Case Study Review: A South African Investment

Abstract

Some of the subscribing members of Interfaith Center on Corporate Responsibility declared that some of its members who owned stocks in Texaco Inc. and Standard oil Company were going to introduce resolutions in the shareholders meeting. These resolutions could see the two companies end their operations in South Africa.

This essay will analyze the moral issues concerning this decision. In addition, the essay will include arguments for or against the resolutions, while at the same time presenting a view of the responsibilities of the management regarding the resolutions.

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The benefits of building the plant in 1977 were less important than the violations of moral rights involved in the project. Although investing in South Africa benefited the company in that there were high returns from the investment, the violation of human rights present in South Africa had far-reaching negative consequences on majority of the population.

The Caltex Company had to operate within the laws enacted by the government of South Africa. This meant that the Company was limited in carrying out its operations and as a result, there was violation of the basic fundamental human rights. Though South Africa was a profitable zone to operate from, the access to employment opportunities kept out some races and favored some; for example, Blacks were discriminated and not equally remunerated (Velasquez, 2006).

Caltex was part of “Sullivan principles” that required that companies practice fair employment practices. While operating in South Africa, the living conditions of the company’s black employees were poor, and it was impossible for them to get jobs as managers and administrators. Even though South Africa was a strategic location for the plant, this racial discrimination could negatively affect the company.

These racial disparities were cause of the resolutions passed by the stockholders who were members of the interfaith center. Caltex was obliged to follow the code of conduct that laid down in Sullivan principles. Failure to adhere to the code meant that the company would face opposition from some of its members. Thus, the building of the plant was not beneficial than the violation of moral rights (Velasquez, 2006).

As a stockholder of the company, I would vote for there solution to terminate the operations of the Company in South Africa. This is because the continued existence of the company in South Africa threatened its image globally. Owing to the fact that South African laws were prohibitive to the blacks, the company would face criticism, and this was very detrimental, as many of its world clients would lose hope in it.

The resolution not to sell the petroleum products to the military or police was against the laws of South Africa; thus, a stockholder I could not have voted in favor of such a resolution. Passing such a resolution would mean that the company would face victimization from the government authorities, and this was disadvantageous to the company.

Although I would support the idea to terminate the operations in South Africa, the company would still negotiate with the government on the issue of allowing more blacks to be employed. Therefore, the company would continue operating without having to stop supplying to the military and police (Velasquez, 2006).

The third resolution that asked Caltex to implement the Tutu principles was very crucial. Therefore, if I were a Caltex stockholder, I would have supported the resolution because it gave more freedom to the black workers. By adopting the resolution, black workers could be in a position to join labor unions and access training in their respective vocations. As a result, the company would stop practicing racial discrimination, and this would mean that the image of the company could improve both in South Africa and globally.

The managers of Texaco and SoCal could have responded differently to the resolutions suggested by the stockholders. On the resolution to terminate the operations in South Africa, the managers ought to have keenly looked into the issue and consider the long-term disadvantages that the decision had on the company. If the disadvantages outweighed the benefits, it was wise to terminate the operations.

Concerning the issue of withdrawing supplies to the military and police, the management should not have rejected the resolution, it was important to engage in dialogue with the government to improve conditions of black employees. The management should have implemented the Tutu principles to enable equal rights to blacks, by offering equal pay for similar work regardless of the race.

Apart from ensuring that the returns on investment are high, the management has other owes responsibility to the society within which it is operating. Managers should ensure that the employees get equal pay for similar work.

Management should also ensure that the living conditions of the employees are good, to motivate the employees to work and perform well. The management should not only adhere to the law and consider the rate of investment of an investment, but also respect the moral values of justice and equality (Velasquez, 2006).

In conclusion, existing laws determine the decision of a company to invest in a particular market. Companies are supposed to adhere to the laws set up by the governments of the countries within which they operate. Adherence to the laws may make the companies compromise their stand regarding societal values. Therefore, the management of companies should respect the fundamental human rights of their employees instead of being only concerned with the returns of the investments.

References

Velasquez, M. (2006).Business Ethics: Concepts and Cases (6th ed.). Upper Saddle River: Pearson Prentice Hall.

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