benefits accruing to independent Namibia from these

activities. Work will begin upon formal endorsement by the Council for

Namibia (Mr. Asante).

Papua New Guinea - In November 1976 a consultant assisted the Goverpment

in reviewing policies on TNCs, as well as in reviewing with officials the

status of negotiations on fishing, copper and timber agreements (Mr. Lipton).

Papua New Guinea - In March 1977 the Centre provided detailed comments on

two agreements: one on timber industries development, and the other on a

draft agreement on the formation of a Joint venture to undertake reforesta­

tion and exportation of wood chips (Mr. Lankester -UNDP, Mr. Lipton).

Papua New Guinea - In February 1978 a mission took place to provide

assistance in drafting regulations for offshore petroleum and natural gas

exploration (Mr. Krueger -c).

Papua New Guinea - In July 1978 the Centre provided detailed comments on

draft legislation for mineral and petroleum taxation (Mr. Asante).

Peru - The Government has requested the Centre to review and provide a

critique ofa secondary recovery petroleum agreement. ConQultants have been

proposed to the Government.

Portugal - The Government has indicated a desire to have the Centre

review a pyrites mining agreement when a draft becomes available in 1979.

- 15 -

Sierra Leone - A request for assistance in reviewing petroleum sector

legislation has been received, and further information on the nature of the

assistance required has been sought.

Type III: Staff work in support of negotiations

Antigua - A request was received in November 1978 for support in joint

venture negotiations. Further background and clarification is expected

shortly.

Bolivia - The Government of Bolivia received assistance in July 1977 in

evaluating bids for a truck assembly plant, involving preparation of back­

ground information, evaluating tenders, and advising on necessary legisla­

tion (Mr. Baranson -c).

Dominica - The Government of Dominica has requested the Centre to

advise the Citrus Grower's Association of Dominica on preparations for

negotiations with the local subsidiary of a fruit processing transnational

corporation, with a view to increasing growers' returns on grapefruit sales.

This project is being implemented in November-December 1978 (Mr. Levin -c,

Mr. Erez -c).

Guinea-Bissau - The national petroleum company of Guinea-Bissau has

requested advice from the Centre. The specifics of the request are awaited.

Jamaica - The Government of Jamaica has requested the Centre to conduct

a workshop for its negotiating team for petroleum exploration contracts,

shortly before the opening of negotiations in March 1979. The Government

bas also requested the Centre to provide staff work in support of its

negotiating team.

- 16 -

Lesotho - The Centre analyzed in November 1977 a draft hotel contract

to establish the sensitivity of the variables determining the Government's

return to changes in gross receipts. Government negotiators relied heavily

on this analysis in subsequent negotiations (Centre staff, Mr. Lipton).

Sri Lanka - Notification was received in October 1978 that a request

for advice on foreign investment negotiations would shortly be forthcoming.

Solomon Islands - A consultant mission was undertaken in June 1977 to

advise the Government on negotiations concerning bauxite development, in

particular to advise on negotiating positions following the receipt of~

feasibility study from a mining company. Follow-up assistance in 1979 has

been requested (Mr. Stern -c).

Swaziland - A request has been received to advise the Government on

technical issues relating to preparations for forthcoming negotiations with

TNCs in the forestry sector. A consultant visited Swaziland in March 1978

to review the Government's requirements (Mr. Lank.ester -UNDP). A follow-up

consultancy project is expected, in conjunction with an in-depth sectoral

study to be organized by the Government.

- 17 -

B. TRAINING PROGRAMMES

The Centre's training programme consists mainly of preparing, organizing

and conducting workshops on regulation of and negotiation vith TNCs in

general, or in specific sectors, as well as workshops focusing on specific

issues. These projects, which are conducted for officials from developing

countries, are organized at the interregional, regional, sub-regional or

national level.

Type I: Workshops on regulation of and negotiation with TNCs

These workshops are interdisciplinary, involving economic, legal and

administrative elements and are designed to assist officials in dealing

more effectively with the main issues that arise in their relationships

between transnational corporations and developing host countries, and thus

strengthen the bargaining positions of developing countries.

The curriculum of these workshops includes a review of the relevant

legislative and administrative f~amework within vhich transnational corpora­

tions operate in host countries in the light of major characteristics of

transnational corporations and of host country objectives. In the course of

this review an examination is made of generally applicable legislation as

well as laws applying to certain sectors such as mining and petroleum. The

issue of control in relation to foreign and domestic equity holdings and

other managerial and technical agreements is discussed, and the advantages

and disadvantages of joint ventures are explored. The tax structures in

host and home countries and their joint impact are also important topics.

- 18 -

On the basis of information on various approaches to these issues

currently adopted in different countries, the alternatives are analysed and

discussed. This discussion centres on the themes of ownership (alternative

forms of foreign participation) and its relation to control and the division

df gains (including taxation, intra-firm transactions and various forms of

profit limitation).

The curriculum also deals with how to prepare for negotiations, typical

negotiating issues and the formulation of negotiating positions.

The workshops usually also focus on how the process of regulation .and/or

negotiation may be strengthened by the pursuit of co-ordinated policies by a

group of host countries, particularly in the case of a regional grouping

joined in some form of economic integration, ranging from common regional

policies toward foreign investment to harmonization of specific measures

such as taxation.

More particularly, the three main areas of possible divergent interests

between a host country and a transnational corporation, on which regulation

and negotiation tend to concentrate, are analysed: financial provisions

(taxation, subsidies, exchange control, intra-firm accounting); ownership

(distribution of equity, capitalization of non-financial inputs, fade-out

arrangements, rights and obligations of parties under joint ventures); con­

trol (including the reasons for the possible divergence between ownership

and operational control, and control through government stipulations on

matters such as employment, exports, value added, transfer of technology,

access to local capital). Among the forms of participation considered are:

- 19 -

controlled subsidiary; minority contractual joint venture; licensing con­

tr~ct; management contract; co-production or production-sharing arrangements;

as well as possible combinations of these forms. These various alternatives

in specific sectors--such as mining--are explored through discussions and

case studies, and the legal arrangements which are appropriate for the

various forms of participation axe examined.

The negotiation process itself is analysed and simulated using case

studies. Information requirements, personnel requirements for the negotia­

tion team, and the conduct of negotiations are discussed.

The workshops give particular emphasis to familiarizing government

officials with the quantitative elements of the negotiating process. In

particular, this involves an understanding of the technique of "discounted

cash flow" (DCF) analysis, including the impact of host and home country

taxation and of precisely how variations in certain contract terms being

negotiated may affect the profitability of the arrangement to the transna­

tional corporation and the net financial return to the host country. The

evaluation of foreign investment projects according to criteria of social

cost-benefit is also discussed. Organizational and procedural questions in

administering and monitoring agreements are also considered.

In view of the obvious need for host country negotiators to be familiar

with the nature of the party with whom they deal, the organization, manage­

ment characteristics, objectives and strategies of transnational corporations

(with differentiation between the various branches of economic activity) are

an important feature of the Centre's workshops.

- 20 -

The workshops are directed by a senior member of the Centre's staff

. and implemented with an international staff of senior lecturers with

extensive experience drawn from a variety of specializations and national

backgrounds.Y When necessary, the workshops are conducted on a bilingual

basis, as was the case with workshops in Central America and West Africa.

Documentation is provided for workshop participants, which also serves them

as useful reference material

In each case care is taken to consult with the Governments of the

participating countries to tailor the content and the presentation to the

specific characteristics of the requesting country or countries, and to

find lecturers from the country or region.

_g_/ Lecturers used at the workshops in Zambia, Central America, Caribbean, West Africa, Sudan, Brazil, Portugal and Egypt, and at the specialized work­shop for the Andean Pact were: Paulo Guilhermo Aguiar C. (Brazil), Vice­presidente, Grupo Ultra, Sao Paulo; Enrique Aguilar (Mexico), staff member of the International Centre for Industrial Studies, UNIDO, and former Director­General of the National Registry of Technology Transfer, Mexico; Michael A. Ajomo (Nigeria), Faculty of Law, University of Lagos; Samuel K. B. Asante (Ghana), Deputy Attorney General of Ghana, on leave of absence as Senior Adviser on Legal Matters, Centre on Transnational Corporations; Walter A. Chudson (USA), Interregional Adviser on Transnational Corporations, Centre on Transnational Corporations; William G. Demas (Trinidad), President, Caribbean Development Bank; John H. Dunning (UK), Professor of International Investment and Business Studies, University of Reading; Victor Duran (Mexico), official of the Mexican Registry of the Transfer of Technology; Ricardo Escobar (Venezuela), President, Sistemas Telef6nicos de Venezuela; Chief M. 0. Feyide (Nigeria), Head of the Petroleum Inspectorate, Nigerian National Petroleum Corporation, and former Secretary-General of OPEC; Kwame Fordwor (Ghana), President of the African Development Bank and the African Development Fund; Peter P. Gabriel (USA), former Dean of the School of Management, Boston University; Carlos Alberto Garay (Colombia), petrochemical consultant; Jose Luis Garcia L. (Mexico), Director de Petroquimica, Petroleos Mexicanos, Mexico City; Samuel V, Goekjian (USA), Attorney-at-Law; Oscar Gonzalez U. (Peru), Subgerente del Area Industrial Petroperu, Peru; Charles R. Irish (USA), Assistant Professor of Law, University of Wisconsin Law School; Pierre M. Kerlan (France), Deputy Director, Ministry of Finance; Sanjaya Lall (UK), Lecturer, Institute of Economics and Statistics,

- 21 -

Workshops completed

Zambia - (January 1976) - A national workshop for 25 officials from

Zambia.

Central America - (June 1977) - A sub-regional workshop for 30 partici­

pants from Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama,

BCIE (Banco Centroamericano de Integraci6n Economica) and ICAITI (Instituto

Centroamericano de Investigaci6n y Technolog!a Industrial). This workshop

was organized by the Centre in co-operation with SIECA (Secretaria Permanente

del Tratado General de Integraci6n Econ6mica Centroamericano) in San Jose,

Costa Rica.

Caribbean - (August 1977) - A sub-regional workshop for 31 participants

from the CARICOM (Caribbean Economic Community Secretariat) countries

University of Oxford; Charles Lipton (USA), Attorney-at-Law, and consultant to the Centre on Transnational Corporations; Michael J. McIntyre (USA), Professor of Law, Wayne State University Law School, and formerly Director of Training and Research Associate, International Tax Program, Harvard Law School; Raymond F. Mikesell (USA), Professor of Economics, University of Oregon; Carlos Paya (Spain), Presidente de la Empresa Nacional de Ingenier!a y Tecnologia, INITEC, Madrid; Jaime A. Roquebert (Panama), Director, Cerro Colorado Corporation; Gert Rosenthal (Guatemala), Director, Regional Office of ECLA, Mexico City; Rana Singh (India), Chief Secretary, State of Assam, and formerly responsible for technology licensing, Ministry of Finance, and Senior Economic Adviser, Centre on Transnational Corporations; Shea Smith III (USA), Vice-President, Cotuit Corporation, Management Consultants, Boston and St. Louis; Samuel A. Stern (USA), Attorney-at-Law; John Stopford (me), Professor of International Business, London Business School; David R. Tillinghast (USA), Attorney-at-Law specializing in international taxation; Ernest Tironi (Chile), Professor, Catholic University of Chile; Phillip Townsend (USA), President, Phillip Townsend Associates; Constantine Vaitsos (Colombia/Greece), Professorial Fellow, Institute of Development Studies, University of Sussex, former Director of the Technology Division, Andean Pact, and consultant to the Centre on Trans­national Corporations; Louis T. Wells (USA), Professor, School of Business Administration, Harvard University; John Wood (Liberia), Head, Concession Secretariat, Ministry of Finance.

- 22 -

(represented: Antigua, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica,

Montserrat, St. Kitts-Nevis-Anguilla, St. Lucia, St. Vincent, Trinidad and

Tobago, Caribbean Development Bank, Caribbean Investment Corporation, and

the East Caribbean Common Market Secretariat). This workshop ~as organized

by the Centre in"co-operation with the Government of Guyana and CARICOM in

Georgetown, Guyana.

West Africa - (November-December 1977) - A sub-regional workshop for 50

participants from the ECOWAS (Economic Community of West African States)

region (represented: Benin, Gambia, Ghana, Guinea, Ivory Coast, Liber~a,

Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo and Upper

Volta). The workshop was organized by the Centre in co-operation with the

Government of Ghana in Accra, Ghana.

Sudan - (December 1977) - A national workshop for 36 officials from the

Sudan was held in Khartoum.

Brazil - (April 1978) - A national workshop for 20 officials from Brazil.

The workshop was organized by the Centre in co-operation with the Government

agency Financiadora de Estudos e Projetos (FINEP) in Rio de Janeiro.

Portugal - (June 1978) - A national workshop for 30 officials from

Portugal was held in Lisbon with the collaboration of the newly established

Government agency, the Institute for Foreign Investment (IIE).

Egypt - (November-December 1978) - A national workshop for 30 officials

from Egypt. The workshop is being organized by the Centre in Cairo, in

collaboration with the General Authority for Arab and Foreign Investment

(GAAFI).

..

- 23 -

The Centre has also provided: (a) one lecturer (Mr. Lipton) for the

conference on transnational corporations held in Port Moresby, Papua New

Guinea, in March 1976, organized by the Commonwealth Secretariat; (b) two

lecturers (Mr. Chudson, Mr. Lipton) for the Latin American workshop on foreign

investment held in Buenos Aires, Argentina, in May 1976, and organized jointly

by UNDP and INTAL; (c) a lecturer (Mr. Lipton) on transnational corporations

to address the University of the Philippines Law School in March 1977; (d) one

lecturer (Mr. Hellawell -c) for the sub-regional workshop on taxation organized

by ECA in Lusaka, Zambia, in August 1977; (e) a ~ecturer (Mr. Lipton) op

foreign investment for a group of Government officials in Ecuador (see page 8);

(f) two lecturers (Mr. Lipton, Mr. Singh) for a symposium on technology transfer

in the mineral sector in Belgrade, Yugoslavia, in September 1978; (g) one

lecturer (Mr. Vaitsos) on transnational corporations for an Asian and Pacific

Development Institute/ASEAN/ESCAP Joint Unit training course on transnational

corporations and sub-regional co-operation in Bangkok, Thailand, in November

1978.

Upcoming workshops

Namibia - (early 1979) - The United Nations Commissioner for Namibia

has requested the Centre to organize a series of short workshops (3-5 days

each) on transnational corporations for Namibians. The first is likely to

be held in early 1979, and others will be held at intervals therea.:fter. The

first workshop will review the most important issues likely to face a new

Namibian administration upon independence, and discuss the central issues

of government policies towards transnational corporations. The subsequent

workshops will focus on specific aspects such as: laws and regulations,

- 24 -

financial and fiscal issues, negotiations in the mining sector, the negotiat­

ing process, forms of participation, negotiations in the fisheries sector,

and transfer of technology.

Romania - (March 1979) - A national workshop for some 30 officials from

Romania. The workshop is being organized by the Centre in Bucharest.

Caribbean - (April 1979) - A second sub-regional workshop was requested

by the members of the Caribbean Development Co-operation Committee (CDCC).

The workshop is likely to be held in Barbados or in Grenada.

Latin America (June 1979) - A regional workshop being organized i~

collaboration with the ECLA Joint Unit to be held in Santiago.

Peru - (1979) - The Government of Peru has requested the Centre to

conduct a national workshop, to be held in Lima in mid-1979.

Philippines - (1979-80) - The Government of the Philippines has expressed

interest in a national workshop, and this is being followed up.

Southern Arrica - (1979-80) - A regional workshop ror some 30 partici­

pants from seven COU]ltries of Southern Africa. The Government of Botswana

has informally indicated its willingness to host this workshop.

Type II: Specialized training workshops

Given their more focused approach, the workshops provide an opportunity

for considering in greater depth the particular issues related to (a) regula­

tion of and negotiations with transnational corporations in specific sectors

(e.g., mining or petrochemicals), or (b) to specific issues (e.g., transfer

pricing or information and disclosure). The duration of such workshops is

- 25 -

1-2 weeks and they are attended by 20-30 government officials, often from

several countries, who hold upper level positions related to the subject

of the workshop.

Petrochemical Sector

Andean Pact - (October 1978) - A sub-regional workshop organized in

collaboration with the Andean Pact Secretariat for 13 officials from Bolivia,

Colombia, Ecuador, Peru and Venezuela, as well as 12 Pact officials, on

negotiations with transnational corporations in the petrochemical sector.

The workshop focused on the main issues related to the possible participation

of transnational corporations in the development of the petrochemical industry,

with particular attention to joint venture forms, technology transfer agree­

ments, construction contracts, strategic options to be considered before

opening negotiations, and special. factors in the negotiating process. The

workshop took place in Lima, Peru. As a result of this workshop, the Centre

will publish in co-operation with the Andean Pact Junta a report containing

guidelines for developing countries on negotiations in the petrochemical

sector, together with an annex containing the papers prepared specifically

for the workshop.

Asia - (1979) - The Centre expects to organize a regional workshop on

negotiations with transnational corporations in the petrochemical sector,

similar to the 1978 workshop for the Andean Pact and using the report of

that workshop. This workshop may take place in Bangladesh.

Mineral Sector

Africa - (October 1978) - The Centre and the Commonwealth Secretariat

jointly organized a workshop on mining legislation and mini~ agreements

- 26 -

with transnational corporations for African countries with major mining

interests. The workshop was held in Bagorone, Botswana, and 22 participants

came from Angola, Botswana, Ethiopia, Ghana, Kenya, Lesotho, Liberia, Namibia,

Sierra Leone, Tanzania, Uganda and Zambia.

Peru - {1979) - The Government of Peru has requested two short high­

level seminars on (i) negotiating petroleum agreements, and {ii) negotiating

mineral agreements. These are expected to be implemented during the first

half of 1979-

Fisheries·Sector

South East Asia and Pacific - (January 1979) - The Centre and FAQ are

jointly organizing a sub-regional workshop on joint ventures and licensing

agreements for countries of the South China Sea and Pacific area, which will

be held in Manila, Philippines. A particular feature of this workshop will

be a five-day simulation of the negotiation of a fishery joint venture agree­

ment. Participants are expected from Cook Islands, FiJi, Gilbert Islands,

Hong Kong, Indonesia, Malaysia, Papua New Guinea, Philippines,

Thailand, Tonga, Tuvalu, Singapore, Solomon Islands and Western Samoa.

Latin America - {July 1979) - The Centre will organize, Jointly with

SELA {Sistema Econ6mico Latinoamericano) and FAO, a workshop on negotiating

multinational fisheries agreements and joint ventures, and negotiating

fisheries joint ventures with transnational corporations, for the 13 member

states of the SELA Fisheries Committee. The workshop will take place in

Lima Peru.

South Asia - (1979) - The Centre and FAO will Jointly organize a second ·

sub-regional workshop on joint ventures and licensing agreements in fisheries

for Sri Lanka, India, Iran, Bangladesh, Pakistan, Burma and Maldives, similar

- 27 -

to the January 1979 workshop for countries of the South East Asia and Pacific

area (above). Sri Lanka has offered host facilities.

Forestry: Sector

Asia - (1979) - The Centre has been requested to organize

with the collaboration of the ESCAP Joint Unit a regional workshop on regula­

tion and negotiation with transnational corporations in the tropical hardwoods

sector for interested countries in the region. Contact is being established

with FAO for their collaboration in the implementation of the workshop. The

workshop is likely to take place in Bangkok, Thailand.

Joint Ventures

Thailand - (1979) - Following the Centre's policy advice to the Board

of Investment (see section A), the Government is requesting a workshop with

particular emphasis on negotiating, screening and monitoring joint-venture

agreements, as well as other issues such as technology transfer and taxation,

for senior officials in the context of the new policies and procedures being

developed with the support and advice of the Centre.

Asia - (1979-80) - The Centre has been requested to organize with the

collaboration of the ESCAP Joint Unit a regional workshop on negotiating

joint ventures covering, inter alia, legal, financial, fiscal, control,

management, negotiation and dispute settlement aspects. The workshop is

expected to be held in Bangkok.

Transfer Pricing _

Interregional workshop on transfer pricing - (1979) ~ The Centre is

organizing a workshop aimed at reviewing issues related to transfer pricing

and other forms of intra-affiliate transactions by transnational corporations

- 28 -

and regulations and administrative procedures for dealing with the problem,

including collection and analysis of relevant information . Special interest

in this workshop has been expressed by the Governments of Malaysia, Philippines

and Jamaica. This workshop will draw upon the materials and results of the

round table on transfer pricing referred to below. The location of this

workshop has not yet been decided upon.

Information and Disclosure

Interregional workshop on information and disclosure - (1979-80) - The

Centre is organizing a workshop aimed at familiarizing government officials

with the types of information required for various purposes related to the

regulation of and negotiation with transnational corporations as well as

monitoring of their activities. The aim of this workshop is to develop a

better understanding of the usefulness of different types of information

and their sources. With respect to disclosure, the workshop will aim at

reviewing procedures to improve the range of information provided to govern­

ments on a regular basis by transnational corporations. Considerable interest

in this workshop has been expressed by several countries in the Asian and

Latin American regions. The location of this workshop has not yet been

decided upon.

Contract Drafting

Sudan - (December 1976) - A workshop on the legal aspects of drafting

agreements with transnational corporations. This workshop was organized by

the Centre for 23 officials, largely from the Office of the Attorney General.

- 29 -

Financial Sector

Peru - (1979) - The Government of Peru has requested a short high-level

seminar on negotiating with transnational corporations in the international

wholesale money market. It is expected to be implemented in early 1979.

Transnational Corporations and Labour Unions

Africa - (1979) - The OAU has requested the Centre to develop, with

the Organization of African Trade Union Unity, a specialized workshop for

trade union leaders. ILO has agreed to jointly sponsor this workshop and

to take the lead in drafting the programme.

Specialized Workshops in Pipeline

Caribbean - A regional workshop on transnational corporations in the

tourism sector has been requested by the Caribbean Cooperation Development

Committee. Further developments are expected in 1979,

Latin America - A regional workshop for officials of interested Latin

American governments on negotiations with transnational corporations in the

petroleum sector. This workshop is expected to be organized by the Centre

jointly with UNDP.

Asia - Countries in the Asian region have expressed interest in work­

shops on shipping, international trading companies, export processing zones,

hard minerals, and petroleum.

Interregional workshop on the experience of Eastern Europe in negotiating

with transnational corporations - Such a workshop has been discussed with the

Government of Poland, which has expressed interest in providing host facilities.

Interregional workshop on taxation - This workshop will focus on tax

policies of host countries with specific reference to the major economic

- 30 -

sectors, the advantages and limitations of tax incentives, the problems of

corporate income taxation as well as international tax questions and the

relationship of transfer pricing to home and host country tax policies.

Interregional workshop on management contracts - The Centre is consult­

ing governments to determine potential interest iri a workshop on management

contracts.

Type III: High-level interregional round tables

The aim of high-level round tables is to bring together senior govern­

ment officials with extensive practical experience at the highest levei on

matters related to TNCs for the purpose of exchanging experiences and drawing

conclusions regarding government/TNC relationships as concerns specific

issues. The proceedings of such round tables would be disseminated to

governments of developing countries so that they may benefit from the ex­

perience and views of high-level officials from other developing countries.

Round table on transfer pricing - (March 1978) - Jointly with the

Institute of Development Studies of the University of Sussex, the Centre

organized a round table on transfer pricing focusing on ways and means of

identifying the existence of transfer pricing abuses, the calculation of its

incidence and measures which could be used to control such practices. The

round table was attended by four officials from Asia, three from Africa,

four from South America and the Caribbean, and eight from Europe, as well as

ten staff of the Centre, UNCTAD, and IDS and other universities.

The round table provided an opportunity for a systematic exchange of

views and experience. Particularly valuable was the participation by

- 31 -

responsible senior officials from both developed and developing countries

who, while approaching the question of transfer pricing from the different

circumstances of their respective countries, were nevertheless able to

identify common problems and approaches. The round table also brought

together a large volume of documentation containing practical analysis

both of the issues arising in particular commodity and service sectors and

general questions of policy and procedure for dealing with the transfer

pricing problem. Both sectoral and functional problems were examined on

an interdisciplinary basis, taking into account economic, financial acc?unt­

ing and legal aspects. The Centre together vith the Institute of Development

Studies will analyse the documentation and discussion at the round table and

will seek the most effective means of making the results available to all

those concerned with this subject.

Round table on negotiations - (April 1978) - This round tabl~ brought

together a small group of senior government officials 31 having the responsi­

bility at the highest level for negotiating with TNCs in their respective

3/ Mr. Mauricio de Maria y Campos (Director, Tax Promotion, Ministry of Finance, Mexico), Mr. Gamal E. Nazer (Deputy Chairman, Investment and Free Zones Authority, Egypt), Chief M. 0. Feyide (Head of the Petroleum Inspectorate, Nigerian National Petroleum Corporation, Nigeria), Mr. N. D. Ganjei (Deputy Minister for International Economic Affairs, Ministry of Commerce, Iran), Mr. Luiz Vitor Magalhaes (Secretariat of Planning, Office of the Presidency, Brazil), Mr, P. C. Nayak (Joint Secretary, Secretariat for Industrial Approvals, Department of Industrial Development, Ministry of Industry, India), Mr. David Simonda (Permanent Secretary, Ministry of Plan­ning, Zambia), Mr. Edgardo L. Tordesillas (Vice Chairman and Managing Head, Board of Investments, Philippines); it was chaired by Mr. Sidney Dell, Special Adviser to the Centre on Transnational Corporations, and several Centre staff, as well as representatives of UNCTAD and UNIDO, participated.

- 32 -

developing countries, or who have exercised such responsibility in the

recent past. The round table provided an opportunity for the participants

to exchange views on some of the main issues arising in such negotiations,

namely: participation and control; financial arrangements; the transfer of

technology; the balance of payments; and link.ages. The agenda was designed

to foster a discussion that would cut across sectors and differences in the

circumstances of individual countries.

The participants recognized that in order to derive maximum benefit

from TNCs a host country should have well-articulated objectives and a

clearly defined development strategy. They also thought it important for

host countries to provide for stability and continuity in their policies,

and to define the rules of the game, so as to minimize uncertainties. Parti­

cipants considered further that the general terms and conditions on which

TNCs are allowed to operate should be governed by legislation, except in

cases where the activities in question are so particular or significant as

to warrant individual treatment. Participants attached great importance to

effective domestic co-ordination of government policies.

It was recognized, however, that the costs of such policies should be

kept in mind so that uneconomic activities were not encouraged. Participants

felt that host governments should not accept passively an international

division of labour determined as the combined and perhaps haphazard result

of the production strategies of large numbers of TNCs but should seek to

alter it to their own long-run benefit to the extent that they could do so

without pricing themselves out of the international market.

. . '

' ..

- 33 -

The Centre is now identifying specific sectors on which negotiation

round tables will be organized during the coming _two years.

Government regulatory functions in the transfer of technology - (1978-79) -

Under the leadership of UNIDO, the Centre is co-operating with UNCTAD, WIPO

and selected governments in preparing and organizing a project to study the

progress ma.de, the achievements of, and the lessons that can be drawn from,

the operations of developing countries' regulatory agencies for the transfer

of technology. The focus is on regulatory mechanisms, intervention policies,

and administrative machinery for the supervision of technology transfer .•

Type IV: In-service training

Barbados - (April 1978) - The Centre provided a consultant to the

Central Bank of Barbados to lecture on problems related to transfer pricing

(Mr. Chudson) .

India - (1979) - The Indian Institute of Foreign Trade has requested

a consultant to deliver a limited number of lectures ·on transnational corpora­

tions, and to consult with the faculty on their teaching in this area

(Mr. Chudson) .

Type V: Support for educational institutions

Philippines - (March 1977) - A consultant to the Centre participated

in a one-week workshop of Asian Law Professors to assist them in developing

teaching materials and techniques for training lawyers to deal with matters

related to transnational corporations (Mr. Lipton).

- 34 -

Colombia - (1978) - The Centre is assisting the Law School of the Univer­

sity of Los Andes in the development of a graduate programme on matters

related to transnational corporations. This involves assistance in the

preparation of curricula and teaching materials, providing guidance to the

teaching staff, and visits by occasional lecturers. A mission visited the

University in June 1978 (Mr. Lipton, Mr. Singh, Mr. Stopford); a lecturer

will visit Bogota in 1979, and will also conduct seminars for faculty of

this and other universities as well as government officials.

Sudan - (1979) - The University of Khartoum has requested assistance

similar to that provided to the University of Los Andes, and a formulation

mission will take place in January 1979 (Mr. Chudson).

. . '

. . .

- 35 -

C. INFORMATION SERVICES

The third category of assistance is information services through which

the Advisory Services of the Centre responds to specific inquiries from

governments for specific information. To date the Centre has responded to

requests from the Government of Colombia for information on typical coal

royalty rates and on the legal relationship of a Colombian company affiliated

to a TNC; from the Government of Liberia on model iron ore extraction agree­

ments as well as on ways of measuring performance in management contracts;

from the Government of Belize on specimen formats of management contracts;

from Sudan on model uranium development contracts; from the Governments of

Egypt and Papua New Guinea on information related to specific TNCs; from

Egypt for comparative regulations against dumping; from Sri Lanka concerning

tyre production joint ventures; from Malaysia on liquified natural gas (LNG)

contracts with transnational corporations; and from Jamaica on offshore oil

exploration legislation adopted in other countries.

- 36 -

D. TECHNICAL CO-OPERATION PROGRAMMING ACTIVITIES

(i) Asia - (June and September 1978) - In collaboration ·with the

ESCAP Joint Unit, the Centre arranged two high-level consultative meetings

on increasing the negotiating capacity of host countries in their dealings

with transnational corporations. One meeting took place in Kuala Lumpur

(June 1978) with 11 participants from Bangladesh, India, Iran, Korea,

Malaysia, Pakistan and Thailand, and one took place at Pattaya, Thailand

(September 1978), with 14 participants from Indonesia, Malaysia, Philippines,

Sri Lanka and Thailand. At these meetings the participants discussed common

issues in relations with transnational corporations, and out of this discus­

sion emerged suggestions for the Centre and the Joint Unit in developing

their future technical co-operation activities in this region. Workshops

were recommended in the tropical hardwoods, fisheries and petrochemicals

sectors and on joint venture agreements, and in connexion with shipping,

international trading companies, export processing zones, hard minerals, and

petroleum (see section B). The participants felt that it would be useful to

also combine specific advisory services with such training activities, and

in this connexion made reference to the consultancy services being provided

to the Thailand Board of Investment (see section A).

(ii) During 1979, consultations will take place with countries of

the ECLA, ECA and ECWA regions in a manner similar to the meetings held in

June and September 1978 with the countries of the ESCAP region. The ECLA

consultations will be held, in collaboration with the ECLA Joint Unit, at

. . .

- 37 -

the meeting of CEGAN (Committee of High-Level Government Experts Lof ECLA

member states/ on the International Development Strategy) in Santiago in

March 1979. It is hoped to arrange the ECA consultations, in collaboration

with the ECA Joint Unit, in conjunction with a major ECA meeting also in

March 1979. Discussions are underway with the ECWA Joint Unit concerning

modalities for consultations in that region; meanwhile, several Middle

East countries have expressed interest in a workshop on negotiating con­

tracts with transnational construction companies.

(iii) The Centre together with the UN Office of Personnel continu~s

its work to establish, and code for easy access, a roster of experts who

could be available for consultancy work and lecturing under the Centre's

technical co-operation programme. In order to increase the size and geo­

graphic representation of the roster, the Secretary-General addressed a

note verbale to United Nations member states in 1977 inviting Governments

to submit names and curricula vitae. The roster will also be made available,

in an abstracted form, to requesting governments who may wish to contact

consultants directly.

(iv) The Centre has an ongoing evaluation programme to assess the

impact and usefulness of its technical co-operation programme. A report

will be submitted to the Fifth-Session of the Commission on Transnational

Corporations.

t

ROUTl,-IG SLIP FICHE DE TRANSMISSION

Mr. Albert

" FROM: Klaus A. Sahlgren 1/.//1 DE: //v1r, . •

Room No. -No de bureou Extension - Poste Do

BR-1001 8453 FOR ACTION

FOR APPROVAL

FOR SIGNATURE

FOR COMMENTS

MAY WE DISCUSS?

YOUR ATTENTION

AS DISCUSSED

AS REQUESTED X SUITE A VOTRE DEMANDE

NOTE AND RETURN NOTER ET RETOURNER

FOR INFORMATION POUR INFORMATION

Enclosed please find our draft for a repl.y by the Secretary-General to the letter of the National Council of the Churches of Christ, concerning the so­called Berne Declaration. I also enclose for your information the text of a rele­vant declaration made by the competent Swiss Einister in the Swiss Parliament.

}ty" personal feeling is that the Berne Declaration people ••• sont en train de remuer des cendres froides, while we in 7the U .N. try to look forward constructi­

y. I did not like either hr . Stock­l's diffusion of copies to others.

-781 'i{;t,j

l • •

UNITED NATIONS

NATIONS UNIES

~05TAL. ADOR-.SS-AORESSI: P'OSTA L.£ ; UN I TED NAT I ONS , N , V. 10017

Dear Mr. Sto~~ell,

MR. A. ROHAN /

CENTRE ON TRANSNATIONAL CORPORATIONS

CENTRE SUR LES SOCIETES TRANSNATIONALES

On behalf of the Secretary-General I wish to thank you for your letter of 30 June 1918 concerning the work of the United Nations Centre on Transna"tional Corporations, with particular reference to the documentation recently published by the Berne Declaration.

First, may I say how much your interest and the interest of your organization in United Nations affairs is appreciated, as well as the strong support that your membership has always afforded to us. There is no doubt that we depend very much on the goodwill and alertness of organizations such as your own in ensuring that public opinion is made aware of the true significance of United Nations efforts in dealing with the manr issues with which it is confronted. It is in this context that I very much welcome the concern that you have expressed regarding the matters dealt with in the above mentioned documentation.

At the same time, I am sure you will appreciate that it would be neither proper nor feasible for the Secretariat . to seek to enquire into all the ways in which influence is brought to bear upon the United Nations, through a multitude of governmental and non-governmental channels. We are concerned with issues in the form in which they are ultimately posed to us, rather than with their complex and varied origins and evolution before they reach the United Nations. It is for each country to determine the manner . in which its interests should be represented in the United Nations. Apart from the fact that it would be quite impossible for the United Nations Secretariat to investigate all the cases of alleged impropriety that might be brought to its attention, and to make an objective determination of the facts in each such case, my own feeling is that it is for the Member countries , themselves to deal with these problems in the way that they consider best. In saying this, I am encouraged to think that the National Council of the Churches of Christ is one of many institutions that will insist on protecting the good name of the United Nations and on furthering its objectives.

Mr. Eugene L. Stock.well Associate General Secretary National Council of the Churches of Christ Division of Overseas Ministries 475 Riverside Drive New York, New York 10027

• •

- 2 -

You express concern as to whether the matters referred to by the Berne Declaration have had an adverse effect on the rate of progress of the work of the United Nations on a code of conduct and on the establishment of a comprehensive information system. I am convinced that this is not the case. The issues involved in reaching international agreement on a code of conduct are real issues of substance, re-fleeting important divergencies of interest. Those divergencies were the subject of prolonged and inconclusive inter­national debate long before the United Nations Centre on Transnational Corporations was established. I believe that as a result of the work of the Commission and of the Centre in this field the prospects for general agreement on a code of conduct are better now than at any time in the past, even though much remains to be done. Likewise, the length of time required to establish a comprehensive information system results from difficulties inherent in the task itself. The process of designing the system in such a way that it will be really useful to the Member countries and meet their most important needs at reasonable cost inevitably takes time, and whatever difficulties we have faced on the way should be viewed in that light. At the same time I welcome your expression of concern .regarding the dangers of undue delay in both of the above areas, since it is certainly of great importance that the momentum of the work should be fully maintained.

May I say once again how much we appreciate your having written about these matters as well as the support given to the United Nations by the National Council of the Churches of Christ.

Yours sincerely,

IG.aus A. Sahlgren Executive Director

Assistant Secretary General

I\

'

Eugene L. Stockwell Associate General Secretary

for Overseas Ministries (212) 870-2 175

Paul F . McCleary Associate Secretary

(212) 870-2257

~JAT!ONAL COU~JCll OF T HE CHURCHES OF CHRIST 1NTHEU.S.A. DIVI SION OF OV ERSEAS MINIS T RIES

475 Riverside Drive, New York, N.Y. 10027 Cable: Domin icus William P. Thompson, President Claire Randall, General Secretary

UN Secretary General Kurt Waldheim United Nations Plaza New York, New York 10017

Dear Dr. Waldheim:

June 30, 1978

The National Council of Churches continues to snpport the United Nations in its efforts to appraise the positive and negative impact of transnational corporations on the economies and · cultures of developing countries. Various policy statements adopted by our Governing Board over tha past ten years concur that the behavior of TNCs is in need of closP scrutiny; we have also reconnnended the UN to the memberships of our denominations as~ source of leadership in appraising the issues of economic justice. Thus, we were quite encouraged when the Group of Eminent Persons created the UN Centre on Transnational Corporations in 1974, and we have watched with extreme interest the progress of the UN in creating a code of conduct of appropriate behavior for TNCs; As you know, J. Irwin Miiler, present Chairman of Cummins Engine Company, is one of the Group of Eminent Persons that created the Centre and is a past president of the National Council of Churches.

Thus we were dismayed when we were notified by the Swiss Protestant Berne Declaration that they had published docu-mentation indicating the secret manipulation by corporations of the Committee of Eminent Persons, and possibly other UN agencies that deal with TNCs such as the United Nations Develop­ment Programme. As you may be aware, the documentation includes the minutes from clandestine meetings in 1973-4 between top corporate executives, Swiss government officials, and Hans Schaffner, a former President of Switzerland, and present official of Sandoz, who was included as a "government representative" on the Committee of Eminent Persons. According to the documentation, tae companies asked Schaffner to delay the formation of a code of conduct, or if this failed to restrict its formulation to international agencies sympathetic to TNCs, to restrict further disclosure on TNC operations, especially on profit movements and transfer pricing, and to reject any enforcement procedures for a code of conduct. More recently the documents indicate TNC attempts to influence FAO and UNDP through the Industrial Cooperative Program.

Cont inu ing the Programs of the Division of Fore ign Missions and Church World Service

Dr. Kurt Waldheim -2- June 30, 1978

Obviously, we are not criticizing corporations for their attempts to influence the various UN agencies; they have as much right as the churches and the poor in developing nations to do so. However, we are critical of the manner in which this influence takes place: Instead of raising issues in a public forum, their attempt at influence through secret strategy sessions . with top government and UN members is improper. We wonder if this is the reason why the code of conduct has been debated for three years without achieving any substantive policy, and why the UN data bank on specific industrial sectors has not become functional, while some of our member churches have called for a code of con­duct for Nestle's and other infant formula companies in their marketing practices to developing nations, Nestle executives are quietly preventing the appropriate UN bodies from raising this issue, much less investigating it and acting upon such investigations.

We therefore join our friends from the Bern Declaration in requesting that you study the ·enclosed document and share your reactions with us. We also would be interested in your ideas about ways that the United Nations can protect itself in the future against such practices.

We believe that the implications of this document deserve serious study within the UN. We look forward to hearing from you.

ELS/dg Enclosures: 3

cc: John J. Deutsch Sen. Jacob Javits J. Irwin Miller Juan Somavia K. Sahlgren

Respectfully yours,

b~--.f.~ Eugene L. Stockwell Associate General Secretary

Enclosures: 2

cc: Andrew Young Cyrus Vance Sen. Frank Church Sen. Edi:vard Kennedy

Erklarung vpn Bern Fur solidarisct1e Entwicklung

Sekretariat cler Vereinigung der Erklarung von Bern fur die deutsche Schweiz

Administration: Gartenhofstrasse 27 8004 Zurich Telefon 01 2426900

FOR IMMEDIATE RELEASE 6-6-78

For further information contact: Dr. Anne-Marie Holenstein (212) 962-2980

A Swiss organization has released a set of documents which charge six

large Swiss multinationals with infiltrating the committee which set up an

important new United Nations' agency -- the UN. Center on Transnational

Corporations (UNCTC). In 60 pages of documentation the "Bern Declaration"

(see attached) reproduced excerpts .from highly confidential minutes and

correspondence of six multinationals, namely Nestle, Ciba-Geigy, Sandoz,

Hoffman-Laroche, Brown Boveri and Sulzer. The first four of these multina­

tionals together account for sales of over $4 billion in the United States.

The release of these documents has already provoked a heated debate in

the Swiss media. The controversy has centered around Hans Schaffner, a

former Pre :.ident of Switzerland and a current official of one of the coMpanies

involved (Sandoz). Schaffner serves as one of the 20 members of the Group

of Eminent Persons which established the need for the UN Center in 1973-74

(U.S. members were Senator Jacob Javi ts and J. Irwin Mil for, Chairman of

Cummins Engine Co).

While officially classed as a governmental representative, Schaffner was

in effect representing the private interests of the six multinationals. 1110

companies' strategy was prepared in over 15 secret meetings of top corporate

executives, at least one of which included both Schaffner and Swiss government

officials. The companies elaborated the following guidelines for Schaffner:

1) Delay the formation of a code of conc.luct for multinational corporations.

2) Restrict any further disclosure on the operations of multinationals,

particularly on the sensitive issues of profit movements and transfer

pricing.

3) Reject any enforcement procedures for a code of conduct.

4) If all above efforts failed, restrict the fonnulation of a code of

conduct to international agencies sympathetic to the multinationals.

- more -

-2-

Recently another UN agency -- the Food and Agricultural Organization -­

decided to ex-pell the Industrial Cooperative Program (ICP), an FAO body composed

of 100 lea<ling multinationals. Trade unions and Third World countries charged

that the ICP jeopardized the FAO's ability to serve as a neutral development

agency. TI1e multinationals again requested Schaffner use his influence with UN

Secretary General Kurt Waldheim to have the ICP transferred to 'another UN

development agency.

The information in these documents ~~11 be of particular interest to Third

World nations who are seeking the assist~ce_of the UN in dealing with multi­

nationals. In effect these documents cast doubt on the impartiality of the UN's

work on multinationals.

The

debate

I)

Bern Declaration hopes that the report wil 1 stimulate an international

and investigation within the UN on the following questions:

TI1e relationship bet~een the big multinationals and the UN.

The docwnentation establishes that the corporations succeeded in unduely

influencing the UN and its agencies.

2) The relationship between multinationals and their governments.

The docwnentation demonstrates how multinationals influence the policies

of their governments.

3) TI1e relationship between the corporations and public opinion.

TI1e documentation establishes that the corporations are able to put

economic journalists to work for their purposes, so as to manipulate the

attitude of public opinion towards multinationals and developing countries.

A representative of the Bern Declaration, Dr. Anne~Marie Holenstein is in

New York until Sunday 11. She can be contacted at (212) 962-2980 and can

provide copies of the document in English. Additional copies in English,

French arid German are available from the above address.

- 30 -

. . , .. ' . ' ,. ..

WHAT IS THE BERNE nECLAPATION?

Berne Declaration: Original name of a mnnifesto on Swiss

development ~olicy published in 1968 upon initiative of

several Protestant theologians. The Berne Declaration was

signgd by 11'000 people willing to take on certain

financial and p6litical responsib~lities (among other things,

to pay 1 - 3% of their income for aid to developing

countries during a 3-year period). This developed into an

organization which combines publication of information on

relations between Switzerland and the third world with

political and social action. The or~anizat~on is financed

entirely by its membership; it receivcsno subsidies from

political parties or the government.

•

'1 · \M'11'· \ OWJ\~d ~-'=t'eA~~eQ \M(l,t -iJ;!,-1'.o.d 1\,1(} 11te. ;·,v ./. 'l. '( - ,..,

"""' ~ , ~~ v U\) to wJ 1t\:1 · tM _ - fl.A ;(!IJ... , UNITED NATIO - NATIONS UNIES 4f( ~/,.

CENTRE of TRANSNATIONAL CORPORATION ; ~ CENTRE SUR LES SOCIETES TRANSNATIONALES

~ INTEROFFICE MEMORAN MEMORANDUM INTERIEUR ---------· . TO: A:

The Secretary-General DATE: 21 October 1977

REFERENCE: ______ _

THROUGH: 8/C DE:

FROM: Klaus A. Sahlgren r,~I. ,1 j /4£ ./ Executive Director lfi4ti //; t, 7~ DE:

SUBJECT: Report of the Secretary-General on International Standards of Accounting and Reporting

OBJET:

The Commission on Transnational Corporations, at its first session in March 1975, decided upon the establishment of the Group of Experts on International Standards of Accounting and Reporting which was subsequently authorized by the Economic and Social Council at its fifty-ninth session in July 1975. The Group, composed of 14 outstanding personalities f'rom Government, the accountancy profession, business circles including transnational corporations, the trade union movement and universities, was appointed early in 1976. Under its terms of reference, it was invited - to ·review -the existing practices of reporting by transnational corporations and the reporting requirements in different countries, identify gaps in information in existing corporate reporting and examine the feasibility of various proposals for improved reporting; and recommend a list of minimum items, together with their definitions, that should be included in the reports of transnational corporations and their affiliates.

The Expert Group held two sessions, from 30 August to 10 September . 1976 and from 18 to 29 July 1977. It was chaired by Governor L.K. Jha of India who had also been the Chairman of the Group of Eminent Persons which had first recommended the establishment of an expert group on international accounting standards. At the close of its second session, the Group adopted a report which sets out in its annex recommended reporting stl;Ltldards and lists of minimum items of information to be disclosed by transnational corporations in their general purpose reports. These standards and lists are designed to improve the published reports of transnational corporations and to enhance their comparability. They are viewed by the ·Group as a first step towards the eventual establish­ment of an international, comparable .system of standardized accounting and reporting.

I •••

I - 2 -

We have evaluated the Expert Group's report and consider the recommendations to be realistic and appropriate. On the basis of that report we have drafted the attached Report of the Secretary-General which, inter alia, presents for the consideration of the Commission on Transnational Corporations a number of recommendations for further action. They include the adoption of measures to promote the voluntary application of the reporting standards and lists developed by the Group of Experts, the setting up of an intergovernmental group of experts to work towards an intergovernmental agreement on international reporting standards and the establishment of procedures for the reviewing, on a continuing basis, of national disclosure requirements and the reporting practices of transnational corporations.

The Report of the Group of Experts, together with the Report of the Secretary-General are to be issued in early December as a United Nations Sales document.

Mj

:I

RA -

As requested, I have examined the attached report to see if there is anything which might be content ·5.aus or politically sensitive.

If anything, the report veers on the side of undue caut{on• It is largely confined to statements of fact and compilations of information. These, and any speculative considerations, are almost invariably backed up by references to original sources of information or opinion. The report makes no judgements and is descriptive rather than prescriptive.

South Africa is consequently referred to in guarded terms as a nracist mir.ority regime" (in quotes) or a "racist regime", and the authors of the report have taken pains to distinguish between the legality of the South African Government and the illegality of the regime in Rhodesia and the illegality of the South African rule f.m Nam1Lmia.

The only sections of the report remotely 11political 11

are those dealing with employment and wages policies. Here again, the authors have confined themselves to a very standard description of the policy of apartheid, without passing any judgements not backed up by previous United Nations Resolutions.

The conclusions on the report concerning TNCs• dealings with Rhodesia through ~outh African subsid~aries did not seem to raise any serious or previously unknown issues. However, you may wish to look at paragraph 166 on page 76.

~c - 19/4

PS: I note that this report has come out in final version, where a mis-quotation is perpetuated: In footnote No. 150, former UoK. Prime Minister Edward Heath is attributed as describing Lonrho as the "unacceptable force of capitalism. 11 In fact, I believe he described it as the 11unacceptable face ••• ".

,.~, UNITED NATIONS wJ NATIONS UNIES

~

RAFEEUOOIN AHMED

I -

'~ (~ t t~'~t l// :._j,-, -, C' IJ J ✓

,/[I~

373

4 1¼1_~ ~ Factual and descriptive; not

analytical; very light, particularly

in respect of Namibia and Zimbabwe.

Certainly not an "in-depth" study of

''activities" and "extent of collabo­

ration ••• ".

/> .• _., tv-...--.. -( t •\~ II

BET

As I have already told you, no

comments on the political aspects

but you might wish to consider

the above remarks.

AAF

15 April 1977

. UNITED NATIONS {A\ NATIONS UNIES CENTRE; ON TRANSNA TibNAL CORPORATIONS~ CENTRE SUR LES SOCIETES TRANSNA TIONALES

TO: A:

THROUGH: 8/C DE:

FROM: t:>E:

SUBJECT: OBJET:

INTEROFFICE MEMORANDUM MEMORANDUM INTERIEUR

The Secretary-General

Alberto Jimenez de Lucio, Deputy Executive Director Otticer-in-Charge ot the Centre on Transnational

Corporations

Report on the Activities of TBCs in Southern Africa

DATE, __ 2_8_Mar __ c_h_l_9_7_7_

REFERENCE: ______ _

The CODIIRi.ssion on Transnational Corporations, at its second session in March 1976, requested the Centre to carry out an in-depth stu~ on "the activities of transnational corporations in Southern Africa and the extent of their collaboration with the illegal regime in that area". The Centre has been requested to submit this report to the third session of the Commission which will meet in New York trom 25 April to 6 May. A copy ot our draft is attached hereto.

In discharging its :mandate the Centre consulted with experts from both within and outside the United Rations. To the fullest extent possible we toek into account the relevant work done b7 other departments of the Secretariat. Given the paucity ot priaary data, especially trom official sources, a considerable amount of our information is derived from secondary sources. While we were not in a position to check the accuracy of every piece ot information, we have made every effort to use reliable sources. In addition to aggregate data the report contains many references to individual corporations and their operations in Southern Africa. In so doing we have tried to use objective language and left the facts to speak tor themselves.

I consulted the Legal Counsel on :matters of definition such as "illegal regimes" and "Southern Africa". In preparing the report we also consulted closely with the Atrican Div sion of the partment ot Political Affairs, Trusteeship and Decoloni ation.

1

COM-lISSION ON TRANSNATIONAL CORPORATIONS Third session New York, 25 April - 6 May 1977 Item of the provisional agenda

Distr. GENERAL

E/C.10/ 30 ·11 March 1977

ORIGINAL: ENGLISH

ACTIVITIES OF TRANSNATIONAL CORPORATIONS IN SOUTHERN AFRICA AND THE EXTENT OF THEIR COLLABORATION WITH THE

ILLEGAL REGIMES IN THE AREA

Report of the Secretariat

'/

TABLE OF CONTENTS

Paragraphs Page

INTRODUCTION ••••••••• • •. • • • • •• • • • • • • 1-26 1

A. The Mandate. • • • • • • • • • • • • • • • • • • • • • 1 .-5 1

B. Review of United Nations voYk• • • • • • • • • • • • • 6-22 3

C. Sources of information. • • • • • • • • • • • • • • • 23-26 10

CHAPTER I: SOUTH AFRICA • • • • • • • • • • • • • • • • • • 27-112 12

A. Overview ••••• • • • • • • • • • • • • • • • • • • '?7-11~ 12

B. Transnational corporate activities in main economic sectors •••••••••••••••• • • • 44-102 23

l. Manufacturing. • • • • • • • • • 0 • • • • • • • • 44-7Q 23

2. • • • . . . .. . • • • • • • • • • • 80-QO 35

3. bdnkinf and finance • • • • • • • • • • • • • • • Ql-Q8 39

4. Oil • • • • • • • • • • • • • • • • QQ-1()2 43

C. Employment and wages •• ~ •••••••••••••• 1<)3-112 45

CHAPTER II: NAMIBIA 113-138 50

A. Overview • • • • • • • • • • • • • • • • • • • • • • o 113-115 50

B. Transnational cornnr~~e activi~ies in main economic sectors •• • • • • • • • • • • • • • • 116-135 51

1. Mining • ••••••••••••••••••••• 119-12~ 53 2. Fishing and agriculture • • • • • • • • • • • • l::>0-131 57

~3. Manufacturing and constru~tion • • • • • • • • • 1,~-133 58

4. Banking and financial services - - . . • • • • • • 1~4 59

5. Oil • • . . . . . . . . . . . . . . . . . . . . 135 60

c. Employment and wages •• • • • • • • • • • • • 136-138 61

TABLE OF CONTENTS

INTRODUCTION• ••• • • • • • • • • • • • • • • • • • • • •

A. The Mandate. • • • • • • • • • • • • • • • • • • • • •

B. Review of United Nations VOYk• • • • • • • • • • • • •

C. Sources of information. • • • • • • • • • • • • • • •

CHAPTER I: SOUTH AFRICA. • • • • • • • • ••• • • • • • •

A. Overview ••••• • • • • • • • • • • • • • • • • • •

B. Transnational corporate activities in main economic sectors •••••••••• • • • • • • • • •

1. Manufacturing. • • ••• • • • • . . . .. . • • • •

2. Min~nJ • • • • • • • • • • • . • • • • • • • • • • •

3. b<Ulkinf and finance • • • • • • • • • • • • • • •

4. Oil • • • • • • • • • • • • • • • •

c. Employment and wages •••••••••••••••••

CHAPTER II: NAMIBIA

A. Overview • • • • • • • • • • • • • • • • • • • • • • •

B.

c.

Transnational cornn~A~~ activi~ies in main , economic sectors • • • • • • • • • • • • • • • 1. Mining • • • • • • • • • • • • • • • ••••

. . . • • •

2. Fishing and agriculture • • • • • • • • • • • • '3. Manufa:turing and c·onstru(?tion

4. Banking and financial se·rvices

• • • • • • • • •

• • • • • • • • Oil . •• . . . . . . . • ••••••••••

Employment .and wap:es •• • • • • • • • • • •••

Paragraphs Page

1-26 1

1 .-5 l

6-22 3

23-~6 10

~7-112 12

~?-h3 12

44-102 23

44-7Q 23

80-QO 35

91-QB 39

QQ-11')2 43

103-112 45

113-138 50 )

113-115 50

116-135 51 119-12t, 53

l~Q-131 57

ll~-133 58

134 59

135 60

136-13A 61

..

I (ii)

ParagrP .phs Page

CHAPTER III: SOUTHERN RHODESIA/ZIMBABWE 139-176 66

A. Overview. . • 139-150 66

B. Transnational corporate activities in main economic sectors . • . • • . . • . • • . • . . . 151-172 10 1. Manufacturing . 151-159 70

2. Mining. . . 160-166 74

3. Banking. 167-170 76

4. Oil. . • . . . . . . • 171-172 11

c. Employment and wages . • . . • • .. 173-176 78

-1-

INTRODUCTION

A. The Mandate

f, The Commission on Transnational Corporations requested the Centre on

Transnational Corporations to prepare an in-depth study of

"The activities of transnational corporations in southern Africa and the extent of their collaboration with the illegal regimes in that area, taking fully into account work done by the relevant bodies of the United Nations, which should be made available to the Commission at its next session". 1/

2. . The Legal Counsel to the _ Secretary-General defined the terms "southern

Africa" to cover Southern Rhodesia /limbabwe, Namibia and the Republic of

south Africa; and "illegal regimes~• as those exercising or purporting to

· / · b b d N 'b. In the view of the exercise authority in Southern Rhodesia Zima we an a.mi ia.

Legal Counsel, the · term "illegal regime" as used in the context of southern Africa,

has a specific legal connotation, which must be distinguished from other terms such

·as "illegitimate•~ "racist" or "unrepresentative". Furthermore, the Legal Counsel

observed that "while the authorities exercising government control in Southern

Rhodesia/Zimbabwe and l'lamibia are clearly "illegal regimes" and have been so

qualified by the General Assembly and the Security Council, these same organs have

refrained from qualifying as "illegal" the government of South Africa. This omission

is both deliberate and legally significant".~/

3. While the term "activities of transnational corporations in southern AF'rica"

is clearly understood and appears to refer to the presence and practices of

transnational corporations in the areas under consideration, the term "collaboration"

raises a number of questions. The term collaboration is commonly used to indicate

Commission on Transnational Corporations, Report on the Second Session, Official Records of the Economic and Social Council, Sixty-first Session, Supplement No. 5 {E/5782), chap. I, para. 29.

Response by Legal Counsel {13 September 1976) to request by the Centre on Transnational Corporations on the interpretation to be given to the terms "southern Africa II and "illegal r~gimes" as contained in the Report of the Connnission on Transnationai Corporations, Second Session, paragraph 29, document E/5782.

·--2-

co-operation by one person with another in a connnon endeavour and is not

pejorative unless the co-operation refers to a questionable activity. In legal

_usage the term does not appear to have a specific technical meaning. In some i t and

countries, however, legislation passed in times of war refers to / prohibits

"collaboration with the enemy". In such statutes the term "collaboration II is

usually given the meaning of "aiding" or "abetting".

• -3-

4. In United Nations practice the term has been used in a variety of

contexts. Several General Assembly resolutions have condemned or called

for a cessation of certain types of economic activity in South Africa,

Namibia or Southern Rhodesia. For example, General Assembly resolution

2923 (XXVII) called for intensified campaigns to bring about "the dis­

continuance of all military, economic and political collaboration with

South Africa". A recent General Assembly resolution urged Member

States to terminate all economic collaboration with the Republic of South

Africa, including: the supply of petroleum, petroleum products or other

strategic materials; extension of loans, investments and technical

assistance either to the Government itself or companies registered in

S th Af . th ~ f . t · 3/ ou rica; or any o er .orm o economic co-opera ion.-

5. It is possible to intei,pret "collaboration" with illegal regimes to

cover any observance of laws and regulations passed by the illegal regimes;the

violation of United Nations sanctions, the payment of taxes or royalties; the

supply of arms to the illegal regimes or conducting public relations activities

on their beha.lf; es~ablishing joint ventures with the illegal authorities and

supplying them with technology;or undertaking any activities that facilitate the

·surviva.l of the illegal regimes and their maintenance in pover. But the term can

al.so simply mean investing or operating in a territory vhich is under the control

of an illegal regime.

B. Review of United Nations ~Q~~

6. The issue of the activities of transnational corporations in southern

Africa has arisen before various United Natbns bodies in a variety of

contexts and has been the subject of several resolutions by the various

United Nations bodies including the Security Council and the General

Assembly.

3/ A/'!IBS/31/6/Rev.l

-4-

While some of the resolutions relating to transnational corporation

activities have dealt generally with the entire southern Africa, others

have focussed specifically on Namibia, Southern Rhodesia and South

Africa separately. The former types of resolutions have usually

been in the context of decolonization or respect for human rights. One

recent example is resolution A/31/7 {1976) entitled "Activities of foreign

economic and other interests which are impeding the implementation of

the Declaration on the Granting of Independente to Colonial Countries

and Peoples in Southern Rhod~sia, Namibia and in all other territories

under colonial domination and efforts to eliminate .colonialism and racial

discrimination in southern Africa."

8. In this resolution the General Assembly called upon those govenunents

which had not yet done so to take legislative, administrative or other measures

in order to put an end to enterprises in colonial Territories

.

---- which are owned by their na.ti~nals or bodies 1in~orporated under

their jurisdiction, ~enever such enterpri~es are detrimental to the

ifiterests of the inhabitants of those Territories, and to prevent

new investments which run counter to such interests. It

condemned the in~ensified activities of those foreign economic·,

financial and other interests which contirrue to expl,oit the natural

and bums.n resources of the colonial Territories and to accumulate

and repatriate huge profits to the detriment of the . ·~nterests of the

inhabitants. particularly in southern Africa, thereby impeding the

ree.liw.t5.on by the peoples of tho Territorjes of their legitimate ,.. ' .

aspirations for eelf-detennination and independence.

-5-

In its preamble, the resolution expressed strong cqndemnation of

"the support which the racist minority r~gime of South Africa and the

illegal racist minority r~gime in Southern Rhodesia · continue to receive from

those foreign economic, financial and other interests which are collaborating

with them in their exploitation of the natural and human resources of, and in

the further entrenchment of their illegal and racialist domination over the

international Territory of Namibia and the Non-Self-Governing Territory of '

Southern Rhodesia (Zimbabwe)" and expressed "deep concern at the growing

investments of foreign capital in the production of uranium and military

equipment and the extent of the nuclear and military collaboration with the

racist minority r~gime of South Africa".

10. In its,substantive paragraphs the resolution reaCfirmed that the

activities of foreign economic, financial and other interests operating

at present in the colonial Territories of southern Africa constitute

a major obstacle to political independence and condemned the governments

which continue to support or collaborate with those interests.

11. Also it requested all States to take effective measures to end

the supply of funds and other forms of assistance, including military

supplies and equipment, to those regimes which use such assistance to

repress the peoples of the colonial Territories and their national

liberation movements. FiB&lly, it requested the Secretary-General to

undertake" sustained and wide publicity campaign with a view to informing .

world public opinion of the lacts concerning the pillaging of natural •

resources and the exploitation of the indigenous populations by foreign

monopolies and the support they render to the colonialist and racist

regimes~'

.. -6-

12. With specific reference to the situation in Namibia, the General

Assembly, in 1966 (resolution 2145) terminated South Africa's mandate

and decided to take over direct responsibility for Namibia from

South Africa. The United Nations Security

Council in 1969 (resolution 269) confirmed the General Assembly decision

and in resolution 276 (1970) resolutions demanded that South Efrica

withdraw its administration from Namibia. In its Advisory Opinion of

1971, the International Court of Justice stated that, in- view of the

illegality of South Africa's presence, all States were obligated to

recognize the illegality and to refrain from activities that would assist

the South African administration there.

13. Also, the Security Council in resolution 283 (1971) called upon States to

prohibit any political, diplomatic or economic dealings with the regime of South

Africa on behalf of Namibia. Security Council resolution 301

··- ( 197-1) called upon States to abstain from entering into economic

relations with South Africa in respect of Namibia and declared

that rights, titles or contracts granted to i n d i v i d u a l s

or corporations by South Africa after the termination of the ma~date are not

subject to protection or espousal by their home States against the claims of

a future lawful Government of Namibia. In resolutions 3117 .(XXVIII) of

12 December 1973, 3299-(XXIX) of 13 December 1974 and 3398 (XXX) of -r]e,,.,t-<-J "lso

11 November 1975, theAAssembly.called upon all States to enact legislation ·h, . ., ,. . and~take other measures concerning nationals who own and operate enterprises

in Namibia to put an end to their operations and to prevent new invesuents.

•

I

" -1-

14. Several resolutions have also been passed regarding the situation in

Southern Rhodesia. The Security CoW1cil in resolution 232 (1966) determined

that the Wlilateral declaration of independence by the minority regime vas

illegal and constituted a threat to international peace and security and

decided that all States Members and non-members of the United Nations must

abstain from any act amounting to recognition of the legitimacy of that regime.

The resolution imposed selective sanctions on certain types of business

dealings with Southern Rhodesia "notwithstanding any contracts entered into or

licenses granted before the date of the resolution". Subsequently resolution

253 (1968) of the Security Council_,which imposed comprehensive mandatory

sanctions on Rhodesia, called upon States to prohibit their corporations

and nationals from entering into any business or commercial relations with

Southern Rhodesia and from transferring any funds for that purpose.

15. The situation in South Africa has been before United Nations bodies since

1946. Some of the resolutions which have been adopted regarding the situation \

have dealt with the role of foreign economic interests in South Africa.

16. Since 1970 the Security Council has adopted two resolutions on the

situation in South Africa which deal with trade and arms investments. One

of these resolutions 282 (1970) condemned violations of the arms embargo called

for in previous General Assembly resolutions. Further, it called upon all States

to strengthen the arms embargo by revoking all licences and military patents

granted to the South ~frican Government or to South African companies for the

manufacture of arms and ammunition, aircraft and naval craft or other military

vehicles and by refraining _from further granting such licences and patents,

and prohibiting investment in or technical assistance for the manufacture of arms

-8-

and ammunition, aircraft, naval craft, or other military vehicles. In

- - - ~resolution · 311. (1972), the Security Council noted the continued military

build-up and strengthening of the military capability of the Government of South

Africa and again ca:Lled upon all States to observe strictly the arms embargo

against it.

17. Following the Security Council actions, the General Assembly has on some

occasions adopted resolutions condemning "the actions of those States and

foreign economic interests which continue to collaborate with the South African

..!:...I regime. More r_ecently, in _ 1976 ,-----

the General Assembly, in a series of resolutions, proclaimed that "the racist

regime in South Africa is illegitimate and has no right to represent the people

of South Africa" and called upon "Member States still engaged in economic

collaboration and trade with the racist regime of South Africa to -implement the

relevant General Assembly resolutions and to cease forthwith any such collaboration

with that ~egime. II :/

- .

_.!±J See General Assembly resolution 3324 (1974).

-'i/ l)ocument A/RES/31/6/Rev.l.

-9-

18. Apart from the resolutions adopted by the main organs of the

United Nations, various agencies within the United Nations system have

conducted studies and prepared reports on various aspects of the situation

in southern Africa and in particular on the subject of foreign economic

interests operating there.

19. In the context of decolonization, the Special Committee on the Situation

with Regard to the Implementation of the Declaration on the Granting of

Independence to Colonial Countries and Peoples prepares annual reports

on the "activities of foreign economic interests which are impeding the

implementation of the Declaration on the Granting of Independence to

Colonial Countries . and Peoples in Southern Rhodesia and Namibia and in all

other Territories under Colonial Domination and Efforts to Eliminate

Colonialism, Apartheid and Racial Discrimination in Southern Africa" • ...!:J These reports contain general descriptions of the background and economies

of the countries concerned, analyses of the various sectors of the economies

and identifications of the nature and extent of the involvement of foreign

investment, earnings and wages, as well as of the prevailing industrial climate.

~ For recent doc\.llnents, see A/31/23 (Part III), 29 September 1976; and A7i:c.109/L.1138, 9 February 1977.

... •

-10- .,

20. With special reference to Nnmibia, a numbet- of studies have been

prepared under the auspices of the Council for Namibia which focus on .]I

the subject of foreien investment there. In addition to

describing the Nnmibian economy and the role of foreign investment ~~

generally, theseThave considered the question of' African labour in

Namibia, wages, and working conditions. They also contain some information

on the various sectors of the economy, taxation and export figures. p

21. The United Nations Centre Against Apartheid

studies on the subject of foreign investmentf

a],so has/ sponsored ·

22. Since 1964, the International Labour Office has also prepared annual

studies and reports on labour and industrial relations in South Africa.

These include proposals for the elimination of apartheid in labour .. \_ ' ... ,ii'(-

matters, with particular reference to equal opportunity in respect of'

admission to employment and training, freedom from forced labour and

freedom of association and the right to organize.

23. ·The information contained in this repo~t is derived principally

from two sources: (1) official Government and quasi-official publications,

including relevant United Nations documents; (2) information provided

9'/ by addi _tional research conducted for this repoFt .-

JI See B. Rogers, Foreign Investment in Namibia, submitted to United Rations Council for Namibia, 5 March 1975. Official Records of' the General Assembly, Twenty-ninth Session, Supplement No, 23 (A/9623/Rev.l) Vols. I and II; A/10023 (Part III), 24 October 1975; A/31/23 (Part III); 29 September 1976. Report of the Council for Namibia, Official Records of the General Assembly, Thirtieth Session, Supplement No. 24 (A/10024), Vols. I and II.

fr instance, §J See nvolvement of Foreign Economic Interest _ ip South Africa: Industrial

Development Pro,1ects, No. 19

j/ Due to the paucity of Government and United Nations sources on the subject particularly concerning South Africa, part of the information this report contains is based on cecondnry sources, many of them from the press, especially of South Africa.

... •.

-11-

24. A study on the activities of transnational corporations in southern

Africa encounters serious difficulties. Information on the size, trends,

origin and type of activity by transnational corporations in these three areas

is limited, sporadic and often outdated.

25. The usual difficulties in obtaining adequate and reliable information on the

activities of transnational corporation affiliates by country of operation are

compounded in the case of southern Africa by several factors. Following the

Security Council and General Assembly resolutions on Namibia, Southern Rhodesia

and South Africa, information relating to transnational corporate activities

has been severely restricted by the r~gimes of these countries. Official

South African sources combine data relating to Namibia with that of South Africa.

Furthermore, activities of many transnational corporations in the southern

African region are closely interlinked, which makes it difficult to disentangle

them on a country-by-country basis.

26. Given the lack of specific i~formation on the assets or sales of

transnational corporations in southern Africa the evaluation of their overall

dimensions in main economic sectors is based on available foreign direct

investment data. Available aggregate data are often supplemented by illustrative

information on the investment, sales and practices of individual corporations.

However, latest information was not always available • . Thus, sometimes current

activities of corporations mentioned in the text are not covered; in some cases such

activities by individual transnational corporations may have expanded,in other

cases may have been curtailed. Hence, the present analysis is more illustrative

than comprehensive.

r .. - -12-

CHAPTER I: REPUBLIC OF SOUTH AFRICA

A. overview

27. Historically, foreign corporate activity in South Africa has been linked to

diamond, gold and other mineral exploitation. During the last decades, however,

foreign investment, carried out mainly by transnational corporations, in

manufacturing, has overtaken mining in importance.

28. Given little or no specific information on the assets or sales of

transnational corporations in South Africa the evaluation of their dimensions

is based on available foreign direct investment data.

29. In 1974 the total stock of foreign investment (direct and indirect in

the public and private sector) in South Africa amounted to 12.8 billion rands (R)

compared t~ R2.8 billion in 1956.W The stock of foreign direct investment

rose from Rl.6 billion to R6.7 billion during the same period (see Tables 1 and 2).

Direct investment .was one-third of total investment in the mining sector, and

over two-thirds in the manufacturing sector •

.!Q1 Figures for 1956 are from: South African Reserve Bank, Supplement to the Quarterly Bulletin of Statistics, December 1958. Figures for 1974 are from South African Reserve Bank, Quarterly Bulletin, September 1976. The stock of total foreign investment refers to all foreign liabilities which are the various capital assets in and claims against South Africa owned by foreign residents. Foreign direct investment is defined as investment by foreigners vho have a controlling interest in organizations in South Africa and investment in these organizations or their affiliates, allied organizations or persons in foreign countries. A controlling interest is recognized when one foreign resident or several affiliated foreign residents own at least 25 per cent of the voting or ownership rights in an organization; or when various residents of one foreign country own at least 50 per cent of the voting rights; or when foreigners participate in a partnership. In 1976 one Rand was equivalent to us $1.40.

r .. -13-

Table I ~ Stock of foreign direct and indirect investment in South Africa by source (millions ·or rands)

1956 1966 1972 Type and source Rands Per Rands Per Rands

cent cent

Direct investment Sterling area •••••• 1,178 72.8 1,765 69.2 3,235 Dollar area •••••••• 276 17.1 438 17.2 928 Western Europe ••••• 1~3 8.8 333 13.1 697 International organizations •••••

other areas •••••••• 21 1.3 13 0.5 35

Total ••••••••••• 1,618 100.0 2,549 100.0 4,895

Indirect investment Sterling area •••••• 693 59.1 674 52.8 1,1o8 Dollar area •••••••• 93 7.9 151 u.8 287 Western Europe ••••• 243 20.7 290 22.7 1,208 International organizations ••••• 134 u.4 152 11.9 235

other areas •••••••• 9 o.8 9 0.7 53

Total ••••••••••• 1,172 100.0 1,276 100.0 2,891

Total investment Sterling area •••••• 1,871 67.1 2,439 63.8 4,343 Dollar area •••••••• 369 13.2 589 15.4 1,215 Western Europe ••••• 386 13.8 623 16.3 1,905 International

organizations ••••• 134 4.8 152 4.o 235 other areas •••••••• 30 1.1 22 o.6 88

Total ••••••••••• 2,790 100.0 3,825 100.0 7,786

~urces: . ' e Foreign Liabilities and Assets of the Union of South Africa", Supplement

Per cent

66.1 19.0 14.2

0.1

100.0

38.3 9.9

41.8

8.1 1.8

100.0

55.8 15.6 24.5

3.0 1.1

100.0

to the Quarterly Bulletin of Statistics, South African Reserve Bank, December 1958; South African Reserve Bank, Quarterly Bulletin, September 1974.

r

-14-

Te.blP. 2: s.11th Africa: Stock of foreb:n direct and indirect investment by source in 1974

(Millions of rands)

Direct investment Indirect investment Total

Source Per Per Per

Rands cent Rands cent Rands cent

EEC countries ••••• 4,467 66.7 3,478 57.4 7,945 62.3 Rest of Europe •••• 466 7.0 681 11.2 1,147 9.0 North and South

America ••••••••• 1,524 22.8 1,033 17.0 2,557 20.0 Africa •••••••••••• 107 L6 340 5.6 447 3.5 Asia •••••••••••••• 57 0.9 222 3.7 279 2.2

Oceania ••••••••••• 66 1.0 18 0.3 84 0.7 International · organizations •••• 205 3.4 205 1.6

Unallocated ••••••• 7 0.1 86 1.4 93 0.7 Total.- ••••.•• 6,694 100.0 6,o63 100.0 12,757 100.0

Source: South African Reserve Bank, Quarterly Bulletin, September 1976.

-15-

30. The extent of foreign capital inflov also indicates the importance of

transnational corporations in South Africa and the dimensions of their activity.

Betveen 1970 and 1975 net capital inflow to South Africa averaged R762.5 million.

Capital inflov in the 1970s played a not insignificant role in the financing of

South Africa's gross domestic investment (GDI). Net capital inflov usually averaged

over 10 per cent of GDI in the nineteen seventies and reached over 20 per cent of

GDI in 1975. Lll (See Table 3)

31. The increase in foreign corporate activity in South Africa has been paralleled

by a change in investment direction. During the last decades the manufacturing

sector bas acquired increasing importance, reducing the relative significance of

mining. In 1960, a third of the stock of private foreign capital vas invested in

. . d 1 uart . . uf t . /~/ B th d f 1974 f t . mining an oa ya q er in man ac uring. -- y e en o manu ac uring

accounted for almost 40 per cent of the stock of total foreign investment, vhile

finance (including insurance and real estate) represented 25 per cent and mining had

dropped to only 15 per cent. Private foreign direct investment at this time vas even

more heavily concentrated in the manufacturing sector : 45 per cent, and less in

i3/ mining: 7 per cent. --

32. The European Economic Community (EEC) is the primary source of foreign capital,

the largest part of vhich ortginates in the United Kingdom. ii/-/ At the end of

1973 the EEC accounted for about tvo-thirds (64.5 per cent) of total foreign

]LI Sol.1th African Reacrve .btwa., 'i(l.ltU"terly :Oullctiu,Sept~er · 1971, Sept.ember 1976.

!2J South Africau Reserve ha.Ilk, Quarterly iiulletiu of Statistics,l>ecewber 1961.

L~I Sou.tu African Heserve .Darut, fne oeconu. Censu~ of J.o,ureit$u Trtt.nsactions 7 Liet.bili ties and Assets, 31 December 1973. Supplement to the South Af'riean Reserve ~ank, Quarterly Bulletin, March 1976.

l'fl Recent South African statistical data on the origin of foreign investment is broken down by the tolloving regions: European Economic Community, Rest of Europe, North and South America, Africa, Asia, Oceania.

•

Table ~:

Year

1965 •••••••••• 1970 ••••••••••

1971 ••••••••••

1972 ••••••••••

1973 ••••••••••

1974 ••••••••••

1975 ••••••••••

Source:

-16-

South Africa: Role of foreign capital in the financing of gross domestic investment

(Millions of rands) .

Gross domestic Net capital inflow investment frDm rest of world Percentage

2,198 255 11.6 3,701 541 14.6

4,201 764 18.2

3,976 396 9.9

5,025. -92 -1.8

7,100 885 12.5

8,282 1,897 22.9

South African Reserve Bank, Quarterly Bulletin, September 1971 and September 1976.

-17-

investment in South Africa. The second largest source of foreign capital, the

North and South America region (referred to herea:t"ter as Western Hemisphere) in

which over two-thirds came from the United States, accounted for nearly one-fifth

(17.0 per cent) of total foreign investment. Africa, Asia and Oceania together

accounted for under 5 per cent of the total. ~ii 33. Tables ½ ~nd 5 on the stock of direct investment holdings by region in

the various economic ·sectors by the end of 1973 shows that EEC accounted for over two­

thirds of total foreign direct investment in South Africa, and the Western Hemisphere

for nearly one quarter.

34. An examination of sectoral investment by region in 1973 reveals that EEC investment

is relatively less concentrated in mining than is investment from the Western

Hemisphere. Together, these two regions own over 98 per cent of all foreign mining

investment. On the other hand, EEC investment is more heavily concentrated in banking

and finance than investment from the Western Hemisphere. tf/ 35. It is difficult to evaluate the foreign investment in South AF'rica by country of

origin. The estimates are based on data published by the United Kingdom and the United

States and sporadic figures found in a variety of sources regarding other home countries

of transnational corporation operations in South Africa.

36. Transnational corporations based in the United Kingdom historically have been

dominant in the South African economy; in fact the United Kingdom is the origin of

about half of the stock of total foreign direct investment in that country. Between

1962 and 1971 United Kingdom stock of investment value increased by over 200 per cent.

niring the 1970s the United Kingdom has continued to be an important source of

investment in South Africa. United Kingdom net investment flows to South Africa averagec

Rl40 million per year between 1970 and 1974. t!/ ti/ South African Reserve Bank, op. cit., 3l. December 1973.

l'-' Ibid.

[I_/ United Kingdom Board of Trade, Trade and Industry, 15 November 1973, 25 June 1976. Note: These figures include Namibia.

Source

European Economic . Community

Rest of Europe

North and South America

Africa

Asia

Oceania

Total*

Table 4: South Africa: Stock of direct investment in the private sector by category of economic activity and by source. en~ of 1973

(Millions of rands (R}}

Total Share of Agri- Mining+ Manufactur- Construct- Wholesale Rand invest- culture quarrying ing ion + retail

ment to forestry trade total in- + fishing vestment (Per cent}

R ' R % R % R % R %

3,685 67.6 25 59.5 256 60.9 1590 64.7 48 78.7 477 59.8

357 6.5 2 .4.8 6 1.4 213 8.7 11 18.0 68 8.5

1,205 22.1 6 14.3 157 37.4 608 24.7 1 1.6 234 29.3

114 2.1 7 16.7 1 0.2 11 o.4 17 2.1

28 0.5 2 4.8 3 0.1 1 1.6 1 0.1

60 1.1 31 1.3 1 0.1

Transport Finance storage+ insur-communi- ance cation real

estate + business services

R % R %

75 68.8 1173 78.8

- 51 3.4

27 24.8 154 10.3

6 5.5 68 4.6

1 0.9 17 1.1

26 1.7

5,449 100.0 42 100.0 420 100.0 2456 100.0 61 100.0 798 100.0 109 100.0 1489 100.0

Other

R

41 55.4

6 8.1

18 ~4.3

4 5.4

3 4.1

2 2.7

74 100.0

Source: United Nations Centre on Transnational Corporations, based on South African Reserve Bank, The Second Census of Forei Transactions Liabilities and Assets 31 December 1 73, supplement to the South African Reserve Bank Quarterly Bulletin, March 197.

*Total includes R2,000 not allocated to any region.

,·' .... ex, I

Source

European F.conomic

Table 5: South M'l"ica: Distribution of source of stock of direct investm ent in the private sector-by ·category of economic activity, end of 1973

' r (Percentage)

Total Rand

(million)

Agri­culture forestrr + fishing

Mining+ quarrying

Manufactur­ing

Construct- Wholesale ion + retail

trade

Transport ··storage + communi­cations

. Community 3,685 1.-3 2.0

Rest of Europe

North and South America

Attica

Asia

Oceania

Total*

357

1,205

114

28

60

5,451

o.6

0.5 13.0

51.7

0.1

3.6

19.0

19.4

14.9

3.6

Finance insur­ance, real estate+ business services

31.8

12.8

59.6

60.1

43.3

Other

1.1

1.4

Total (Per cent)

100

100

100

100

100

100

Source: United Nations Centre on Transnational Corporations, based on South African Reserve Bank, The Second Censue or Forei Transactions Liabilities and Assets 31 December 1973, supplement to the South African Reserve Bank Quarterly Bulletin, March 197.

• Total includes R2,000 not allocated to any region.

f .... \.0

I

•

•

-20-

37. United States transnational corporations, representing the second ~argest

foreign direct investment source in South Africa, have expanded rapidly during the

last decade. Between 1960 and 1975 United States direct investment increased by

over 300 per cent to R 1.4 billion, or approximately one-sixth of the total foreign

direct investment in South Africa.

is highly concentrated,. - - -·

18/ Investment originating in the United States

- -~ Al though more than 300 United

States-based transnational corporations operate in South Africa, thirteen account for

about three-fourths of total United States direct investment in South Africa. !f_,/

38. Several affiliates of United Kingdom and United States transnational corporations

have become integrally linked to the mining finance houses which are prominent in the

South African economy. They are often involved in consortia with these mining houses,

the State and local private enterprises. The largest finance mining house, Anglo­

American Corpo!ation, itself a transnational corporation with subsidiaries throughout

the world and assets of R 7 billion, is interlocked with Engelhard Minerals and

Chemicals Corporations (Anglo-American owns 30 per cent of it) and Charter Consolidated .

The fo_1.111er is a United States-based f'irm and the latter a United Kingdom-based firm.:JE/

Forty-nine per cent of the shares in Gold Fields of South Af'rica (GFSA), the second

largest mining finance house, are held by Consolidated Gold Fields, also a United

Kingdom-based firm. ~/

Ii/ United States Department of Commerce, Survey of Current Business, August 1976. South African Reserve Bank, Quarterly Bulletin of Statistics, December 1961. In order of' size of assets: General Motors, Mobil Oil, Exxon, Standard Oil of' California, Ford, ITT, General Electric, Chrysler, Firestone, Goodyear, 3M, IBM and Caterpillar. (Source: Corporate Information Centre, National Council of Churches, Church Investments, Corporations and South Africa (New York, Friendship Press, 1971).

Anglo-American Corporation, Annual Report, 1974. Moody's Industrial ( New York: 1974); .tngelhara. Minerals anu Cuemi.c.u..s, Re})Ort to the Securities and Exchange Commission, 1971.

Consolidated Gold Fields, Annual Report, 1974.

• -21-

39. In addition to the United Kingdom and the United States transnational

corporations there are several transnational corporations from ·other countries which

are active in South Africa. According to information from South African press,

the transnational corporations based in the Federal Republic of Germany held assets

in direct and indirect investments totalling more than Rl billion in 1974. Indirect

investment often takes the form of bonds issued by the South African Government and

its State corporations. About 400 Federal Republic of Germany manufacturing,sales

and service corporations are reported to be active in South Africa, particularly in

the sectors of motor vehicles, chemicals and engineering.~

40. French firms are estimated to contribute about five per cent ot all foreign

investment in South Africa. Their involvement is mainly in the exploration and

refining of oil, construction and in military equipment, according ~to South African . J..~/

sources. --

41. Swiss-based transnational corporations , according to a source, ·=:!I represent

about four to five per cent of total foreign investment in South Africa, concentrating

mainly in the manufacturing and service sector.

42. Little is known of the size of the assets of other European transnational

corporations operating in South Africa. Although the Swedish Government discourages

investment in South Africa, there are a few Swedish firms operating there. But they

represent a very small part of manufacturing activity. 2-§

).~ ·See, Financial Mail,Supplement on West Germany, 4 October 1974; Sunday Times (Johannesburg), 26 October 1975; Star (Johannesburg) weekly airmail edition, 15 February 1975; Financial Mail (South Africa), 4 October 1974. Republic of South Africa, Department of Trade Statistics, Monthly Abstract of Trade Statistics, (Pretoria: Government Printer, 1975).

G. Rist, "Relations between Switzerland and South Africa" in United Nations Unit on Apartheid, Notes and Documents, 9/74, May 1974. South Africa: Black Labour - Swedish Capital, a report by the LO/TCO study delegation to South Africa, Swedish Trade Confederation and Central Organization of Salaried Employees in Sweden, 1975. Vovlvo cars, however, are assembled by

'Lawson Motors in South Africa, although the Swedish company does not have ·a subsidiary there.

• -22-

43. The Japanese Government has prohibited direct investment in South Africa.

Japanese transnational corporations nevertheless have provided South African firms

with licences to produce Japanese products. According to a report issued in 1971,

_tf;,/ about 70 Japanese firms had offices in South Africa. --

~Y Management (South Africa), April 1973.

•

-23-

B. Transnational Corporate Activities in Main Economic~tors

1. Manufacturing

44. Manufacturing accounts for the largest part of transna.tional corporate

activity in South Africa. Although no curren~infonnation is available, it

appears that foreign involvement in the manufacturing sector

is substantial. At the end of the nineteen-sixties, a · report by official South African

the/Franzsen Commission indicated that 40 per cent of the industry was

controlled by foreign interests.m In view of the rapid growth of

investment in recent years, the proportion of the manufacturing sector

controlled by transnational corporations may be substantially higher by now.

The establishment of backward linkages by transnational c~rporations in the

South African economy has contributed to the development of advanced

technology and has, according to several sources, given

them .:i.t '

a critical role in t~1e growth of manufacturing in South Africa.-

Following the restriction on arms sales called for by the United Nations or

imposed by various Governments, the South African Government has taken steps

to stimulatefi%Ef:al manufacture of parts and equipment for military purposes.~

This has induced further expansion of the manufacturing sect9r.

).1' Financial Times (London), "South Africa Survey", 14 June 1971 •

.2l.J See, Barbara Rogers, White Wealth and Black Povert Investments in Southern Africa Westport: Greenwood Press,

erican , PP• 93-122.

m See, Republic of South Africa, Estimates of Ex enditure to be Defra ed from Revenue Account During the Year Ending 31 March 197 Pretoria: Government Printer, 1975); Institute for Strategic Studies, Survival (London, June-July 1972); South African Digest, 9 April 1976.

-24-

-46. According to offici9:l South African data, the European

Community in 1973 accounted for nearly 65 per cent of the value of the stock of

foreign direct investment in the manufacturing secto;.E (See Table 4).The Western the stock of

Hemisphere region at that time held nearly one fourth of/direct investment

in this sector, leaving small holdings to the non-EEC European region,

8.7 per cent, and minimal holdings to Africa, Asia and Oceania. The

EEC stock of investment in South Africa's manufacturing sector represented

over 40 per cent of the total .value of EEC holdings in all economic sectors.

Investment :f'rom the Western Hemisphere in this sector, even more concentrated,

was over half of its total investment in South Africa.

47 •. Therefore, the EEC and the Western Hemisphere together accounted for

nearly 90 p~r cent of the total value of foreign direct investment in

manufacturing. Transnational corporations based in the United Kingdom

and the United States were responsible for the great bulk of investment

:f'rom their respective regions.

~8. Available data :f'rom United Kingdom sources,l.lf which include Namibia the figures for

in /South Africa, show that manufacturing in 1971 in these two countries in 1971

accounted for over 50 per cent of the value of United Kingdom investments.

Jf/ South African Reserve Bank, The Second Census of Foreign Transactions, Liabilities and Assets, 31 December 1973.

W United Kingdom Board of Trade, Trade and Industry, 15 November 1973.

-25-

firms, 49. United States / Jas the second largest source of investment in South

_ since t~eir Africa have / the 1960s rapidly expanded / investment in manufacturing.

In 1960 investors from the United States had committed approximately RlOO million

(direct and indirect investment) to this sector. This constituted less than one

quarter of all United States investment in South Africa. (Figures include former

{),/ Federation of Rhodesia and Nyasaland) -- By 1975 United States direct

investment alone was valued at over R600 million in this sector, representing

?~ nearly 45 per cent of all United States direct investment in South Africa. -2

Rapid expansion occurred especially in the areas of motor vehicles, computer

technology and uranium processing.

50. No comparable data are available on aggregate transnational corporation

activities or direct investment in manufacturing from countries other than the

United Kingdom and the United States.

(a) Iron and steel

51. Over the years, transnational corporations have provided both technology and

capital for the South African steel industry. The South African State-owned steel

corporation, ISCOR (with total assets of about R3 billion and an annual output of

over 3 million tons of steel) has benefited from such assistance as well as from

loans from transnational banks guaranteed by the South African Government.

52. Several United Kingdom corporations have been involved since the early part

of this century in the steel manufacturing sector of South Africa. Following the (

nationalization of the iron and steel industry in the United Kingdom, the

Government-owned British Steel Corporation acquired a number of South African

subsidiaries and minority holdings in South Africa belonging to the United Kingdom /

3~! South African Reserve Bank, op. cit., December 1961.

~/ - United States Department of Commerce, Survey of Current Business,August 1976.

•

nationalized firms.ii/ These included a 100 per cent position in Baldvins, the

second largest steel stockholder in South Africa and a 49 per cent holding in

Stewarts and Lloyds, the biggest manufacturer of tubes and pipes in the country.

In 1970 the British Steel Corporation reorganized its South African interests by

effectively handing over control of these companies to the South African State­

owned !SCOR. But the corporation still maintained a substantial interest. Another

United Kingdom-owned transnational corporation, Guest, Keen and Nettlefolds (GKN),

United Kingdom's biggest manufacturer of steel -products, produces and sells about

14 per cent -of its world output in southern Africa through its South African

b "d" • ,f{ f su si 1ar1es.--

53 • Transnationsl corporations based in the Federal Republic of Germany have been

suppliers of equipment for !SCOR. De:sg, which built ISCOR's first mill in the

1930s, has become a major manufacturer of heavy plant equipment. Among United

States-based transnational corporations, the United States Steel Corporation

has a 30 per cent interest in the African Triangle Company (copper mining} which

operates in both South Africa and Namibia and is controlled by Anglovaal.

54. The Swiss-based Alussuisse awns a quarter of the share of /J.usaf which accounts

for about 90 per cent of the uuminium needs of South Af'rica~ 3tl

(b) Chemicals

55. Transnational corporations play an important role in the South African

chemical industry. The giant plants that have been or are being built

1.'tl See R. First, J. Steele, Ch. Gurney-, The South African Connec·tion · (Harper and Row, 1973), pp. 76-79.

3.!,_!

See R. First, "Foreign Investments in Apartheid South Africa", United Nations Unit on Apartheid, Notes and Documents, 21/72 (October 1972).

Siesuisse-Afrique du Sud, Relations economiques et politigues, Centre Europe -Tiers M:>nde, Geneve 1972, pp. 137-139.

•

-27-

depend heavily upon foreign technical knowledge. The industry is dominated

by two firms.

56. The African Explosives and Chemicals Industries (AECI) is owned by the

United Kingdom-based Imperial Chemical Industries (ICI) through its South

African subsidiary and by the Anglo-American Corporation. AECI, which is one

of the five largest South African companies, is the main producer of ammonia and

PVC (polyvinylchloride), operates two of the largest explosives factories in the

world and has constructed munitions plants for the South African Government.

Another South African chemical firm, Santrachem, was formed through a merger of

several South African companies and the partially United Kingdom-Government owned

:f'irm, BP Chemicals.

57. Farbwerke Hoechst, a Federal Republic of Germany chemical transnational

corporation, manufactures a wide range of products in South Africa from plastics

d h t · al t f rt· 1 · ·1<; I an p armaceu 1c s o e 1 izers. --

58. The Swiss-based pharmaceutical firms ,Sandoz, Ciba-Geigy and Hoffmann-La

Roche, have substantial investments in South Africa. By the end of 1971, Hoffmann­

La Roche's fixed investments were estimated at 5 million rands}?_ I

59. United States-based firms are of lesser importance. Phillips Petroleum,

Monsanto and Dow Chemicals are some of the corporations which operate on a

relatively small scale in South A:f'rica. ~/

See Ruth First, "Foreign Investment in Aoartheid South Afrie11." in Ohjeetiv@: Justice, a Unit~d Nations publication, Vol. 5, No. 2, April/Ma3/JUJJ.e 1973. South A±"riemi Gazette, 1 June 1973; Star (Johannesburg) annual edition, 9 JUJJ.e lj77.

Ji.I Suisse-Afri.gue du Sud, op.cit., p. 224.

, __ r, - , ..

See, United States Consulate General, Johannesburg, List of American Firms, subsidiaries and affiliates, Republic of -South Af'rica (Johannesburg: mimeo, 1970).

{c) Motor vehicles

60. Transnational corporations dominate the South African motor vehicle industry.

The Government in 1960 imposed import restrictions which require that over half

of the components, by weight, be locally produced. These regulations

-29-

have

Africa.

induced expansion of the TNC automobile investment in South

~l. Three US-based TNCs, namely General Motors, -Ford and Chrysler account for

more than one third of the South African motor vehicle market through their

directly held subsidiaries. General Motors at an estimated investment of

Rl.25 million represented approximately 14% of total US direct investment in

South Africa in 1971. Ford represented approximately 11% and Chrysler 5% of US investment • . ~// automobile 6,2. General Motors South Africa is the largest/company in the country,

producing several GM models and manufacturing components local:ly such as radiators,

engines, batteries, spark plugs and aheet metal parts. Its backward

linkages with domestic suppliers are extensive. On the other hand,components

produced in South Africa have been shipped by GM to be incorporated into

vehicles assembled in Europe. Ford Motor Company of South Africa is a wholly

owned subsidiary of Ford Motor Company of Canada which in turn is about 80

per eent owned by the parent US corporation. In the 1960s Ford expanded its

South African output rapidly. It now owns assembly plants for cars, vans,

tractors, trucks and engine plants and parts and service depots.

~3. Leyland Motor Cars of South Africa, a subsidiary of the UK TNC, in spite

of recent overall relative · decline in importance, is still dominant in the

sale of heavy trucks. f!::' 64. In recent years the production

automobiles increased substantially.

of Japanese and Federal Re~ublic of Germany

Volkswagen and Deutz have major plants in South

Africa exporting part of their production of automobiles and engines to

neighbouring countries or overse&JJ respectively. Deu~z produced the first

wholly South African-made tractor using locally manufactured , diesel engine. rj!i ~5- Owing to the Japanese Government's prohibition of investment in South

Africa, Japanese automobile companies have used licensing to local assembly

plants in order to capture a share of the South African market. Toyota

South Africa, owned by South Africans and holding a franchise from Toyota

Japan, first established a motor ·assembly plant in South Africa in 1962 with

loans from two South African mining finance houses.· !I.!/ During the oil crisis

~I I Interfaith, op. cit.

•'-' In 1975 the parent corporation vas taken over by the British Leyland Ltd., owned by 95% by the U.K. Government. See Moody's Industrial Manual, 1976.

fi3 / South Africa Digest, ·27 September 1974; Sunday Times (Johannesburg) 14 Octobe~ 1974.

lt!t.J Yoko Kitazawa, "From Tokyo to Johannesburg: A Study of Japan's Growing F.conomic Links with the Republic of South Africa" (New York: Information Centre for Corporate Responsibility, 1975), pp. 23-28.

-30-

its 1973/74 sales of small cares expanded rapidly. In 1974 a new plant was built to assemble trucks. Most of the parts are imported from Japan as the

"local content" requirement imposed by the South African Government exempts

trucks.

66. • Iatsun-Nissan, Japan's second largest automobile firm, star1ed shipping

parts for assembly to a border plant near Pretoria in 1966. A new engine

manufacturing plant was licensed in 1973, the basic equipment of which was

supplied by Herbert-Ingersoll of UK. Hagel of Federal Republic of Germany, Press Metal United Kingdom-based Co. South

Africa and Ferra~~i~Scotland/. Given Japan's prohibition of direct investment

in South Africa, ~tis reported that the financing of the new plant was

channeled through Nissan's subsidiary in the US.~

67. ~her Japanese automobile firms have established assembly plants

in co-operation with US-based firms which own important shares of the parent

Japanese company. Mitsubishi Motor Corporation's Galant cars· are assembled

at the South Africa plant of Chrysler (US) which owns 15 per cent of Mitsubishi

~ Motors. _, Isuzu, Japan's third ranking truck manufacturer, produces small

sized trucks at the Port Elizabeth complex of General Motors which owns 34%­

of Isuzu in Japan. fj!/

68. The French Peugeot Automobile At'rique produced and sold about six per cent of the

cars and tvo ner cent of the commercial vehicles in South Africa a few years ago.& .

(d) Electrical Equipment and Appliances

69 •. TNCs have provided technology, finance and equipment for the South

African industry in this field. The subsidiary of General Electric in South

4:r_/ ~ (Johannesburg) 7 Aprill974.

4-'_j Kitazava, op. cit. p. 20.

4z/ Ibid,

~/ Advertisement by Peugeot Automobile Afrique in La Revue Frangaise (Paris, 1971).

.. -31-

Africa, SAGE, the biggest electrical company of the country, manufactures a wide range

ot household appliances, industrial controls, capacity and locomotives. It is among

4-f/ the five companies selected by the Government to manufacture television sets. --

International Telephone and Telegraph Corporation (ITT) has several af:filiates in South

Africa. ~I It is reported that one of them, Standard Telephone and Cables (STC), suppliE

communication equipment :for postal, police and military purposes. -[LI

70. Some Federal Republic of Germany owned transnation&;l ~orporations participate

in South Africa's electrical and communications industry. For instance, Siemens South

Africa (52% owned by the parent company and constituting one of its major overseas

investments) supplies one-third of all Post ·Of:fice Telecommunications equipment and the

railways signalling system, as vell as much of ESCOM's requirements. f1/. AEG

Telefunken (af:filiate o:f the Federal Republic o:f Germany based transnational corporation)

is pl~ing a major role in setting up South Africa's television network. :[!/

71. The French consortium., Telespace, has been contracted to build South AFrica's

first satellite earth station to provide telephone, telegraph and telex channels all over

the world, as well as a television channel via the Atlantic. -:'~I

72. Several other European transnational corporations are involved in the

electrical engineering industry. Philips {Dutch-owned) operates a factory near Rossing.

A Swiss firm, Brown Boveri at Bade~, ·is co-operating with its French and Federal Republic

ot Germany subsidiaries to supply turbo-alternator sets for the ESCOM's Arnot Kriel. and

Grootvlei generating stations. It has also suppl.ied electrical furnaces tor steel,

aluminium and coal production, railw~ trans:formers ~al~l,stem as well as !!.--. Crec'flfier for Alusaf, which ·- --

t;21 Corporate Infol'!!'lation Centr@', Church Inveet"'l!nte, Ol). cit., p. 69.

Sol Moody's Industrial Manual , 1976. "ii.I Corporate Information Centre, Church Investments, op. cit., p. ill.

~2/ Sunday Times (Johannesburg) 6 April 1975; South African Financial Gazette 20 July 1973; South African Digest, 22 October 1976.

~/ South A:f'rican Financial '1azette, 15 November 197~ • .flt/ Ibid, 6 September 1974; South African Digest 19 July 1974.

•

-32-

0 • des 28 t t th d 1·n Natal. ~ __ S'/ pr vi per cen o e energy consume

73. Japanese firms have given licences to South African firms to assemble and sell

Japanese electrical equipment. ,These include Tokyo Shibauza Electric Co. (electrical

appliances), Hitachi Electric (radios), Matsushita Electric Co., Sharp Corporation

{portable record players, radios, mini-electronic calculators) and P_ioneer Electric Co.

(sterea sets). :ff/ -Hitashi and Tokyo Shibaura Electric Co. sold hydro-electric power

generator equipment to South African State electricity corporations for the $1 billion

Orange River Development Project. ~7/

(e) Nuclear Technology

74. Transnational corporations enabled South Africa to develop the mining and processing

of uranium. A United States Corporation, Allis Chalmers, in co-operation with other

United States firms, designed and built the research and test nuclear reactor of the

Pelindaba plant for the processing of uranium.~~/ Two other United States firms,

International Business Machines and the Foxboro Corporation have also provided

. .f'J I · d s · equipment for the project. -- The Federal Republic of Germany-owne iemens and Krupp

are reported to have also helped in the development of the experimental nuclear reactor

at Pelindaba, while STEAG was to invest in construction of the Pelindaba enrichment

plant. i.P_/ A French consortium composed of Framatone-SPIE-Batignolles-Alsthom was

awarded a contract in Mq.1976 to build a R850 million nuclear power plant near Capetown

for ESCOM.~!/ Alsthom, financed by a bank consortium led by Credit Lyonnais, has in the

past supplied electric power equipment to South Africa.

R. First, "Relations between Switzerland and South Africa" in United Nations Unit on Apartheid, Notes and Documents, 9/74, May- 1974. and Suisse-Afrigue du Sud, op. cit., pp. 179-187. lfi,i!'.On Keizai Shimbon, 20 June 1970, Star {South Africa), 27 Devember 1972.

South African Financial Gazette, 21 May 1972; Nikon Keizai Shimbon, 27 August 1973. American Committee on Africa, Africa Toda.y, Nev York, August-September 1965, Hearings before the Subcommittee on Africa on the Committee on Foreign Affairs, United States House of Representatives, part 2, 12 November 1971, p. 53. South Africa Digest, 24 June 1976 and 7 July 1976. Wall Street Journal (New York), 6 May 1974; Financial Times (London), 23 April 1976

South African Digest, 24 June 1976 and 7 July 1976; Nuclear Technology, ·August 1976.

• -33-

(f) Computers

75. Transnational corporations contributed to the rapid growth of computer use in

South Africa in recent years. Tbe market is supplied from abroad by corporations

based mainly in the United States (approximately 70% of the market), the United

Kingdom and the Federal Republic of Germany. Of the United States-based transnational

corporations, it is estimated that International Business Machines (IBM) accounts for

half of the South African computer market.f.'Y Burroughs, Honeywell, National Cash

Register, Control Data, Univac-Sperry Rand are among the other United States-owned

transnational corporations reported to be operating in South Africa.~2 1/ Approximately

one-third of the market is held by International Computer Equipment Finance Corporation

(ICLEF) in which British International Computers (ICL), a United Kingdom-based firm,

was reported .to have a substantial holding.~~/ Siemens, Kienzle and Noxdorf, three

Federal Republic of Germany-based transnational corporations, have provided computers ,,,,.

for various uses in South Africa.f~/

76. A joint venture, INFOSET, between Anglo-American Corporation and the United States

Computer Sciences Corporation, established in 1971, offers South African firms access

to a United States-Canada-Australia timesharing network. ff/. 77. Interdata, a subsidiary of Holderbank, a large Swiss-based concern with diverse

financial interests and holdings in South Africa, provides computer facilities for

Holderbank and other South African companies. ~~/

78. It has been noted that the use of computers in South Africa has facilitated the

automation of industry and alleviated problems connected with shortages of white skilled

llJ/ labour. --

f.2./ f3_/ l,y_/ l,5/

Church Investments, op. cit., pp. 100-107.

Rogers, White Wealth ••• , op. cit., pp. 133-137.

Financial Mail (Johannesburg) 28 Mary 1971.

tinancial Mail (J:ohannesburg) 14 March 1975; Sunday Times (Johannesburg) 6 April 1975; Star (Johannesburg) 24 and 29 January 1976. R. First et. al., The South African Connection, op. cit., p. 107. Suisse-Afrique du Sud, op. cit., pp. 316-317.

For detailed discussion see B. Rogers, op. cit., pp. 132-140.

(g) Rubber ---79. The rubber industry is dominated by UK e.nd US-based TN"Cs. For inste.nce,

Dunlop Suuth Africa is O\mcd 70% by Dunlop Jroldings, Ltd., a UK-ba.scd TI,c.

Firestone and Goodye&r control through their South AFrican subsidinries

subst~ntio.J. portions or the market. It is reported that Goodyca .r controls

one-third of the South African mtu·k~t for tyres. It vas estimated that in

the early 19705 their combined investment rcr,ched $25-30 lilillion for Firestone

and $15 million for Good.year. {§,j The Japanese Bridgestone Tire ano. Yokohama

Rubber Compo.uies began exporting tyres to South Africa in 1969. Z9' 'l1he

South Africen Government insisted tho.t t 1.~ Ja.pe.ncse compr.nief: estc.bli.LJh a

local plant. In 1972, the above-mentioned Japanese firm, along vit.h Toyo Tyre, ·'

the US-owned B.F. Goodrich (which controls' a third of t.he Yokohnmtt com:pRr,y) ~

established a R20 million plant in a border area near Durban through a joint

venture with Foremost and Syfrets. The plant was constructed by Continental 7//

Gummi,-rerlce, a large Federal Republic of Germany-owned rubber company. --

W Interfaith Centre on Corporate Responsibility, op. cit., p. 33.

y ~ (Johannesburg), 26 December 1971.

"lL/ Kitazawa, op. cit.

-35-

!L Mining

80. South Africa,next to the Union of Soviet Socialist Republics and

the United States,possesses the richest and most varied mineral resources

in the world. Gold, which accounts for about half of the country's mineral

production, historically ha~ attracted substantial indirect investment from

abroad through the mining finance hous~s. Increasingly, however, the ratio vis-a-vis

- of foreign/ local capital declined during this century. In

addition to gold and diamonds, the range of minerals produced in South Africa

in~ludes copper, nickel, tin, manganese, asbestos and zinc. South Africa is

a maj9r exw.~:ter of ur~ium, possessing a quarter of the world's known reserve-$,

Since the mining finance houses of South Africa have had a leading role in mineral

activities, direct investment by transnational corporations has been less

important than in other sectors of the economy.

..

-36-

-,1;

8~. By 1974, foreign liabilities (including both direct and indirect

investment) in mining were less than one-sixth of total~oreign liabilitie8.

The proportion of direct investment in the mining sector to all direct ~ I

investment was even l~3S: seven per cent of the total.~

Indirect: investment has tro.ditfonally been the princip·al channel for

forcien co.pit.al 5.n m:7ning . In thfo sect(?lj _ forcigr, direct :i.nvestllic:-it ::-.ccounts for

less tl'lan one third cf e.J.l forciE,n investr:ier/i;. By contrast~ in the

manufacturing sector direct investment constituted over tvo-thirds of all

foreign manufact~ing investment. 73/ -The stock of • 83. / tor.eign investment in mining hn.s dccren:::.r~d rele.tiveJy over recent decacle::..

In 1960 the mining sector comprised nearly one-third of all foreign liabilities

in S_outh Africa. ?!t:J At the end of 1973 this proportion ho.d dropped to under

15% 7£· as t)J.e ratio of local capital to foreign capital increased.

Nevertheless, a substantial_part of the shares of the Anglo-American mining . .

house ( South Africa's la:i:·gest) is still helcl in the UK and other foreign countries. I

84 • . The UK has long ·played an important role in South African mining. In

19601 the UK accounted for over 60% of all foreign private holdings in the ·

mining sector. At that time UK investment in mining represented approximately

one-third of all UK foreign investment in South Africa. ?Jd By the 1970s,

however, UK involvement in South African mining decreased relative . to its

involvement in all other sectors. It is estimated that in 1971 the UK

:zy w 1!!:l ·"I![/

1/J

I South African Reserve Board, Slcond Census, op. cit., p. 18.

Ibid

South African Reserve Bank, Quarterly Bulletin of Statistics, December 1961.

South African Reserve .Bank., Se~ond Census, op. cit. ~ I

South African Reserve Dank, Qunrterly Bulletin of Statistics, December 1961.

I

-37-

~h~ accounted for less Jone half of all foreign capital in South Af'rican mining,

and tRis mining capital represented only 10% ot all UK foreign investm~nt

there. 71J Most of UK holdings, -- over two-thirds -- are indi~ect. connected

with those of the South African mining houses.

~5. In recent years US-based TNC investment has expanded rapidly in mining,

contributing about one quarter of all foreign capital in this sector. This

can be compared to 1960 when available data showed that the US held only one-The stock of

sixth of all South African foreign mining investments. /US direct investment

in South African mining ; doubled between the years 1968 and 1973, reaching

a total of $158 million in the latter year. This expansion in the mining

sector, however, was accompanied by a relative decrease in importance of that

sector to the us. In 1960, over one-third of all US investments in South

Africa was in mining. By 1973 only 13 per cent of all United States direct

. . . . 7i/ investment was in mining.-

db: US TNCs have been involved in the exploration for and -exploitation of

new South African mineral deposits through advanced labour-saving technology.

US companies discovered large deposits of copper, zinc, lead, silver

and antimony in ' l973 and 1974. W They are also involved in chromium mining ,

and vanadium mining and smelting.

8_7. • Among the more important US mining tirms operating in South Africa are

Engelhard Minerals and Chemicals Corporation, which is closely linked with the

~ Anglo-American Corporation, American Metal Climax (AMAX),JI.Jnion Carbide, active

in the mining ot chromium and vanadium (one of its subsidiaries accounting

tor one-fifth ot the country chrome production). Newmont owns halt of the

O'okiep Copper Company which operates mines in South Af'ric -a and Namibia and

?Jj UK Board ot Trade, 15 November 1973. lg6L ~cember __ ?'1J For 1960: South AFrican Reserve Bank, op. cit.I; for 1973: US Department of Commerce, Survey of Current Business, August 1974.

7jJ Financial Mail (Johannesburg) l October 1976.

•

shares ownership with the UK firm, Rio Tinto Zinc, .of the South African

Palaboza Mining Company. Phelps Dodge and US Steel, as well as Falconbridge,

primarily owned by United States interests through a Canadian affiliate, have also

been involved in recent explorations and development activities. FJ,J/ Lonrho (US)

has opened a platinum mirie in partnership with Falconbridge Nickel of Canada.

King..Resources of Denver, Colorado (US) controlled South Africa's only

titanium mine. '6//

88. The Swiss-based Holderbank has several subsidiaries engaged in exploration,

production and distribution of asbestos in both South Africa and Southern Rhodesia.~

The investment of Holderbank in asbestos was estimated in 1971 at Rands 30 million,

two-thirds of which was based on property value alone.

89. Transnational corporations are also assisting the Government of South

Africa in the development of two large regional mineral development projects. One,

Richard Bay, is being expanded into a deep sea harbour to facilitate the export

of coal from Transvaal.g 3/ Participants in this scheme include Emte Participazioni

e Financiamento Industria Manufactura (E.i<'IM), an Italian group; Euroinvest and

SilJna, S.A., two Luxembourg-based international groups and Nicrima Holdings, a

South African company. A Swiss company, Alusuisse, has jointed the South African

Industrial Development Corporation in building a R80 million aluminium smelter, expected .

to make South Africa virtually self-sufficient in aluminium.

· · · .iSJ See Moody's Industrial Manual 1975 and ~976; Englehard Minerals and Chemicals, Annual Report, 1974; Corporate Information Centre, op.cit., PP· 132, 141; Financial Mail (Johannesburg) 1 October 1976.

g// R. First, "Foreign Investment in South Africa", Objective Justice, op.cit. p. 26.

~Suisse-Afrigue du Sud: Relationseconomigues et politiques, Geneva 1972.

g_~/ United Nations Subcommittee, Special Committee against Apart~eid, "Involv;;;ent of Foreign Interests in South Africa's Development Projects, No. 35/75, November 1975.

•

-39-

90. Quebec Iron and Titanium Corporation of Canada (2/3 .owned by the United

States firm), is co-operating with South African agencies and firms in another project

to extract titanium and zirconium from beach sands and build a titanium smelter

complex. In the Sisher-Saldanha Bay Project, Japanese firms provide export

markets; a Dutch consortium, Salcon, is constructing the harbour; a French

firm, Spie-Batignolles, is building the railway system; the South African

African General Electric subsidiary has built electric locomotives and a

Federal Republic of Germany engineering company, Mann, is building, handling

and shiploading harbour equipment.~ !SCOR retains a 51 per cent stake in

the project. Other transnational corporations from European countries have

expressed interest in joining the consortium.

3. Banking and finance

91. The finance sector in South Africa (including banking, insurance, real

estate and business services) is a major recipient of foreign direct investment.

At the end ~f 1973, 27.5 per cent of the stock of all foreign direct invest­

ment was found in this sector. The EEC region accounted for nearly 80 per cent

~S/ of this investment, and the Western hemisphere for over 10 per cent.-

92. Traditionally, the presence of UK banking institutions in South Africa

has been preponderant. Two subsidiaries of UK banks, namely Barclays National

Bank Ltd., and Standard Bank of South Africa Ltd., accounted for two-thirds

of the assets of commercial banking in the country at the end of 1970.!fj,

Ibid., Financial Mail {Johannesburg) 1 October 1976

South African Reserve Bank, Second Oensus 2 op.cit. See R. First et. al, op. cit., p. 89

...

-40-

The expansion of their operations has been rapid; between 1961 and 1969 · , , ·

their branches increased by two to three times reaching 963 for Barclays

in 1969 and 822 for Stardard. /5J/ By encouraging the establishment of

Afrikaner banking and introducing a policy of reducing foreign control

of banks, the Government in recent years has managed tu lessen the

1t:°rtance of foreign participation in equity of South African banks,

~ not necessarily in foreign control.

93. · • Merchant banks have played a significant role in attracting foreign

capital~ South Africa. UK banks participate in the equity of merchant banks.

Union Acceptances Ltd., established by the Angl._American Corporation ~nd

Lazard Freres in 1955, includes a minority share held by Barclays. The

Standard and C~rtered Banking Group (UK) has a minority holding in the Central

Merchant Bank Ltd. Holsam, a subsidiary of the British Hill Samuel group, is

the fourth largest merchant bank in the country. '88/ -

9'-1. '!be largest transnational banks in the US and Western Europe have also

extended their activities in South Africa in recent years. Some 25 banks

have entered the country through European banks and their affiliates. '?C:,j They

service primarily US transnational corporations operating in manufacturing,

oil and mining in South Af'rica.--------------------------

1ZJ Ibid.

/jg/ Ibid,• P• 90.

·fi.J See Annual Reports of Chase Manhattan Bank and First National City Bank and Citicorp for 1960s and 1970s.

-41-

The French Bank of South Africa, owned by the Banque de l'Indochine (France)

and South African institutions has several offices in the country. Swiss

banks have assisted the South African Government and its state corporations . fo;

in floating large loans on the Swiss capital markets or in ''gold swaps". -

The major part of South Africa's gold (about 80 per cent) is sold on the

Zurich market.JLt

95. Three Swiss-based banks are represented in South Africa. The Union de

Banques SYisses, (UBS), the Societe de Banque Suisse (SBS) and the Credit

Suisse (CS). They are heavily involved in gold transactions and have '-.tbrougq>

financed'°' export credits of a large number of projects in South Africa . ~

including those of ESC0M, textile companies, railroad, f;a fiua~l!d the

Atlas Aircraft Corporation, owned by B0NUS0R, a State-owned corporation.

96. Although the Japanese Government has prohibited bank loans to South

Africa, the Bank of Tokyo maintains a representative office in Johannesburg

to service Japanese commercial interests. 9~

fE./ To alleviate pressures on the rand the South African Government at times sells gold in Switzerland and agrees to buy it back three months later at a slightly higher price. Recently $500 million were raised through a bank group composed of Swiss Credit Bank, Union Bank of Switzerland and Swiss Bank Corporation. See Business Week1 1~ April 1976_.

!LI ~

Rist, op.cit.

Star (Johannesburg), 11 September 1974.

-42-

97. Some major transnational banks have fermed consortia in South Africa.

For instance, it is reported that such a consortium, the European Brmks

Internationa Company (EBIC}, vhich has representative offices in South

Africa, is owed by Amsterdam Rotterdam Bank (Netherlands), Creditanstalt

Bankverein (Austria}, Deutsch Bank (FRG), Midlands Bank (UK}, Societe Generale

(France} and Societe Generale de Banque (Belgium}.?;J,j

98. Trans~ional banks and consortia have apparently assisted the South

African economy during its recent economic difficulties by providing foreign

loans. By mid-1976 South Atrica's total debt to foreign banks had risen to

$5.5 billion, equal to about 16% of its GNP. The US Export-Import Bank

facilitated provision of credit, increasing its exposure there from $21.6

million in 1971 to $265.8 million on 31 March 1976. '!!iJ Western European banks

have also helped South Africa , meet its obligations by arranging loans

tor critical projects, financing the import ot capital equipment and machinery

produced by European-owned firms and providing general purpose f'unds. ~

flj EBIC, South Atrica, op. cit.

f!t:/ Financial Mail (Johannesburg} 2 July 1976; South Africa Digest 15 October 1976. See also Senator Dick Clark, Opening Statement, US Senate Subcommittee on Foreign Affairs·, 23 Sept•ber 1976.

22,_/ Borrowing in International Capital Markets: Foreign and International Bond Issues and Publicised Eurocurr:ncy Credits (1st Quarter 1975 - 2nd Quarter 1976), World Bank document EC-181-751. Business Week 15 November 1976; South African Digest, 15 October 1976, 29 October 1976. -

-43-

4. Oil .:·:· .. ..

.;·:·

1 29.•. South Africa relies on imports for about 90 per cent of its oil needs.

The remainder is met by production of oil from coal by a State-owned

corporaticn (SASOL). Six cf the largest transnational corporations in

petroleum- namely, Mobil, Caltex and Exxon (United States-based);

Royal Dutch/Shell and British Petrolewn (United Kingdom-Netherlands­

based and United Kingdom respectively) and Total (French-based)

supply crude oil, handle distribution and take part in refining and

. . 96/ oil prospecting.-·-

100. The United States firms in the early 1970s coptrplled about

44 per cent of the petroleum products market in South Africa with for ?-=ti

Shell accounting/ o~e ~uarter.!.U

101.A number of transnational corporations have participated in

South Africa's effort to discover oil. British Petroleum, Shell, Total,

Mobil and others have been active in off-coast oil exploration through

consortia agreements and in co-operation with governmental agencies.

Mobil, which represents more than half of United States investment in

the oil industry in South Africa, had investments in 1969-amounting to

$87.5 million~ Following expansion in recent years it is estimated that now ~ -

---- Mobil's investm.e~ in the amount of $122. 5 mill.ion.W'

Caltex, owned by Texaco and Standard Oil of California, which according

to reports had an investment of about $100 million in 1972,holds about

'/Y Barbara Rogers, op. cit., pp. 140-143.

!lJ R. First, op. cit., p. 28.

'1'J.;J Rogers, op. cit., P• 141.

.. "

-44-

20 per cent of South Africa's market for crude oil refining. It

recently announced plans for a $134 million expansion in its refining

capacity.fil

~O?~ Some transnational corporations · have invested heavily in refining

imported crude oil in South Africa for distribution through their subsidiaries

i n southern Africa. The United Kingdom-based firms Cayzer, and

Irvine and Co. formed a joint venture with a South African State-owned . IQ-,/

company to . establish a :f'u.lly equipped oil base at Mossel Bay,.,_J A

refinery, lubricating plant and a tanker terminal were built recently lt>il

by BP and Shell near Durban.:.::.!/

tz} African Develo ment, August 1976, p. 226. lijjj} Financial Mail Johannesburg), "Oil Supplement", 5 March 1971. /~ First, et. al., South African Connection, op. cit., p. 105;

Interfaith Centre on Corporate Responsibility, op. cit.

--- ....

• I •

c. Employrient and wages

103. One of the areas of transnational corporation activities in S~uth Africa

that has attracted considerable criticism and controversy is the employment and

wae;e policies followed by these corporations . One asr,ect of the i:,sue relates

to the contribution of TNC activities towards creating em9loyment and maintaining

the pattern of employment. Another aspect refers to the wage rates paid to various

groups of workers. The overriding issue is whether transnational corporations adhere

to the laws and apartheid policies of South Africa or whether they take advantage

of these policies.

lo4. The employment and wage conditions in South Africa have been doclEi~nted at

length in United Nations documents as well as in other publications.

105. Between 1947 and 1970 non-white participation in the industrial work force Ii;;)../

rose from 65 to 77 per cent.~ According to United Nations statistics, the

per capita income in South Africa for whites was 15 times higher than that of ..

. lod/ 91 i Afr1car • .:1. In 1 1, average earn ngs for Africans in mining was five per cent

of that of white; in manufacturing it was 17 per cent.le~/

lo6. Africans represented 90 per cent of all workers in mining, whites nine per cent

and "coloureds" and Asians only one per cent. In manufacturing, however, the

proportion of "coloureds" and Asians was 23 per cent while Africans accounted for

just over half of the work force. White workers were disproportionately represented

~ in banking, where they accounted for 87 per cent of all workers.t!!I/

l£ll io3J

/Dy/ Releases.

R. First, Objective Justice, op. cit., p. 33.

United Nations Survey of Economic Conditions in Africa, Part 1, 1971.

Republic of South Africa, Department of Statistics, Statistical News-16 June 1971, 18 June 1971, 13 September 1971.

Ibid.

•

-46-

107. The effect of transnational corporations on employment varies by sector.

In manufacturing many use capital intensive technology, which contributes relatively

little to the employment of non-skilled workers. This is especially true in the

nuclear and electronics industries.

108. Some available information suggests that wages paid by transnational corporations

to African workers are, on the whole, in line with those paid by domestic firms.

Many wages are below the Poverty Datum Line estimated by the University of Natal

as being essential for an average family to subsist.!!:±/ In the automobile

industry, it is estimated that the minimum wage was below the 1973 Poverty Datum

Line in ove.:: half of the reported cases .!!!l/ 109. Transnational corporations have also conformed, by and large, with South ,frica's

labour policies that greete barriers for African trade unions. Available information

shows that very few transnational corporations operating in South Africa recognize . . i{,~/

African trade unions as legitimate bargaining agents for the African workers.

Some transnational corporations, taking advantage of existing labour legislation

which denies the Africans the right to strike, have fired black workers who did so.le~}/

/06/ In 1973 the University of Natal estimated the Poverty Datum Line, the minimum wage necessary for an average African family to "live under human or decent conditions in the short run", as R94. This included only food (R69.11), clothes {R8.67), fuel and light (Rl.88), cleaning (R2.51), accommodation (R6.72) and transport (R5.11). It excluded such items as taxes, medical expenses, education, replacement of household equipment, etc. estimated to cost about R50 more.

/07/ Kitazawa, op. cit.

lo~/ See, for instance, House of Commons, Fifth Report from the Expenditure Committee, Session 1973-74, Wages and Conditions of African Workers Employed by British Firms in South Africa, London, 22 January 1974, p. 25; Financial Mail, 22 February 1974 and 15 March 1974; Sunday Times, Johannesburg, 24 March 1974; The Star, Johannesburg, 10 December 1973; The Observer, 9 December 1973.

/Off The Star, Johannesburg, weekly airmail edition, 9 March 1974; Rand Daily Mail, Johannesburg, 21 March 1974.

---.. -------:-------~-------

-47-

110. The relevant South African legislature, comprising an extremely complex

legal system, denies union representation to Africans and places strict

limits on their right to hold or to change jobs. Since 1964 South Afri~a

has faced condemnation by the International Labour Organisation for

practices of forced labour, and limits on freedom of association and JnJI

employment.~ The income Africans receive is often too low to qualify

them to unemployment insurance. In the extractive and heavy industries,

blacks are left to work under dangerous and unhealthy conditions for which

there is no insurance~ccording to information obtained by the British

Parliamentary Inquiry in 1973, wages paid in South African mines were far

below those paid in manufacturing by foreign concerns. Blacks work more

hours per week and earn shorter vacations than whites./1.Z/

.....

/10/ Suisse-Afrique du Sud, OJ2• cit., P• 58.

/I/ I Ibid., P• 59.

/1'-,j Ibid., P• 343;.

-48-

111. During the last decade, resolutions adopted by the United Nations and

other international bodies, political pressure in many transnational corporation

home countries and general world public opinion generated .a debate and induced

several responses by investors in South Africa. In explaining some of the

reasons for their operations in the area, transnational corporations have

suggested that they contribute to the employment of Atrican workers. They also

maintain tha~ the growth of the economy will eventually lead to the breakdown

of present discriminatory structures. Operating in a country and adhering to

its laws, they add, does not mean approval of its policies.

112. Some corporations at various times have decided to introduce hiring or wage

' //.3/ level practices fairer than those in effect elsewhere in South Africa.

Most recently, 12 of the largest United States transnational corporations

representing more than half of United States investment in South Africa,

announced a common agreement to support a set of six principles "to promote

fair employment practices" in their plants and other facilities in South Africa.

These principles refer to non-segregation of races in work and other facilities,

equal pay for equal or comparable work, development of training programmes to

prepare blacks and other non-whites for supervisory, administrative, clerical

and technical jobs, increase the number of blacks in supervisory and management

positions and improvement in the quality of employees' lives outside the work

environment.I/I/-/ This policy, if implemented, would represent the first major

effort of a group of large companies to change working conditions of non-whites

in their plants and facilities in South Africa. Neither the response of

South African authorities nor the results of these policies can be estimated

at this point. Much will depend on a continuous · international pressure,

113 / See Polaroid "experiment", Barclays Bank "equal pay for equal work", etc. See discussion R. First, et. al., op. cit.

/It,./ See, New York Times, 2 March 1977. The participating companies are: General Motors, IBM, Citicorp, American Cyanamid, Burroughs, Caltex, _F'ord Motor Co., International Harvester, Minnesota Mining and Manufacturing, Mobil Oil Co., Otis Elevator and Union Carbide.

-49-

measures by home Governments, and reactions from those segments of

South African society which believe that the present oppressive and

discriminatory system victimizes blacks as well as whites in the longer run.

-50-

CHAPTER II: NAMIBIA

A. Overview

113. Namibia, presently under the illegal South African administration,

had in 1974 a population of 852,000 (738,ooo indigenous Africans , 99,000 whites

and 15,000 "coloureds"). It also had a gross domestic product of R6:t.5.6 million

which gives it one of the highest GDP per capita incomes in Africa. Mining

is the dominant sector in the economy, and diamonds are the principal

mineral resource. Copper, tin and lead are also important. Fishing is the

second principal commercial economic activity. Commercial agriculture, the

third most important economic sector in Namibia, involves the production of

beef and karakul for export.

114. Reliable and complete information on foreign corporate activity in

Namibia is difficult to obtain since South African authorities combine their

information on the country with that of / own. .Furthermore, the release

of official information on mining production and investment in Namibia is

prohibited by South Africa. Without this type of information, a comprehensive

presentation of transnational corporate activity or data by sector or origin

of investment is impossible. However, illustrative data on selected

corporations can be obtained at times; it is supplemented by newspaper

sources and scattered o~ficial statistics.

115. The United Nations has produced a large number of surveys on Nami?ia,

some of which also deal with foreign investment and the activities of

transnational corporations. Currently, United Nations sources provide the

-51-

best available picture of forei~n economic activity in i-Tamibia. /I~/

B. Transnational corporate \ activities in main economic sectors

116. The involvement of transnational corporations in Namibia is far-reaching.

In spite of United Nations resolutions, foreign corporations control a

substantial part of the economic·activities there. Corporations,

principally based in South Africa and the United States and to a lesser extent

in the United Kingdom, accounted for 57 per cent of Namibia's tax revenues

collected directl~ by South Africa in 1973-74. United States investment in

Namibia had been valued in 1973 by the United States Government at R30-34 million.

Most of this investment is accounted for by Tsumeb Corporation, 65 per cent of

which is controlled by two United States transnational corporations. I l/

117. Transnational corporations also provided the initial capital investments

for most of Namibia's industries. In 1967, the last year when comprehensive

information on Namibia was released by the Republic of South Africa, foreign

capital accounted for over half of the total investment in mining, fishing

117/ and manufacturing. The extent of transnational corporation involvement

is illustrated by the large difference that exists between gross domestic

production and gross national product. In the 1960s GNP was approximately

30 per cent less than GDP, and it is estimated that the difference was widened

II<// in the 1970s to over 50 per cent.

· II~/ Report of th~ Special Committee on the Situation with Regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples. General Assembly, Official Records: Twenty-ninth Session, Supplement No. 23 (A/5)623/Rev.1), Vols. I and II; A/10023 (Part III), 24 October 1975 A/31/23 (Part III), 29 September 1976. Report of the United Nations Council for Namibiat General Assembly, Official Records: Thirtieth Session, Supplement No. 24 A/10024), Vols. I and II.

11,; Rogers, op. cit., p. 192. 117/ A/10023 {Part III), op. cit. !IS/ A/10024, op. cit., p. 26.

•

-52-

118. In the last few years as a result of mounting international and national

pressure, several transnational corporations have withdrawn from Namibia and

others have rescinded their plans to invest in the area. Phelps Dodge, a

United States-based copper producing transnational corporation, withdrew

from Namibia in 1972. Other United States-controlled companies inv.olved

in oil exploration consortia (Anglovaal of South Africa and Kewanee, H.M. :t✓-inine;,

Gulf Oil Corporation, Syracuse Oil and Woodford Oil and Gas) withdrew following

the opinion of the International Court of Justice./t?/ At the end of 1974

five United States oil companies, namely Getty Oil, Phillips Petroleum,

Continental Oil, Texaco and Standard Oil of California abandoned their oil

exploration off the coast of Namibia./~/ One of the reasons for the

reluctance of United States companies to enter or continue their operations

in the country might be the fact that the United States Government has, since

1970, discouraged United States investment. For instance, the United States

Overseas Private Investment Corporation would not insure investments by

United States firms and would not protect such investments acquired after 1966.

II~/ Rogers, op. cit., pp. 202-203.

l'-0/ Business Week, 5 May 1975.

--- :..------~------------------------------~------

-53-

1. Mining

119. Mining is the singlemost important economic sector in Namibia. Its

contributions, depending on the world price of minerals, have reached as much •.ri//

as two-thirds of Namibia's gross domes tic product. '#... Mining is the main

source of foreign exchange and provides over half of Government revenue in

Namibia through truces collected by the South African admini~tration.~

Worldwide, Namibia ranks seventeenth among all mining countries.fld/

120. Mineral production in Namibia during 1973 (the latest available official

statistics) amounted to R230 million. Diamonds, the most important mineral

produced in the country (Namibia is also one of the world's leading diamond

producers), accounted for 64 per cent of all mineral sales of the country.

Copper was the second largest mineral export and lead the third. In 1973,

Namibia exported R34.2 million worth of copper and Rl7 million of lead.

Other minerals produced in Namibia by transnational corporations include

uranium, zinc, tin, wolfram (tungsten), kyanite, vanadium, levythium, salt

and manganese.t&/

121. In recent years mineral production in Namibia has expanded rapidly.

Within a decade mineral sales increased by four times, reaching R250 million by 1973.

In the last few years the growth of the sector has been particularly impressive.

Sales of base minerals in 1973 showed a five per cent increase over 1972, , , . /.

mainly due to a 66 per cent annual increase in the proceeds of diamond sales.I~/

I~/ A/10024, op. cit., p. 27.

/,-~ "Foreign Economic Exploitation in Namibia", Objective Justice, Vol. b,No. 2, April/May/June 1974, p. 16.

123/ World Mining, Catalog, Survey and Directory, 1972.

/~~/ A/10024, op. cit., pp. 26-28.

/:J.5/ Ibid.

~-~---:----------------========--.:=-=-=-===-_:_ __

122. The mining sector of Namibia is almost totally dominated by transnational

corporations. In spite of the United Nations Security Council resolution 233

of 29 July 1970, which called en Member States to discourage private companies

from investing or obtaining ccncessions in Namibia, at least 18 transnational

corporations had established mining operations by 1973 and 34 other companies

were actively prospecting/2.k/ This group included 16 South African,

11 United States and 3 United Kingdom transnational corporations. There

were other corporations, however, which withdrew from the area, as

pointed out above . (Table 6 lists some ~oreign concerns in mining).

123. Two transnational corporations, Consolidated Diamond ?f.ines of

South West Africa, Ltd. (CDM), a South African company controlled by

De Beers Consolidated V~nes with extensive British participation, and Tsumeb

Corporation, controlled by Newmont Mining Corporation and American Metal Climax,

both United States based, account for 90 per cent of all mining production in

Nam.ibia./1.7/ Consolidated Mines of South West Africa (CDM) has held a

virtual monopoly on diamond mining since 1971.

124. Unlike diamond production, the base metal sector in Namibia, comprising

primarily copper, lead, zinc and tin, is not totally dominated by any single

transnational corporation. A number of transnational corporations from

South Africa and the United States, and to a lesser extent the United Kingdom

and Canada, are actively involved in prospecting or production of base metals

in Namibia. However, most of these operations are relatively small compared

to the Tsumeb Corporation Ltd., which accounts for 8o per cent of production

in base metals./:J.~/ The Tsumeb Corporation~ controlled by United States and

l~l/ A/10023 (Part III), op. cit., P• 28.

1~7/ A/10024, op. cit., .PP• 26-28.

/:J..6/ A/31/23 (Part III), Annex II, p. 6.

-55-

South African transnational corporations, produce lead, zinc, copper, cad!r.ium

and silver in three mines. Tsumeb, the largest mine, has proven ore reserves

of 5.5 million metric tons; the two smaller mines (Kerr.bat and Uatchless) have

reserves of 1.1 million metric tons each. Copper and lead from these mines,

partially processed in Tswneb smelters located in Namibia, are exported as

refined lead or blistered copper. Tsumeb's metal sales between 1$63 and . l~t//

1974 averaged R42.4 million annually. During 1976"nswneb closed one of

its smaller mines, Kombat, because of falling copper prices.

125. A copper mine at Asis Ost, owned by a consortium of Tsumeb and South West

Africa Company (SWACO), was also closed in 1976. 11i1/ SWACO is the second largest

metal producer in Namibia and the third largest mining company. Beside its

part ownership in the Asis Ost mine, SWACO owns and operates the Berg Antas mine,

one of the principal zinc mines in Namibia, and the Brandberg West mine (tin

and wolfram). In 1973, SWACO's sales were £2 million. /3/J

126. Other important transnational corporations in Namibia's metal sector

include the Canadian firm, Falconbridge Nickel Mines Ltd., which is 75 per cent

owner 0£ Oamites Mining Company and is the second largest producer of copper

in Namibia (the other 25 per cent is owned by the Indu.strial Development

Corporation of South Africa, a State enterprise}.~

1~,1 Ibid., P• 7.

l3P/ . A/Ac.109/1.1138, p. 23., op. cit. I

13// A/10023 (Part III), op. cit., Annex pp. 30-31.

!W Ibid., P• 33.

•

127. The most significant recent development in the mini 4g sector of Namibia

is the effort to exploit uranium on a large scale. The Rossing mine, owned

and presently being developed by the Rio .Zinc Corporation, Ltd. (RTZ) of the

United Kingdom, Rio Algom, Ltd., an RTZ subsidiary; the Industrial

Development Corporation of South Africa, a para-statal body; Total-Compagnie

~ti.ni~re et Nucl~aire of France; and the General Mining and Finance Corporation

of South Africa, has estimated reserves of 100,000 metric tons. Total

investment needed to start fw.1-scale production is expected to reach

R700 million. Limited production of uranium ore began in early 1977./~~/ l'"7'"<. .

128. Given the reluctance of~national corporations to enter or become

further involved in Namibia's mining sector, following an International

Court of Justice opinion, the South African Government, in 1973, decided to

further encourage foreign investment by liberalizing regulations for mining

and prospecting concessions in Namibia. Instead of requiring that

transnational corporations limit their investment to 50 per cent holdings,

the new laws allow 75 per cent ownership. Furthennore, transnational

corporations are not required to take a local partner until the prospecting

stage is reached.IM

133/ Special Committee on the Situation With Regard to the Implementation of the Declaration of ~he Granting of !nde endence to Colonial Countries and Peoples. A AC.109 L.113, 9 February 1977.

{E!J/ A/~23/Rev.l, op. cit., Vol. II, P• 151.

.,,j

-57-

Fishing and agriculture .

129. Fishing, Namibia's second largest industry, contributes about

20 per cent of all export earnings. In recent years, annual sales have

ranged from R55 million to R65 million. The fishing lndustry represents

a capital investment of about R49 million, which includes a fleet estimated

at 240 purse-seine trawlers, 15 canning factories, and other fish-meal

factories. 13:{'/

130. The 10 fishing companies in Namibia are all controlled directly or

indirectly by South African companies. As a result of problems caused by

overfishing, the companies are given a share of the quota established by

the South African Government to limit the catch. Africans participate in

the fishing industry only as workers in the fish-processing factories; they

are not allowed to own a licence to operate fishing boats.

131. Commercial farming accounts for about 20 per cent of the gross domesti~

product of Namibia. Cattle slaughter and meat processing, and the production

of karakul fur are the two most important activities in this sector. Total

agricultural . sales in 1974 were R96 million, of which beef sales accounted

for 55 per cent (R53.2 million) and karakul for 29 per cent (R27.6 million)./.36/

~{/ General Assembly, Report of Special Committee, op. cit., (A/~Rev.l), Vol. II, p. 165. .

/3,b/ General Assembly, op. cit., A/10024, p. 32.

-58-

3. Manufacturing and construction

132. Namibian manufacturing and construction is small scale, due in part to

the fact that South Africa has not encouraged these activities. The processing

of perishable goods for ecnswnption is the principal manufacturing activity.

Engineering, the finishing and assembling of ma~erials obtained from

South Africa, specialized repair and small production work are secondary.

Manufacturing output was valued at Rj08 million in 1967-68, the last year

for which information is available. Some 217 ~orporations were involved,

mainly in processing agricultural, silvicultural and marine raw products.

Many transnational corporations are active in this sector. /'35/

133. Construction work on buildings and roads has boomed since the early

/37/

sixties, as a result of the large number of tenders provided by the South African

Government. An increase in the rate of the development of the Cunene hydroelectric

scheme appears to provide a major stimulus to the construction firms, while it

promises to provide the power for large-scale manufacturing industry by the 1980s.

137/ A/10023, op. cit., p. 23.

13'6/ These include: Babcock and Wilcox International, Ltd., Blackwood Hodge, Ltd., British Leyland Motor Corporation, Ltd., British Oxygen Company, Ltd., British Steel Corporation, Davy Ashmore, Ltd., George Wimpey and Sons, Ltd., Metal Box Company, Ltd. and Mitchell Cotts Group, Ltd. of the United Kingdom; Lurgi Gesellschaft, A.G. and Volkswagen, A.G. from the Federal Republic of Germany; Anglo-American Corporation, Ltd., Anglo-Transvaal Consolidated Investment Company and Murray and Stewart, Ltd. from Southkfrica; and Arthur G. Mckee and Interspace, Inc. from the United States. See A/10023, (Part III), op. cit., Annex, pp. 39-40. ·

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Bankinc and financial services

134. Transnational corporation banks typically operate in Namibia throUGh

their South African regional head offices. Barclay's South Africa operates

22 full branches and 90 agencies in rramibia. Standa~d Bank South Africa

has a full branch at Windhoek and agencies elsewhere in Namibia. The

Banque d'Indochine operates through the branch Bank of Southern Africa

with a full branch at Windhoek. United States banks have been reported

to be a major source of funds for the Rossing uranium project.~

[}9f Nucleonics Week, 19 September 1974.

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g. Oil

135. Transnational corporations are also involved in Namibia through exploration

for petroleum. Since 1968, South Africa, which is totally dependent on

imported oil, has been pressing efforts to find a supply in Namibia. As

far as is known, prospecting has, for the most part, been unsuccessrul.

In 1975, four United States-based transnati~nal :~~ons, Cont.inental

Oil Company, Getty Oil Company, Phillips Petroleum Company, and Texaco Oil

Company, responding to pressure from the international community and from

church groups, announced their withdrawal from Namibia. The companies

still believed to be involved in oil prospecting in Namibia include the

following: Soci~t~ National des P~troles d'Aquitaine (France); De Beers

Consolidated-Mines (South Africa); Etosha Petroleum (Pty.), Ltd.;

BrilUnd Mines, Ltd. (Canada); Mr. B.J.H. du Preez (South Africa); the

Milford Argosy Company (United States); , the Texas Gulf Corporation

f /~ (United States);and Standard Oil o~ Cal.ifo nxa.

iJf'/ A/10023 (Part III), op. cit., Annex p. 36.

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6. »nployment and wages

136. Transnational corporations that operate in Namibia are part of an

employment system that formally discriminate against black Africans, forcing

them to live and work ~:ider deplorable conditions and paying them

disproportionately low wages. In most cases, the wages are below the

recognized poverty level. Though data is Gcarce, since South A:f:rica bas

not published complete data since 1966, it is estimated that by the early

197Os, e7,OOO Africans were employed. About a third worked as agricultural

labourers and the rest were in the various industries . Of the total,

47 per cent were reported to be employc•l as labourers, 13. 7 per cent in

mining and the rest in various industries. Only five per cent were

classified as supervisors, skilled or semi-skilled workers, and 3.8 per cent

as professionals, semi-professionals and technical personneifY(/

137. More than half of the African labour force work as contract labourers,

a system that promotes the apartheid policies practiced in Namn,.;_a. Under

this system Africans are recruited from their "homelands", where employment

opportunity is negligible, to work as temporary and cheap labourers on

white-owned farms, factories and mines. They are not allowed to bring their

families, and the housing provided by the employers is reported to be

seriously substandard. As migrant labourers, with few legal rights, these

Africans are virtually powerless against their employers-!-f!JJ

Jjjj General Assembly, A/10023 (Part III), op; cit . , p. 43.

IJiJ,,/ General Assembly A/31/23 (Part III), op. cit., Annex II, p. 13, 14.

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138. Africans are paid wages far below whites employed in the same enterprise,

and even for the same task. The mining sector wages are usually the highest

for Africans. Nevertheless, in the mining company Tsumeb, the average wage

for whites is 19 times higher than for blacks. If non-cash benefits given

to Africans are included, blacks still earn only 10 per cent of the white

cash wage.~ One estimate claims that 95 per cent of all urban workers

in Namibia in 1973 were earning less thaplthe Poverty Datum

1 e:,~~\l\dae! ot '"'~ J!ii/ below which heal th and decen4t,'\ cannot be mainta~nea.

Line, a level

J.iil General Assemb1¥, A/51/23 (Part III), Annex II, p. 15.

JiJ!JI Rogers, Barbara, Foreign Investment in Namibia, Conference Paper 146/74, 18 September 1974.

',l'able 6. JlAMIBIA 1''0REIGH CORPORATIONS OPERATING IN MINING DY

ORIGIN AND ACTIVITY

Corpor~tion in 1?runibia

Ai'ricnn Triangle Mining, Prospecting nnd Develop­ment Company (Pty.) Ltd.

Band O Mineral Exploration Cy. (Pty) Ltd.

Consolidated Diamond Mines of South West Africa (CDM)

Desert Finds (Pty.) Ltd

Di.Gunma J.fining Company

FEDSWA Prospekteerders

Gold Fields of South Africa

Hanna Mining Company

Rosh Pinah Zinc Mine

Uis Tin Mine

Johannesburg Consolidated . Investment Group, Ltd. (JCI)

Kiln Products, Ltd.

Khan Mine (Pty), Ltd.

Klein Aub Copper Company,

Parent Corporation Home country of Parent

Anglo-Transvaal South Africa Consolidated Invest-ment Cy, Ltd

(ANGLOVML)

Johannesburg Consolidnted South Africa Investment Croup

De Beers Consolidated ~ South Africa Mines of South Africa Ltd .

Desert Finds (Pty)_Ltd South Africa

Digamma Min_ing Company

Marine Products Ltd Federal Mynbou (Bpk)

of South Africa

Snuth Africa

South Africa South Africa

Federale Volksbeleggin gs(Bpk :1:>outh Africa General Minirig aud Finance South /iiric:e.

Corporation, Ltd.

Gold Fields of South Africa Consolidated

Gold Fields, Ltd.

United Kingdom

South Africa

Hanna Mining Company USA

Iron and Steel Corporation South Africa of South West and Africa (ISCOR)

Iron and Steel Corp. of S.A.

JCI

Anglo-American Corporation of South Africa

Metallgesellschaft, AG Consolidated Gold Fields,

Ltd.

Ohlthnver Group

General Mining nnd Finance Marine Products, Ltd. Federal Mynbou (Bpk.) of

South Africa Fedcrale Volknbcleegings

(Dpk) of South Africa

South Africa

South Africa

South Africa

FRG United Kingdom

FRG South Africa South Africa South Af'rica

South Africa

Activ:i.t:'t'

Prospecting for Copper

Prospecting for Copper

Diamond rninin;

Prospecting for uranium

Prospecting for uraniu::i

Prospecting for copper

Prospecting for uranium

Mineral u.:e:>mlor.atio::i ""'-n1ng :t.1nc

Mining Tin

Prospecting foz gypsum

Produces zinc oxide fro1:1 concentrates

Mining copper

Mining _copper

___,. . ,,,-----­"

corporation in Namibia

Iprelei Copper Mines

Ma.rcona. Company

Marine Die.!:lond Corporation

Navarro Exploration Corporation

Oami tes Mining Company, (Pty.), Ltd.

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Parent Corporation

Lorelei Copper Mines

Marcom\ CompWly

De Beers Consolidated Mines, Ltd.

Navo.rr.o Explorntion Corporo.tion

Falconbridge Nickel Mines, Ltd.

Jlomc country of Parent South Africa.

USA

South Africa

Canada

Industrial .Development South Africa Corporation of South Africa

O'okiep Copper Company, Ltd. O'okiep Copper Company, Ltd. South Africa Newmont Mining Corporation USA

tjihase Mining Company (pty.), Ltd.

Rescna Minerals Company

Rossing Uranium, Ltd.

Minerts Development (Pty.), South Africa Ltd.

JCI South Africa Fedn1ar Ltd. Continento.1 Ore Corporation

Resenn Minerals company

Rio Algoni Ltd~ . .

South Africa United States

South A!':dca

Canada

Industrial Development Corp- South Africa oration of South Africa

Toto.1-Compagnie miniere et France nucleaire (CMN)

Rio Tinto Zinc Corporation; United Kingdom Ltd. (RTZ)

South A.rrica. Vendome (Pty.), Le Nickel Societe Anor.:/1r.e Ltd.

France

South West Africa Company; Kiln Products, Ltd. Ltd. (SWACO)

South West /1.li'rico. Lithium Company

••

Metnllr,caellscho.ft, A.G.

South Af.rica

FRG

.. Activity

Mining copper

Mineral cxplor.,. ntion

Off-shore dio.::o: mining

Mining copper

Mining Copper

Prospecting for uro.niUI:1

Mining copper a:: zinc

Mining fJ. uorcp!:.!

Mining urani U.":l

Prospecting fo: copper

Mining lead nn vanadium

Mining lithil.U:

-

Corporill.2!1 in Jhunibia 'r" .

Tidal Diamonds (SWA)(Pty.), Ltd.

Tsumeb Corporation Ltd.

!J!!£_nt Corporation

Getty Oil Company , De Beers Consolidated Mines~ Ltd.

.Amer:i.cnn Metal Climn.x, Inc. Nevmont Mining Corporation Selection Trust, Ltd. O'okiep Copper Company, Ltd. Union Corporation. Ltd.

Home country o'f' Po.rent

USA South Af'rica

USA USA

Activitv

Prospecting f"or diamo1~.:is

Mining co:r;e1 lend, enc.

United Kingdom zinc South Africa South Africa.

SOURCE: Report of the Special Committee on the situation vith regard to the Implementation of the Declaration on the Gro.nting of Independence to Colonial Countries and Peoples. G.A. Official Records: Tweni:y-ninth session, Supplement lfo. 23 (A/9623/Rev.l) Vol. II, p. 170-176. 1

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CHAPTER III: SOUTHERN RHODESIA/ZIMBABWE

A. Overview

139. Southern Rhodesia, which since November 1965 has been administered

by an illegal minority regime, has a population of about 6.2 million,

composed of 5.9 million Africans, 274,ooo Europeans and 30,000 "coloureds"

and Asians. With a Gross Domestic Product of Southern Rhodesia dollars 1.68

billion ($US ~Tl ) in 1974, Southern Rhodesia is, next to South Africa,

the second most industrialized country in the sub-Saharan region. Manufacturing,

which in the last decade displaced agriculture as the most important sector

of the economy, accounted for one quarter of the GDP in 1974.

140. The sanctions imposed on the illegal regime since its Unilateral

Declaration of Independence (UDI in 1965) have, however, affected the

economic structure of the Territory. The export of tobacco was particularly

affected. Manufacturing, which gained by an expansion of import-substitution,

is meeting several difficulties due to foreign exchange restrictions.

Violations of sanctions, however, l.dve allowed the regime to earn foreign

exchange by exporting agricultural products and minerals through some

neighbouring countries and importing needed primary and manufacturing

commodities f.!LD

141. Foreign investment has played an important role in the Southern

Rhodesian economy. Except for the years 1966 and 1972 the Territory has

been a net importer of capital since the Unilateral Declaration of Independence.

In 1974, net capital transactions accounted for $R 63 million. In fact,

betweeen 1966 and 1975, reported capital imports amounted to R$ 400 million,

while income remitted abroad totalled almost $R 300 million. The latter

does not include profits which m~ have been remitted abroad through the

transfer pricing mechanism, e.g. overpricing on imports, etc.

/Ip I : See Offic • a Supplement No. 23 (A/9623/Rev.l),

•

•

• -67-

142. The dimensions of the stock of foreign direct investment or of the

activities of TNCs in Southern Rhodesia cannot easily be ascertained.

143. Mining is the sector that has attracted most of the foreign invest­

ment in Southern Rhodesia. /!t.~/ But TNCs are also present to -~ary~ng degrees

in manufacturing, oil and finance.

144. Most TNC activity in the Territory is conducted through affiliates fttl I

established in South Africa in which TNCs have majority or minority holdings.

Many of the important Rhodesian industrial firms, through operating as separate

entities, maintain close ties with South Africa.

145, Many subsidiaries of TNCs, encouraged by the illegal regime have

registered in Southern Rhodesia and thus have technically become Southern

Rhodesian companies./!ft V This releases subsidiaries from the legal control

of parent corporation.

146. As in the case of South Africa, investment originating in the United

Kingdom is the most important source of foreign capital. According to the

United Kipgdom's Board of Trade the net assets of United Kingdom investors

amounted to £.78 million in 1971.

frb/ A/9623/Rev.l, op. cit., p. 106

/q]f The regime imposed in 1973 a non-resident shareholders tax of 15 per cent on taxable profits. Companies registered in Southern Rhodesia are exempt for this tax. See A/10023 (Part III) p. 4-5.

iM} United Natbns Security Council, Reports of Security Council Committee established in pursuance of Resolution 253 (1968) concerning the question of Southern Rhodesia, Security Council Official Records, 31st. Session, 1975, Vol.l. See also "Sanctions as an Instrument of the United Nations - Rhodesia as a Case Study", Hearings on the International Organizations and Movements of the Committee on Foreign Affairs, U.S. House -of Representatives, 2nd. Session, June 13, 15 and 19, 1972 (Washington, D.C., US Government Printers, 1972) p. 165

., •

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147. Almost a third (£22 million) was invested in four manufacturing

industries: tobacco and beverages, chemicals, electrical engineering and

paper, printing and publishing. A little over 10 per cent (£10.2 million)

was invested in mining, about 5 per cent (£3.5 million) in agriculture

8 ( 6 . ) . d d' t 'b t· l!tj_/ and about per cent £ .5 million in trade an is ri u ion.-

148. Al though, following the UDI, the United Kingdom Government required the

UK-based firms to sever their ties with their Rhodesian affiliates, some TNCs

continued to supply important services for them, often through their South

African subsidiaries. These ties usually fall under such legal formats that

the home government often faces jurisdictional obstacles in attempting to

ban them. J.r.Q./ In 1974 the Government of the United Kingdom stated that, as

· · f" t· . Rh d • ISL} of that time, there were no longer any British irms opera ing in o esia.--

/fjJ United Kingdom Board of Trade, Trade and Industry, 15 November 1975

~ A case in point is that of the investigation of the Lonrho Company by a special group set up by the Government of the United Kingdom. Lonrho's beginnings in Africa were in southern Africa. In 1961, Lonrho bought some of the assets of . the private company, Shipton Estates. From then until the Rhodesian UDI, Lonrho's expansion was mainly in southern Africa; however, the specacular growth took place ar~er 1966 when pre-tax profits rose from £3 million in that year to £63 million in 1975. The activities of Lonrho · Ltd., which employs nearly 100,000 people and has vast mining and trading interests in the Middle F.a.st and Af'rica, were branded in 1974 by former Prime Minister Ed.ward Heath of the United Kingdom when he described Lonrho as "the unacceptable force of capitalism". He then took the unusual step of investigating its operations, resulting in a report which was finally submitted to the British Government in January 1976. The investigation described as improper the manner in which Lonrho funds were used to finance development of a copper mine in Southern Rhodesia after the UDI. It also attacked special payments to customers abroad by "way of gift or reward or inducement". See s. Cronje,, M. Ling and G. Cronje, Lonrho: Portrait of a M\u.tinational (U.K.: Penguin Books Ltd., 1976) •

. ~ UN Press Release, Bo. HR/1072, 12 February 1974, p. 5.

•

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_ 14~. Investment originating in the US is the second most important source of

foreign capital in Southern Rhodesia. According to estimates, the value of

US investment amounted to $57 million in 1971. US-based TNCs have coucentrated

their activities in the mining sector (chrome). One US TNC (Union Carbide)

accounts, through its subsidiaries, for approximately three-fourths of

total US investment in Southern Rhodesia.

150. The largest TNC interests in the territory, Anglo-American Corporation, .

which · indirectly involves both US and _ UK capital, holds a widely di versified

portfolio of investments in mining, engineering, agriculture and banking.

Its quoted investment in Rhodesia amounted to $~3 million at market value in

'1973. In that year the company reported $3.5 million in profits after taxes.

....

•

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B. - Transnatforial corporate activities in t11&in economic sectors

1. Manufact<pring

151.Desp~te extensive assistance offered by the regime, most Southern

Rhodesian industries in their import-substitution activities depend on

supply of capital goods and technology from abroad. This renders the territory

highly dependent on those TNCs which continue providing essential goods and

services through their South African subsidiaries. Thus, several Rhodesian

companies are subsidiaries of South African corporations or of South African mostly_,

subsidiaries of TNC';;vbased in the UK and the us. Countries not members

of the UN have also been used for tke headquarters of firms handling Southern

Rhodesian business . '(Table 8 lists foreign concerns in manufacturing) ~

&o iron and steel

·152. The Southern Rhodesian regime has developed an ;iron and steel industry

. through RISCO, a state-owned corporation which has relied on TNCs for much

of its machinery and equipment. According to a reportJ the following tirms

have assisted RISCO in mobilizing capital and finding international markets

for its products :J81 Getraco-Finmeta1 ·· · and Handelgesellschaft, Zurich (Sviss­

based), Kl.ockner and Co. and Neunkircher Eisenverk (RRG-based), Voest

(Austrian based), Anhold, Wilhelmi and Co. (South African), European-American

Banking Corporation, through its subsidiary the European-American Finance

of Bermuda, and a consortium of Rhodesian banks, including Barklays,

Standard and otibers.

153. The South Atrican .State-ovned steel corporation ISCOR has established

a distribution agency in Southern Rhodesia for its own products and those

!_W Sunday Times (London), 14 April 1974.

•

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of several other companies, including Union Steel, Metalloys and Vautia.lfll

A South Ai'rican-own~ subsidiary of Guest Keen and Nettles (GKN),

a UK-based TNC, has production and distribution facilities in Southern

Rhodesia-J51l An affiliate - of the US-based 3M Company and an affiliate of

the UK-based Stewarts and Lloyd are aleo involved in distributing their

products in Southern Rhodesia.JW

b. Chemicals

154 . Some TNCs in the chemical industry have continued to operate in

the territory through their South African affiliates )£f} For instance,

AECI, owned jointly by British and South African interests, sell explosives

and blasting accessories, industrial chemicals, acrylic sheet, polyethylene,

PVC and vinyl produ,ts through Southern Rhodesian affiliates. An AECI

subsidiary fact~ry near Salisbury produces superphosphates, buying the raw

materials from another AECI affiliate. AECI also owns 50% of the Rhodesia

Fertilizer Corporation, which manufactures and retails fertilizers and crop

chemicals, as vell as a 50% interest i r. Prolux Paint Holdings/ 8

155 •. The partially British-owned ICI of South Africa distributes dyestuffs,

pigments, plastics, medical and ve·terinary products, and industrial and mining

chemicals in Southern Rhodesia. ~affiliate of Ho~, a Federal Republic

of Germany chemical firm vith production facilities in South Africa, sells

chemical dyestuffs, plastics, mining and agricultural chemicals and pharmaceuticals.

/Slj Association of Rhodesian Industries, Registrar of Rhodesian Manufacturers, 1976 (Bulawayo: Belmont Printers, 1976).

rsu Ibid.

/;fl Ibid

,~ii Ibid.

¥:n AECI, Annual Re~rt, 1974.

-72-

other taansational corporations selling chemical and allied products in

Southern Rhodesia include the United States firms, Johnson and Johnson,

Cheeseborough Ponds. Colgate ~oO.molive; the partially British Governmented-

- ovned Shell Chemicals Company; and the British Oxygen Company, through

Afrox (SA).

c. Electrical equipment and awliances

156. A number of TNCs are listed in the Rhodesian Registry of Industries,

including General Electric Company Rhodesia and Gestetner (Rhodesia).

International Telephone and Telegraph's South African subsidiaries have

maintained ties with Supersonic Radio Manufacturing Company which produces

sound equipment at Bulawayo in Southern F.hodesia and sells them throughout

South Africa and Namibia. An affiliate of a Belgian company (Electrotermil

Philips-ACED, South Afric,, supplies itmms of electrical equipment to a

South Rhodesian company, Morewear Industries •• ~/ Philips Rhodesia, an

affiliate of the Dutch TNC, assembles imported parts to produce radios and

television sets for sale in Southern Rhodesia.

157~ The South African franchise holder of the Japanese Sharp Corporation,

which produces and sells sound and other equipment in South Africa, operates

a branch in Southern RHodesiaA°;}/ -d. Food, beverages and textiles

158. A number or TNCs are involved in light consumer goods industries, like

food and beverages, tobacco and textiles. Affiliates of the British American

Tobacco Company and Rothman of Pall Mall produce cigarettes, tobacco and cigars.

Li1J See United Nations Security Council, Reports of Security Council CnmmittP.e established in pursuance of Resolution 253 (1968) concerning the question of Southern Rhodesia. Security Council Official Records, 31st, Session, 1975 (New York: United Nations, 1976) .,

/~/ Kitazawa, op. cit.

-------------------.'"\ Ill

-.

•

-73-

159. Rhodesian firms which openly sell beverages under TNC brand names include

Schweppes and Coca Cola-. ----------The British firm, Lyons, Brooke Bond,

has a Southern Rhodesian affiliate which sells coffee and tea. A Southern

Rhodesian subsidiary of the British firm, Tate and Lyle, produces sugar.

A Southern Rhodesian affiliate of Lever Brothers manufactures and sells a

line of detergents, soaps and cheeses. Another Southern Rhodesian firm sells

condensed and powdered milk, baby food and instant drinks under the name of

the Swiss-based firm, Nestle. The Rhodesian Breweries, associated with

Anglo-American's South African Breweries, produces beer.

\

•

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3.- Mining

160. The greatest involvement of TUCs in Southern lbiodesia is found in the

mining sector. Although mining is a relatively small part of the total GDP,

i~ is_given significance as foreign exchange earner. In fact.

mineral products constitute the second most important exported commodities

next to those of agriculture . According to one estimate 80% of Rhodesia's

mining sector is controlled by foreigners ./J.2/

161-. Over the last decade the mining sector has prospered in spite of UN

sanctions against trade vith ,Rhodesia. Betveen 1965 and 1972 the value of

mining output almost doubled, reaching R$129,4 million • . Base minerals like

lead and copper have become increasingly important, replacing gold as the

major mineral. Chrome, asbestos and tungsten are also mined in a large

scale.JW/

162. The mining sector in Rhodesia is dominated by a number of UK and South

M'rican firms, along with tvo US-based TNCs. The leading UK firms include

Lonrho, Ltd. whose subsidiary, Coronation Syndicate, Ltd. (CORSYN) ovns ·

gold and copper mines. There is also the Rio Tinto Zinc Corporation, Ltd.

of the UK which has several subsidiaries: Rio Tinto (Rhodesia) Ltd.,

which is involved in the mining of nickel, copper, chrome, gold and emeralds;

and the Dnpress Mickel Mining Company. A third UK-based TNC is Falcon

Mines. Ltd. which has the largest gold output in RhodesiaJ.6lf

163. South African mining companies operating in Southern Rhodesia are among

th4argest and most profitable. The Messina (Transvaal) Development Company,

Ltd. subsidiary, MTD Mangala Ltd., which is also partly held (10%) by

l6Cf A/10023, Part III, op. cit.p.4

~ A/9623, op. cit., Vol III, P• 107.

l!:!!J A/10023, Part III, op. cit., pp. Annex, pp.17-22

-75-

Anglo-American, is the major copper producer. The Anglo-American Corporation

of South Africa, Ltd. controls several subsidiaries, including a leading

coal producer, the Wankie Collerie Company, Ltd. and Rhodesian Nickel

Corporation, Ltd. (RHONICK), a major nickel producer. Besides these tvo

subsidiaries, Anglo-American also shares in the following companies:

Consolidated Mines Holdings (Rhodesia) Ltd., Trojan Nickel Mines, Ltd.,

Madzuva Copper Mines, Ltd. and Bindma Smelting and Refining Company, Ltd.

A third major South African corporation, Tsumeb Consolidated Investment

Company, Ltd. owns over 50% of the Shanghai Mining Corporation, Ltd.fill

164. US investment in Rhodesia is heavily concentrated. One US TNC, the

Union Carbide Corporation, accounts for aH estimated 70-80% of all US L tha,;t..J . •

investment iWT~rritory. Its holdings in four subsidiaries amounted to approxi-

mately $40-45 million in 1971. Two of these subsidiaries, · Rhodesia Chrome

Mines and African Chrome Mines, produce the major part of Rhodesian chrome

ore. Union Carbide subsidiaries also operate a feroalloy plant and grow

trees and supply lumber for the mining operationrrlif4

165. ~rior to the enactment of the Byrd Amendment by the United States

, in 1971, transnational corporations from the United States were required

to observe the economic sanctions imposed on Southern Rhodesia by the

United Nations. However, some t~ansnational corporations were reported

to have tried to circumvent these restrictions. A United Nations General

Assembly Committee reported that Union Carbide, immediately before the

imposition of sanctions in 1966, transferred significant amounts of chrome lj[/ ~

outside of Rhodesia. With the~ of the Byrd Amendment in March 1977

United States-based transnational. corporations are again required to observe

United Nations sanctions.

Ibid. Church Investments, op.cit., p. 140, fn.8 UN, Special Committee on Decolonization, Foreign Economic Interests and Decolonization. 1969.

-1b-

t i . . t hr "d t 0 -d . -~ trans erred a gn1t1can amounts ot c ome outa1 e o n9U e■ia. __

166. Some Ja~eae TNCs are also r~rted to have purchased Rhodesian chrome

using South Af'rican cenificates ot origin provided by the ,

Johannesburg Chamber of Commercefj,iA list published in 1968 of Japan's iro~ ~

and steel makers with investments abroad include Kobe Steel company, represanted

by Nissho-Iwai, as a joint investor in Southern -Rhodesia with Mine de Chrome, · 1

a Swiss Mining Company.~

J. Banking

167. 'lNC links with Southern Rhodesian financial institutions provide a

conduit for essential funds. Barclays Bank is still the most important bank in

Southern Rhodesia, · w i t _h. 37 branches as well as 50 tixed

and mobile agencies. In its advertisement Barclays Rhodesia stresses its

connexion with the network of Barclays subsidiaries through the worl~

~68. Standard _Bank of Southern Rhodesia operated 44 branches and a network

of static and mobile agencies thsoughout the country, participating in

insurance and other types ot tinancing.

169. The third largest bank, Rhobm•;, was originally attiliated with the

Netherlands Bank which had ottices in South Af'rica. In 1967 it became the

Netherlands Bank ot Rhodesia and in 197? assumed its present name. Presently,

it embraces a commercial, a merchant bank, a tinance house and insurance also

brokerage activities • . Rhobank was/listed as one ot the 15 leading manutacturing /1."1I

tirms in Rhodesia with reported profits betore taxes ot R$1.4 million in 1975. ~ -

170. The National Grindlays Bank, Southern Rhodesia's youngest bank with

reported assets of R$ 35.5 million, is affiliated with the UK-based bank ot

/1:a/ UN, Special Committee on Decolonization, Foreign F.conomic Interests and

/.Jj;J/ lsahi Shimbun, 19 June 1974.

t,!'j Tekko Shimbun, 1 Mayl974 •

/1,/,,/ Thom 's Commercial Publications, Ltd. , Industry and Commerce of' !rhodesia

-;(Salisbury: Mardon Printers Ltd 1971. ) -----------..:..:;.....:..::--:::.::::.::=.::=., ,, I Ib • d , • , .. • -....., --2:__ •

...

1974

-11-

the same name in which Citibank (United States-based) owns 40 per cent

of the shares. In 1969 National Grindlays took over the Ottoman Bank in

Southern Rhodesia and in 1971 established a finance house.

4. Oil

171. 'l'rans1fi'onal oil corporations, with affilaites di~tributing pe~roleum

products throughout Southern Rhodesia under internationally-known brand

names, include the partially French-South Af'rican-ovned firm, Total. In

1966 the US l'NCs Shell and Mobil financed a 100,000 gallon oil depot at

Messina in the South African Transvaal, within easy reach of the Southern

Rhodesian ~nrder. The parent companies insisted they maintain no ties with

their Southern Rhodesian subsidiaries.

172. Accordin~ to a United Church of Christ document published in 1976,

Mobil (South Africa) has been s~PJ'lying oil products to Southern Rhodesia for ten years

through a chain of intermediary South African companies, to be distributed

by oil companies in Southern Rhodesi~, including Mobil's own Southern Rhodesian

subsidiary /19

ng/ United Church of Christ, Centre for Social Action, The Oil Conspiracy,(New York: United Church of Christ, 1976)

' -78-

C. ~loyment and wages

17}. It is especially difficult to give precise data relating to wages and

employment of transnational corporations in Southern Rhodesia because of the

: secrecy surrounding their operations. It is possible~ however, to give overall

· data relating to wages and employment of Africans in the major industries

in which transnational firms appear to be most active.

174,In 1975, official data shows that African wages were less than

· one-tenth of white wages in Rhodesia. . Over the pa.st decade African

• earnings have actually droppe,d relative to those· of white Rhodesians. In

1966 African earnings averaged 9.7% of white earnings. By 1975 this f~gure

had dropped to 9.1%. .,. (See table 7. )

"i75piocrimination against Africans is evident in the employment data

as well. In 1975, 119,700 European Rhodesians were employed, representing

38.6% of the total European population. On the other hand, the number of

· Africa1. ·employed, 945,000, is only 15.5% of the total African population.

176 •. A study conducted by the University of Rhodesia in 1974 showed that over

90% of the 545,400 African urban employees surveyed received cash wages below

the Poverty Intum Line. Almost 50% of these Africans were paid wages that

amounted to less than half the Poverty natum Line, a level which is supposed

to represent a minimal standard of living.!:lt./

/J!J A/31/23 (Part III), op. cit., Annex I, p. 12.

Table 7. Southern Rhodesia: Employment and wages, 1966-1975

1 1975 Employment Earnings Percentage of Employment Earnings Percentage of

Sector (Average) African to (Average) African to European European

African European African European earnings African European African European earnings '000 '000 R$ R$ '000 '000 R$ R$

Agriculture and forestry ••••••••• 272.0 4.37 125 2,540 i~. 9 355.0 4.85 178 4,268 4.2

rt.dning and quarrying •••••••• 45.7 3.14 300 3,503 8.6 60.3 3.82 504 6,963 7.2

Manufacturing ••••• 68.5 15.11 426 2,952 14.4 136.1 23.91 715 5,780 12.4

Finance, insurance I

and real estate •• 2.3 5.69 608 2,671 22.8 4.3 9.08 1,023 4,857 21.1 ~ \0 I

Total, all sectors •••• 644.o 90.1 260 2,671 9.7 945.0 119.70 461 5,048 9.1

Source: Ministry of Finance, Economic Survey of Rhodesia, April 1976.

Note: European includes Asians and Coloureds.

-80-

Table b. Transnational manufacturing corporatiions known to have pouthern Rhodesian affiliates, 1975

Rhodesian Affiliate

AAC (associate

AE + CI Rhodesia

Alpha Brick+ Tile (Pvt)

Atkinson Lorries+ Seddon Diesel

British .American Tobacco

British Insulated Callenda ~ 's Cables

Datsun Distributors

Dunlop Rhodesia

Ford Motor Co.

GEC Rhodesia+ 15 other subsidiaries

Hippo Valley Estates (AAC Affiliate)

Huletts

International Computers

Irvin+ Johnson Rhodesia

Iscor Rhodesia

Iscor Rhodesia (agent)

. Leyland

Lonrho + 39 other subsidia

Metal Box Rhodesia

Miller Weedon+ Carruthers

Protea Chemicals

Rhodesian Bakeries Assn. + 7 other subsidiaries

Rhodesian Breweries

Rhodesian Cables

South African Affiliate

De Beers

AE + CI

Anglo Alpha

International Harvester

British .American Tobacco

British Insulated Callt:ucl.ar's Cable&

Mitchell Cotts Subsidiaries

Dunlop

Ford Motor Co.

GEC

Hippo

Internntional Computers (Holdings)

Irvin+ Johnson

Metkor (S.A. parastatal)

Union Steel

Leyland

Lonrho

Metal Box

Protea Holdings

Associated British Foods

South African Breweries

Transnational Corporation i A~filiation outside South Africa (if known to exist •

ICI (UK)

Associated Portland Cement (Ltd.)

International Harvester (t and Seddon Diesel Vehicle (UK)

British .American Tobacco I

British Insulated CAllend! Cables (UK) and General Cables Corp. (US)

Metchel Cotts (UK)

Dunlop (UK)

Ford Motor Co. (US+ Can. :

GEC (UK)

Tate+ Lyle (UK)

Alcan (Can)

International Computers (t

British Leyland (UK Govt •

Lonrho (UK)

Metal Box (UK)

Associated British Foods (Ul()

-81-

Rhodesian Affiliate South African Affiliate

Rhodesian Oxygen Afrox

RISCO (Rhodesian Iron and Steel Co. - Govt.)

Schweppes Rhodesia Cadbury Schweppes

Stewarts+ Lloyds Rhodesia Stewarts+ Lloyds

Submarine Rhodesia Submarine (s.A. parastatal)

Woolworth South Africa Woolworth Rhodesia

Transnational Corporation Affiliation outside South Africa (if known to exist

British Oxygen (UK)

British Steel Corp. (UK Go\ft.)

Cadbury Schweppes (UK)

British Steel Corp. (UK)

Woolworth (UK) and Woolworth (US)

Sources: Moody's Investors Service, Inc., Moody's Industrial Manual, 1976 (New York: Moody's Investors Service, 1976); o.w. Roskill and Co. (Reports) Ltd.; Dunn+ Bradstreet Group, Who Owns Whom Continental Edition, 1976; Who Owns Whom, North America, 1976-77; and Who Owns Whom, United Kingdom Edition, 1976. {Darthmouth: Eyre and Spottiswood, Ltd. 1976).

ME. Klaua lablt'ftD beaut.iv• Direct.or "' Infonuatlon and aaaearoh Centre for

Tranaaat:Lonal Co,:po.ra~S.oa■

aaf-ud4in AhlN4 Bxecut.iv• Aaaiatant to the leCla'etary-Qeaeral

candidature of Mr. Nat Weinberg fW the poat of an adviser to the Y,nit.ed Nation• Centre for Transnational CoFP9rationa

19 May 1976

The a.oretary-Geae•al ha■ receivecl the attached let.tu fzoa Mr. Arnold Mille. Pn■ident of the Ull11:ed Mina worker• of Allal'lca. X Ul ■enclS.ng J'Oll 1:111■, to9etiler with the s.neu,:y-oe---1•• r•ly for you aonai4uat1on.

...

Mll/flbf. ~ iirL CCI SG

Mr.

19 Nay 19'76

I wlah • e>ter's JOI& fo% ,oar lat:er of 7 llay 1116 ~ the candidabln of llr. llat _l.._., fOftlU'

z•euch 4$.raat.os of the U.i-..d Allt.o 11N.ken, for a poat •• an act.iaer to the United llatioDa oa•l•■ion on 'ft'aUna1'1ona1 Qupon1t'-•·

Yov lnure.t ln tlle won of tld.a Colllll■•lon la ftEY IIIQCb appreolaud an4 YM NY be aa1111r-, that *• wet8Nl9•a caa41dat.ue will be 9lwa the III08C aarebl oonatdentJ.oa.

Na'. Ano14 Jd.ller Pnaident uait:ed Ni.De wodtca of Aaerlca WUhlDftGD, D.C.

S&hlgren

ARNOLD MILLER PRESIDENT

Dr. Kurt Waldheim Secretary General The United Nations United Nations Plaza New York, NY 10017

Dear Mr. Secretary:

TEL'EPHONE

ARCA Cooc 202 - 638-0530

UNITED Ml NE WORKERS' BUILDING ~00 FIFTEENTH STREET, N . W.

~l~"!r11i t11ltCiJ:t),i111il\, 101.<tit ?I~~ ~.._ .. -4,•· u,~,~•~"1&--...... 20005

May 7, 1976

I am writing to respectfully urge the appointment of Mr. Nat Weinberg, former research director of the United Auto Workers, as an advisor to the United Nations Commission on Trans-national Cor­porations.

As you may know, Mr. Weinberg served as a consultant to the Group of Eminent Persons whose report led to the establishment of the Commission. During long experience in the United Auto Workers, and more recently in retirement, he has written extensively on multinational corporations and their impact on working people. He has worked with us during the past several years as a consultant, and I consider him

t exceptionally well informed on matters involving multinational corporations and energy resources.

Mr. Weinberg is, in short, highly qualified to assist the Commission in pursuing its important work, and his appointment as an advisor would, in my opinion, greatly enhance the Commission's prospects for success. Accordingly, I hope you will give this recommendation your most serious consideration; and may I express my thanks to you for doing so.

Si,ncerely,

{2JJ!~ Arnold Miller

....

1 \ 0 C

ST/SGB/Organization/.Amend 6 novembre 1975

CIRCULA.IRE DU SECRETAIRE GENERAL

Destinataires: Les fonctionnaires du Secretariat

Objet: ORGANISATION DU SECRETARIAT

Il est cree par la presente, avec effet immediat, le Centre des Nations Uni, sur les societes transnationales. Son organisation et ses attributions sont decrites dans le document ci-joint (ST/SGB/Organization, sect. T).

Le Secretaire general,

Kurt WALDHEIM

75-22884

Section T

CENTRE DES NATIONS UNIES SUR LES SOCIETES TRANSNATIONALES

Attributions

Fournit l'appui necessaire a l'Assemblee generale, au Conseil economique et social et a la Commission des societes transnationales sur toute la grunme de questions liees aux societes transnationales ;

Met au point un systeme d'information complet, en assure le fonctionnement et rassemblc, analyse et publie des rensei­gnements concernant les societes transnationales ;

Mene des recherches sur les aspects politiques, juridiques, economiques et sociaux relatifs aux societes transnationales , y compris des travaux concernant l'elaboration d'un code de conduite et d'arrangements et accords internationaux specifiques ;

Organise et coordonne des programmes de cooperation technique sur les questions ci-dessus.

organisation

Le Directeur executif

Cabinet du Directeur executif

Aide le Directeur executif a gerer les programmes et surveille l'etablissement , l'execution, la revision et l'eva­luation des parties du budget-programme et du plan a moyen terme relatives aux societes transnationales, ainsi que des programmes entrepris en commun avec les coIJ1D1issions economiques regionales ;

Coordonne l'appui a la Commission des societes transnationales et a d 1autres organes intergouvernementaux qui s'occupent de questions relatives aux societes transnationales ;

Assure la coordination avec les institutions specialisees, les autres organes des Nations Unies et les organisations exterieures au systeme des Nations Unies;

Examine toute documentation a soumettre par le Centre • aux organes des Nations Unies ;

Coordonne la representation du Centre aux conferences et , .

reunions.

ST/SGB/Organization Section T, page 1 ~ovembre 1975

• Division de l'analyse des renseignements

Precede au rassemblement et a l'analyse systematiques de renseignements concernant les societes transnationales au niveau global et au niveau des entreprises ainsi que la legislation et les politiques nationales, regionales et internationales qui s'y rapportent;

Assure regulierement la diffusion des renseignements s~mentionnes par des publications et des rapports ainsi que par tout autre moyen que peuvent demander les gouvernements;

Tient a jour des donnees bibliographiques sur les articles, rapports et etudes concernant les societes transnationales.

Division de l'analyse des politiques

Effectue des travaux de recherche et d 1analyse concernant les questions economiques, juridiques, sociales et politiques relatives aux societes transnationales;

Entreprend des etudes et effectue d'autres travaux sur l'elaboration d'un code de coniuite et d'arrangements et accords internationaux concernant les societes transnationales.

Services consultatifs

Fournissent aux gouvernements qui en font la demande des services consultatifs cqncernant des questions relatives aux politiques d'investissement etranger et aux arrangements institutionnels et administratifs qui s'y rapportent et concernant l'evaluation des propositions d'investissement ;

Organisent des seminaires et ateliers de formation sur les points ci-dessus et sur les questions concernant les negociations avec les societes transnationales et la surveillance de leurs activites;

Constituent et tiennent a jour, avec l'aide du Bureau des services du personnel, une liste d'experts des questions relatives aux societes transnationales a l'intention des gouvernements qui souhaiteraient s'assurer leur concours.

ST/SGB/Organization Section T, page 2 Novembre 1975

4 ltovember 1975

110TB 10R THB SBCRJl'J.'AllY-GBIIDAL

Res ,Mei.gal Jiataea de Luoio

Bia application was taken up by th• Offiae of Peraonnel Serviaea with Mr. lahlgren -..tl.o wa• rather negat.iv• about: it ainoe be ba• already three qualiflecl Latinaaeriaan aandidatu for the poat of hi• 4apuq-.

Be alao bad no infoDation about .Admiral Jiaenez•e backpound. i therefore arranged that the neaeaaary infoDlation be 9ivan to Mr. hbl.gren and poilmed out that you recQIIIID.nded .,_1ral Jimenez•• oand.idaituseo

You are •-ln9 the new Jteruvian Alibaaaador on Wedneaday, 5 Bovanber, at 10 am and MX'. lablgren on the same day at 6 pa •

., • Maymofer

•••••

J ...,_. h \bl 811""-7 c,_,.i •• ... Id• le -,,., ,- a tbre• ,-II" n.a1, , 11■ appcd.nt u t, .. lll1111U•• ~ et .a.. Unl"4 .. u._ l'llt...U.• _. ......,. o.tn CIII 'tre■aat.loaal ~.ta •• , ...

I • -SUiia 'le eJ....u, ...t.dll ..... .S•waltft -,em of lbla ~fer.

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'f-. ldl1 aie. M IIIUU .. le ..U.tt,,.,.l J◄ I IIM 1a .. IMll1lt le IHt 4.t.flld.Md le• s•••• tw •• .. ,Ida> ._... ... M N•maM7 ~ In ta S........ of tlle ~. ta t.lle patonuw ,... dltll•.

la ..Uttea, J'CM will NMlft da,1ad•• •l:wa1• -' 1M n1oe ...» .. ,.. --- ,_,.... ..u. ... $\,0 - ,.. ... ,_ ... 11..,_ 1 • tddld.

ta ld.11 al.90 M ..U.Ued to an ■...U.. ..... f/6 -. lo '1.,500 Mt, ,_. - ,_ ..- cldld ID fllll--U.. dtrt••• • a Nlloel. • -~-• n le Ml, Jlle'illile U ,_.. lld.14 attenda • tJiee NINel or Q.. aiftftt.'7 la --- .....,. ., ,.... -- .......

A t--.1. ~ ol _.,.,, •• art .U • ,...,.... I• ,-a- efp1tre ... ,. '•"' ,_ ... ,, .. , .... ,_ 1ll1l ... - .,, ...... _ t.o ...... ,-1,ilt .... ~ wltll tM l\dt 11111.• 111111 U. aaff ... l.U_. .......... ~ _,. ot 11t1ilal1 11 ·~ Ill tM nrllltae., ,-'411 tJ.ad ~ w ........... ------ ., ~ in tM ......... Wr.11 .. .a. llell1&Na e/• hm• 1 a", Mtedan ., '1nleed

\o \be VI Oft'1N a\ a...a aaa,a, ._.._.lud ./ ..

... ......

JI tlallr'8 u ... ■1:SSUcn■l iahml.t.l• ,- _. to ..... 111••• .................... , .... , .... .......

D.I.Y!--el '

CONFIDENTIAL

UNITED NATIONS

, C' c 1r~ J CL.._c r 1 ,

,~, \:) - I "- - - , ".:)

~~) NAT I O N S U N I E S 01{ . ,· ~ ~ ~~lff Q ~ ~ tc. C1 G'OSC!r~

INTEROFFICE MEMORANDUM MEMORANDUM INTERIEUR cc. S (,...

TO: The Secretary-Gent/ \"" 1 r I J ,~ ' DATE, 11 September _ 1975 . I ''i v-v , A:

l~l0 ~•• ~ ij- £ 1$))-l :' t "'••••«•

George F. Davidson /l,)·J Under-Secretary-General ~v · FROM:

OE:

for Administration and Management SUBJECT: oeJET: Appointment - Mr. Klaus A.· Sahlqren

I had a talk last week with Sahlgren in which he outlined to me the terms and conditions under which he is willing to accept appointment to the post of Assistant Secretary-General, in charge of the Centre for Multi-national Corporations. He has strong views as to the inadequacy of the 1976-77 budget proposed for the Centre, as well as the provision for travel contained therein. I reassured him on these points, pointing out that I would be preoared to exolain to the Fifth Committee (as our Budget Document clearly states) that the budget must be regarded as a provisional one, and that we may have to return with proposals to revise it, at the 31st session. I have spoken to Mselle about this and he understands the situation! the ACABQ in its own report stated that the budget was to .be regarded as provisional. · ·

Sahlgren has apparently made it clear to van Laethem that under the terms of his appointment (agreed with you) he will not be reporting through van Laethem to you, but will be reporting directly to you and will be completely independent of van Laethem and ESA. J He is very insistent on this "autonomous" status and has requested that I include a statement in his Letter of Appointment, specifying

.. that he is to report directly to you. This can be done if-Y.Q.Y. agree. l '---- - - - - --..._

The final point on which Sahlgren insists causes me great difficulty and concern. He states that he must have representation allowance of not less than Sl,000 oer month, since he will have to reciprocate entertainment offered to him by many of these high- . powered multi-national corporations, and he does not wish to be · / 1- "\

under any obligation to them. He states that he has your agreement MJ/ on this, and emphasizes further that he simply will not accept the ~_!?

~ appointment unless he can be assured that his representation ~llowance will be at least 512,000 per year.

This, of course, if accepted, would create an impossible situation. Under the arrangements reported to ACABQ and the Fifth Committee in the budget documents, a standard representation allowance of S4,000 per annum is paid to all Under-Secretaries-General: 53,000 to all Assistant Secretaries-General~ and 5400 to D-2s. ACABQ has approved for 1976 and future years an increase for D-2s from 5400 to S600. While I am ready on receiving specific instructions from you, to go to ACABQ and argue the . case for a special representation

- 2 -

allowance of Sl2,000 for Sahlgren, I see very little likelihood that they will aporove: and if they were to approve,it is predictable that this would set up a reaction among other Assistant Secret~ries­General ?.nd Under-Secretaries-General which would create more difficulties. A number of Under-Secretaries-General (van L?.ethem, Corea and Winspeare\ have already made representations at various times as to the inadequacy of their reoresentation allowance: and I do not really see how one c'.1uld justify a representation allowance for an Assistant Secretary-General (with a small staff of a dozen professionals) so much larger than the allowances paid to Under-Secret?.ries-General who have very special obligations and responsibilities arising from the size and nature of their offices.

I would therefore wish to point out that in attempting to solve a problem affecting one individual, - Sahlgren - we may risk creating a gre?.t deal more difficulty for ourselves in other directions. I do not think the ACABQ or the Fifth Committee would view with ~uch sympathy any nction on our part which would have the result of ·escalating the scale of representation allowances across the board by giving s~ecial treatment to one individual.

Could we discuss?

---

//4 I

Curriculum vitae

Ambassador Klaus Aksel Sahlgren, Permanent Representative of

Finland, Geneva

Born on 11 August 1928 in Helsinki, Finland

Present post since 1970

Assistant Unde~Secretary, Ministry for Foreign Affairs of Finland,

1968-70

Ministry for Foreign Affairs of Finland, 1967-68

Embassy to China, 1964-67

Ministry for Foreign Affairs of Finland, 196 2-64

Embassy to Egypt, 1959-62

Commercial Representation to the Federal Republic of Germany, • > --.,

1957-59

Ministry for Foreign Affairs of Finland, 1955-56 IUKkU

0

Education: Abo Academy, 1946-5 3. Advanced degree in economics

Chairman, Geneva Diplomatic Committee, 1974

Chairman, European Free Trade Association, Joint Council 1971, 1974

· Economic Development Committee, 1974-75

Chairman, GATT, Council, 1974-75

Different working parties, 1970-74

Author: Several articles in international economical questions

- 2 -

Ambassador Sahlgren speaks Fi _nnish, Swedish, English, French,

German and Russian.

He is married ·and has four children.

Files Pending (Tit) Transnational Centre TIV*:!:~ L

I

lt Nay~

Dear Na. Gilli.a,

I 'NZ'J' 1111111:rh .,.._1.au ,oar l•~r of 7 Nay,

briDflDI' - ........... on~ Gallllp &a-.rinf IIU'NJ' on the "stau of llan1r.in4" u well .. the • .., *YII" arUale.

At S-N•1: a Dlnatm of the Ulliad llationa

Infonatiell aa4 ....... Centn on TnmmatioDal Cozpon~iCIDa baa not. 'been -lAlct:e&L l 11111111, ..,_

...r, t.nfoza yoa •• aoon u a J>S.renor of the Centre hubeen .... lata4.

Wi1:h 'klnd ftllllX'daa,

*• •hyllla L. Gilli.a ..._ti.ft Director Gallllp l11tenatl.onal ltMearc'b

11111~ tat.ea, Ina. 53 Buk 81:nn ~inaetian, - 3Uf/Jf/ly 08540

... ....

. ,..

GALLUP I N T E R N A T I O N A L R E S E A R C H I N S T I T U T E S, I N C.

1:13 BANK STI\ EET, PRI N CE T O N. S E W JE I\S EY 081:l ◄ O <&09 > 924 9&00

GEORG£ GAL LUP

CKAIRMAN

Mr. George Hennig

May 7, 1975

Deputy Executive Assistant to the Secretary-General

United Nations 866 United Nations Plaza New York, New York 10017

Dear Mr. Hennig:

During our meeting of a few weeks ago, I indicated that initial material was becoming available on the Gallup-Kettering survey on the "State of Mankind".

We will be beginning our distribution schedule within the next few weeks, and so I thought you might be interested in an article about the survey that recently appeared in "New Ways", a publication of the Kettering Foundation.

011!:NMARK

,.INLAND

FRANCE

GREA T B RIT IA N

GR£E.C£

INOIA

IRAN

IRE.LANO

ITALY

In addition, as you may recall we discussed the United Nation's ,voRYCOA5T

new Information & Research Center on Transnational Corporations and the possibilities for cooperation between Gallup International JAP•N

and this new agency. As I explained to you at that time, the Gallup LUX<MBOURG

group has quite a bit of experience with regard to research ; n the NETHERLANDS

realm of attitudes toward multi-national corporations and could NEW ZEALAND

possibly be beneficial in developing initial data for this new NORWAY

agency. PARAGUAY

If you would be good enough to either refer the new director of the Information & Research Center on Transnational Corporations to Gallup International 's facilities -- or, if you prefer, refer me to him, I would be delighted to follow-up in this area.

I enjoyed speaking with you again and will send you additional information about the "State of Mankind" survey as it becomes available. In the meantime, I look forward to hearing from you·.

Sincerely, ~

<7'/.;tl,,; I. ,$,ti. Phyllis L. Gillis Executive Director

PLG/st

swP:Dl!'.N

SWITZltRLAN 0

UNITCO STATES

WEST GERMANY

·f/,~l IN T E R N AT I O N A L AT O M I C E N E R G Y A G E N C Y ~tr • . ~, fl. M AGENCE INTERNATIONALE DE l'ENERGIE ATOMIQUE \ IJ ME)K.LlYHAPOllHOE ArEHTClBO no ATOM HOH 3HEPrJ.H1

~---~::--~ 7;,o-~~-~~~ . ORGANISMO INTERNACIONAL DE ENERGIA ATOMICA

K.\RNTNER RING 11, P.O . BOX 590, A-1011 VIENNA, AUSTRIA

TELEPHONE: Sl 4S II S2 4S H

TELEX : l-164S

CABLE : INATOM VIENNA

IN REPLY PLEA5E REFElll TO: 1975-05-;0 PRltRE DE RAPPELER LA af.FfaENCE·

0PERSONAL ~ 1Q_ ~~~~ti'~ (/:wt, llwl~ -q f;e~~/A~A)"h~.~~

~-

. A friend of mine, ~-~--""""-!ii~ .. is the official Australian candidate for the directorsh p oft new Information and Research Centre on Trans National Car£ ... ens a subject on which, I believe, Odette is even more expert tan you yourself and about which I have the pleasure of hearing her address the Austrian League for the United Nations.

Butler was here about five years ago and then went to the Australian Mission at the United Nations. He is now back in Canberra. He is an extremely intelli5ent and able young man, ve-ry dynamic and would put ~reat executive drive into the ~ob. I think he would be a real asset, capable of dealing with UN ureaucracy and of getting things done despite it. He has not yet lost his idealism and he has the rsonal endorsement of Mr. Whitlam so you may fairly guess his genera poi ica approac.

I do not know whether~his matter comes into your .orbit but if it does and if Austria has no other man in view, I would be ve-ry grateful for any help you could give to Butler. ·

I understand that Odette will be back here in June and hope to get together.

Jrn; w-1 ~~ !"""' ,!'t:-.t *~ ~ ~

y~ D.A.V. Fischer

Mr. Peter Jankowitsch Ambassador .fSetraordinary and Plen~potentiary Perrnane!'lt Representative to the United Nations Perma."lant Mission of Austria 809 United Nations Plaza~ 7th floor New York, N.Y. 10017 USA

PERMANENT MISSION OF ITALY TO THE UNITED NATIONS

809 UNITED NATIONS PLAZA

NEW YORK. N. Y. 10017

(for Director of the Information and Research Center

on Transnational Corporations)

/ "', Prof. Giovann( ,_~o, Professor of Public Law at the

University of Rci'me.

~ . bf.~ cc.~

· uN~~crc

T hbnuy 1175

Dear•• lliller,

on behalf of '1le ••~1, vbo 1• •~ pr-~ Nkh19 an offie1lal fl.al-- ...... ancl ~ a.lf 81:at.N~ l vi.ah t:o admowi.tt• JOUr le~ur of 17 Janauy ftlllU'dias *• Jun _..,la.

1 - oenaiD ~~ t:be leeretaq,-Gau'al viU N ¥UY int:iu'Ut.ed in~ Yialll MOIi~ Mr. Sala'Yia1 a heeding 1:he UDiud Jlat:iou lnfO&'llll•ion an4 -...uch C•ue on ftWMu.al Co%po&'ationa, and you may be oct:aJ.a t:la~ ywr 1ftUr will 1N 'brollght to the perflOllal a~tenUon of the S.creQrY-General on h1a retusn to a-, Yo&"k.

1111:h Ju.114 reguda,

Hr. J. lzwi.D Nlller C& ine ... iae CII pny, Inc. Colve+u, 1 .. lana

Ant.on Pnhaaka B-4of the lecr•teda• of the Jbcecnni.Ye Office

... .....

1

----:,7 A e

· GoLUMBus, INDIANA

January 14, 1975

Dear Mr. Secretary-General:

I have just finished reading about the action of the General Assembly to establish an Information and Research Centre as an autonomous unit within the United Nations Secretariat. I congratulate · you on this action. Of all the proposals for action at the international level none is more important.

There is now a great opportunity to move . forward in promoting increased understanding among transnational corporations and the countries in which they operate. The task of the new Centre is a most formidable one and leadership of the highest caliber is essential.

May I propose consideration of Juan Somavia, a member of our commission on the study of MNCs. My experience serving with •him as a member of the group has made me an admirer of his remarkable . talents and of his unusual capacity for international leadership. It is seldom that I have met a young man who has made a stronger impression on me; ·

The Centre must win trus.t and respect of parties who more often than not view each other with caution if not open disaffection. Leadership will involve diplomatic sensitivity and skill together with conceptual insight and technical competence. Mr. Somavia gained the respect of all members of the commission, including those with whom he had differences of opinion.

, .

1

I ;

t

j

j

Page 2

I suppose that, if anyone of the group might have been expected to view Mr. Somavia with mis­givings, it might have been myself, an American . businessman. I found him, however, to be at all times objective, scrupulously fair, in no way doctrinaire, and responsive to other points of view. These are all characteristics which the Centre's new -director should possess.

His credentials to the developing nations would appear impeccable. His willingness to engage in pragmatic discussion rather than just ideological debate will stand him in good stead with managers of corporations.

If he is able to attract to his team people with truly outstanding talents in the field of information processing, I feel the United Nations would have an excellent chance of making a major contribution to economic interdependence in this work.

Best wishes.

The Honorable Kurt Waldheim Secretary-General United Nations New York, New York 10017

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1970-1973:

19'73-1971+:

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Executive Secretary of the Executive Secre­tariat for Lru~A and Andean Group Affairs, Chile. Permanent Chilean Ambassador to the Co~.mission of the Andean Group, former President of the Commission (1970-71) and of the Board of the Ande<J.?1 Development Corporation (1971-73). In charge of pre­paring and negotiating Chilean positio~ with _ respect to bi:ateral and econor.~c i~~egra­tion in La.tin America. (Annex II!)

Member of the United Natior.s Group of Eminent Persons on }1ultinational Corporation..c:;. \'las unanimously elected Rapporteur.

International Co.nsultant based in Geneva. Served as sen.;_or consultant to var::.o~.s govern­ments, United Natio:1.S Agencies, and }'ounc!ations.

Invited to various meetings and discussion groups:

- Problems of Resource Management - t,'NCTAD. Geneva, Ap~l 1974 •

- Premie!" Symposium mono.ale sur l'Energie et les Matieres,premie~es, Paris, May 1974. Introduced discussion of "areas for i.'1.ter-

. nationnl cooperationn.

- High level seminar on 11World Development an.c. Intenw.tional Economic Cooperatio:r1.1', Hammarskjold Foundation - June 1974.

- Meeting of Senior Advisers of U.t\S? - Nairobi; September 1971+. Was P.appo:rteur -,f worki,ng group III _.

Symposi~~ of Coeoyoc, Mexico - October 1974. - Preparatory meeting !or h:!.gh. level courses

w neBctiations wit h trananutione.l corpox-a­tion.s - Caracas, Nove~~er 1974 .

Lectured und~r the au.spices of

- World Council on Relig5.on ::md International Affairs - New Yor~

- Institut de Science ?oliti~ue - P~tis

- Centra: .!3ank - Caracru:;

Teaching activities:

Published material:

Languages - :

.....

1964:

-3- ·

Assistant in Economics, ·Faculty of Law, Catholic University, Santiago, Chile

1967-1968 : . Professor in charge of Economic Integration lectures in GA~T•s Commercial Pol~cy course

1969-1972 : Professor of International Relations, Institute . of Political Science, -Catholic University, Santiago, Chile

Analysis of the Treaty of Montevideo ('.!.'hesis, 1963). Articles on the Inter-American System, Andean Group Affairs, and Transnational Corporations. Interviews.

Speaks, reads and writes Spanish, Englis~ and French •

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ANNEX I

I was a member of the General Division, which is the operational division in so far as global trade negotiations are concerned.

Initially I was in charge of keeping ' up to date tariff information available in the Secretariat.

- When the _ Kennedy Round moved into its final stage I was named liaison with delegations of developing countries within my division. This entailed preparing all the technical informotion they req! ~ired. It led to what became known as the "hard core" exercise in which the principal out­standing issues of interest to all participating developing countries were jointly discussed. Was actively engaged in Kennedy Round work of the Division.

- Was assistant to the secretary of the Anti-dumping Group. Also assistant and secretary of the Balance of Payments CoJl'l.mi ttee. This entaile• _,, drafting reports of the consultat~ons.

Was lecturer on economic integration in the GATT Commercial Policy course {three different courses- during a two-week period).. Was once ri..amed officer­in charge of the final ten-day work trip usually organized (to Belgium, Sweden and France).

- Lectured on behalf of the Secretariat to different groups of post-graduate students interested in the pD.rticipation of Latin American countriee in the Kennedy Round.

- • Was a member of tne GATT delegation to UNCTAD II. financial issues.

Followed trade and

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The Chilean Foreign Minister has three Senior Advisers (legal, political and economic) in his cabinet who hold the rank of Ambassador. In my capacity as economic adviser I fulfilled extremely varied tasks according to the needs of the Minister (special research, speech writing~ answering substantive correspondence, contact with other authorities within the Ministry, receiving foreign diplomats, private missions in the Minister•s name and acting as personal representative of the Minister in certain government bodies).

- In substantive matters I was charged with preparing and participating in negotiations in multilateral economic organizations. I headed an inter­ministerial group which was respo~.sible for evolving a policy on basic commodities, manufactures and semi-manufactures, international monetary and financial issues, transport, technology, forei.~n investments and inter­

_national corporations, preferences and general in~~rnational economic questions.

In these capacities I .

Represented Chile and~presided over a meeting of Iatin American Experts on the Generalized System of Preferences under the auspiees ~f .ECLA -Santiago, September 1968.

Was one of five Chilean representatives to the General Assembly in 1968 (headed the delegation in the ·Second Committee). Was involved in different contact groups, in particular was active i·n preparatioD.13 leading up to the Second Development Decade.

Presided over a Chilean delegation to a meet~~g of the Special Committee on Preferences, UNCTAD, December 1968. Was named spokesman for Latin America.

In February 1969 the Chilean Government was charged with organizing a Ministerial meeting of CEGLA ( to deal with inte:·-America.n relations) . Within the Foreign Ministry I was called upo~. to fulfil substantive posit.ions and co-ordiliate action . with other governments . In that context

- I was a member of the Chilean delegation at preparatory meetings at a technical level, Santiago, February/March 1969 and wns also a member of the drafting group.

I was no.med Secretary General of the Ministers' Conference in Vina del Mar, May. 1969. (I held this post until June 19'("0.) Participated in final draft negotiations of tho "Latin American Coneonsus of Vina del Mar".

Was a member of the Chilean Delegation to tho bi-annual ministerial meeting of EC.LA, Lima, Peru, April 1969. Was no.mad chairim.m of a working group on trado issues.

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ANN£X II {continued)

Presided over the Chilean Delegation to a of the Inter-American Economic and Social Vias named co-ordinator of CEGLA countries Trinidad ahd Tobago, July 1969.

prepa~atory meeting of experts Council at ministerial level. throughout the meeti:ng; ... ..

Was a member of the Chilean Delegation to the ~inisterial meeting of the Inter-A!?lerican Economic and Social Council, Organization of American States, v:ashington, November 1969. Was a member of contact groups on trade and financial questions.

Presided over .the Chilean Delegation to a preparatory meeting of experts for ministerial meeting of CECLA, Buenos Aires, June 1970. Was nruned in contact group and was spokesman for Andean Group countries on certain issues.

- In February 1970 I was named Executive Secretary for La.tin American Pree Trade Area Affairs. I retained my functions as Economic Adviser to ~.d.nister Gabriel Valdes.

- To caxry out these functions I had eight Foreign Ministry officials under my supervision. I could also draw on resources of r~gular departments and of other government bodies.

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AN?IEX III

- Was the Permanent Representative of Chile to approximately 20 meetings of the Commission of the Cartagena Agreements (Andean Group). The maj0rity of other representatives to the moat important sessions were cabinet ministers in their own countriee.

- Presi~ent of the Commission from November 1970 to November 1971. During my tenure basic decisions for orientation of the Ap.dean Group were adopted such a.s: a joint policy towards foreign inve~tments, special industrial allocations for Bolivia and Ecuador, the list of products sub.ject to sectoral development prograrr~es, list of products subject to across the board tariff reductions and the initial levels of reduction, products to which agricultural safeguard clauses can be applied, a common minimal ex­ternal tariff and a number of other supplementary decisions.

- Later, as Chilean representative I participated actively in the follovdng decisions:. establishment of a framework for Andean multinational enter­prises, an initial joint prosramme for the development of infrastructure, industrial development programme for the metallurg:5.cal sector, negotiation for the accession of Venezuela, establishment of Joint Andean Group policies vis-a-vis international economic issues and third countries (i.e. GA'r'.!.' multilateral tri:i..de negot:i.ations, relati .ons with Japan, Mexico, Spain, Argentina, etc.), establ:.shment of Joint Commissions .. with Argentina, Nexico and Spain. ·

- Participated as principal adviser to the Chilean Foreign Minister in four meetings of Andean Group Foreign Ministers; on two occasions w~~ r~u:ied chairman of the drafting committee of the Ministers• joint declaration.

In my capacity as President of the Commission was cru.trGed by Andean Group Governments to lead a Joint Mission to Japan (October 1971). It was the first expression of joint international action by the Andean Group. A communique was signed and a Japanese-Andean Group Eco~omic Commission was set up.

- Chairman of the Board of the Andean Development Corporation (November 1971 to March 1973). During my tenure all basic operational policies were approvec. Participated in different negotiatior.s relative to the financing of the Corporation.

- In charge, within Chilea.'l Government, of 'bilateral economic relations with Latin .American countries. This included overseeing development of export and import situation, possibilities for joint industrial initiatives in the region, co-ope1·ating with national financial authorities and preparing and co-ordinating bilateral negotiations. In that context I prasided over various economic ntj.ssions to Peru, Ecuador, Colombia, Venezuela, Mexico and Argentina. Also prepared bilateral meetings of Minister of Foreign Affairs with these and other countries.

f-t:

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• I I •

ANNEX III (cont~nued)

Vias charged with special research projects in Ia.tin America of interest to Chilean Government and preparing drafts for speeches of public authorities related to economic integration and Ia.tin America •

. Headed a group of various public services charged with analyzing activities of multiI1.cJ.~ional. enterprises. Basic research for Andean Group Decision 24 was done under my direction.

To carry out these activities I headed a service of approximately 80 employees, around 40 of whom were professionals (cco~omsts, engineers, lawyers, journalists, political scientists) 10 technicions (statistics mainly) and 30 general staff-members. I was assisted by one Under­Executive ?ecretary and five heads of division. My direct authority was the Foreign Minister.

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