'We are encouraged by your calls for divestment'

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14 SOCIALIST ACTION JULY 1985 things such as the bunga, which are what they call "native advisory councils" and the so-called homelands, which are only labor reservoirs headed by Black collaborators.

Today you have the same policy in the tricameral parliament, which gives a sham representation for Indians and Coloured people. And so the Unity Movement says, "If you do not collaborate with the oppressors then you are crippling the machinery that is designed to oppress you."

S.A.: What influence does the Unity Movement have among the mine workers and other sectors of the working class that have recently been on strike?

Khumalo: The Unity movement is strongest in the countryside. In the Eastern Cape, for example, it has been politicizing people successfully since the 1940s. The Pondoland revolt, which took place in the 1960s in that region of Women in the Transkei "homeland."

the country, was the closest struggle so far toward our liberation.

Now that revolt really shook the country. The peasants there were largely members of the All-African Convention, an organization that is affiliated to the Unity Moment. They formed independent peasant committees to fight against the Rehabilitation Scheme that uprooted people from their land. Because they were unable to get the assistance of others, their revolt was crushed by the armed forces.

The largest labor force in South Africa comes from these people, from the reserves of the Eastern Cape-the Transkei, the Ciskei. And the Unity Movement has recognized that by educating these people at the grassroots level in the countryside, migrant laborers will carry the message to the urban areas where they work.

The mine workers, for example, are mainly people who had been peasants. They have a background that used the boycott and the strike as weapons of struggle and an ideology learned from the Unity Movement that they were able to carry to the mines. And they what they learned most effectively.

S.A.: The trials of 16 members of the United Democratic Front are scheduled to resume in July. Why has the government begun these trials at this time?

Khumalo: The government has charged these people with treason for statements that they supposedly made. After granting a new constitution and partial elections the government has to prove to the white diehards that they still have everything under control.

In addition, the government wants the white population to believe that the country is in a state of war. The government can better whip up white people behind its policies if it can convince them that a "communist insurrection" is imminent.

S.A.: Thousands of opponents of the dictatorial regimes in Latin America have disappeared after being picked up by the police or government-supported death squads. Are there similar cases in South Africa?

Khumalo: There are many cases. There was one person, for instance, who was detained by the police and had some chemical used on him that crippled him. He tried to sue and went for treatment to a hospital. There was no trace of him after that.

For another example, you could take what happened on March 25, 1985, at Uitenhage. On that date, exactly 25 years after the Sharpeville massacre, the people were going to a funeral. It was a peaceful procession.

And as they were walking, two armored police vehicles came and hemmed them in. The police asked the people to disperse. The people were not antagonistic but asked, "Why?" The police then opened fire.

Government statistics say that 19 people were killed and some 30 people were injured. But the people themselves say that far more died and that many disappeared and cannot be accounted for. A few were children.

The government said-and this was repeated by Reagan-that the police were defending themselves against attacks and that the people were using sticks, stones, and petrol bombs against them. But the evidence goes contrary to that. An official commission appointed by the government found that no police were injured.

One man gave evidence to the effect that he had been grazed by a bullet and fell down. When he regained consciousness he heard one policeman saying, "Well, we'll have to finish these people off. Otherwise, they might tell the tale."

And he actually saw policemen picking up stones and putting them by the dead bodies to try to show that the people had thrown stones.

And the commission went even further. There were scientific tests done on the petrol bombs that the police had produced. The tests showed that in all those cases it was the same newspaper that was used as a wick and that the earth from which they said they had picked up these bombs did not have traces of petrol.

This shows that the white government lives in fear. Whenever they see a procession or gathering of people they become trigger-happy.

S.A.: What is your opinion of the movement in the United States that is demanding that U.S. institutions and corporations divest themselves of their holdings in South Africa?

Khumalo: Most people in South Africa are encouraged by what is happening in America. We realize that the Reagan administration is not representative of the people in the United States. So when people call for divestment they are expressing solidarity with our struggle.

By investing in the country-and U.S. corporations have over $14 billion invested there-the white regime has been provided with sufficient funds to maintain a well-equipped military. It's like providing ammunition to suppress the opposition.

The view has been expressed that divestment would hurt Black people the most. This is put out by government agents like the leaders of the "homelands."

But we say that the people already have their backs to the wall.

The American people should know that the Reagan administration represents those corporations that have invested in South Africa. They want cheap labor. They want to maintain the status quo and a stable government.

For that reason the U.S. government will not order a full embargo against South Africa. An embargo would be a direct challenge to the apartheid government.

People should realize that the United States receives its major supply of uranium from Namibia, which is the second largest producer of uranium in the world after the Soviet Union. That is why the U.S. supports the South African occupation of Namibia-despite the United Nations resolution that declared the occupation to be illegal.

We feel that the call for divestment is a positive step but it is limited. It can shift the emphasis from the political struggle.

People in the United States must bring a great amount of pressure on their own government, which is perpetuating apartheid. Americans could try to get their trade unions, for example, to support the strikes of the South African miners. Remember, American families like the Rockefellers own many of the mines and they are underpaying the workers. This must be brought to the attention of the public.

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Ripples of fear are flowing through the executive suites of many staid and conservative corporations these days. Forebodings of personal disaster grip executives as they hear their company's stock is in demand and its price is rising.

This should be cheering news to most managers, a sign their company is doing well. But these executives know better. Their stock is being bought by a dread raider who will invade their company like an old-time pirate boarding a helpless merchant ship.

Raids and mergers have been part of the business scene since the 19th century. John D. Rockefeller bought up small oil companies to eliminate competition. Andrew Carnegie bought iron mines and coal mines to give him an integrated steel industry.

General Motors has just bought Hughes Aircraft for $5 billion. This gives the automobile manufac turer millions of dollars worth of defense. contracts and access to years of research and development in electronics and high tech.

Most of today's mergers, however, bear little relation to the production needs of the acquiring company. The publishers of Esquire have bought a company making light bulbs. The mammoth Gulf and Western conglomerate operates Paramount Pictures, Consolidated Cigars, and Playtex underwear, among other enterprises. Beatrice foods, known as a merger junkie, held 400 subsidiaries at one time.

Increasing concentration of ownership The motive for these mergers is short-term profit. By acquiring the profit-making assets of established companies, a conglomerate can grow without the risk and trouble of bringing out new products.

Shuffling ownership of existing firms adds absolutely nothing to the nation's productive capacity. But heads of conglomerates care little for the nation's social wealth so long as their personal wealth is augmented.

The conglomerates have found plenty of companies to take over. This is because staid conservative companies have staid conservative executives whose modus operandi is "play it safe."

They are running a well-known, mildly successful company that has been in business for over 50 years. There is no point in taking chances. They pile up cash reserves instead of plowing money back in the business.

They are stingy in paying stockholders dividends. The price of their stock does not reflect the true value of the company's assets. Such a company is a sitting duck for a merger proposition. Its stock is underpriced and stockholders can be persuaded to sell when offered a premium over the latest Wall Street quotation.

When the conglomerate gains voting control, the old management faces an uncertain future. One disgruntled former executive eloquently described his experience when his company was taken over. "They gave us the mushroom treatment,, he said. "They kept us in the dark, then they covered us with manure, then they let us stew awhile, then they canned us."

Workers at merged plants have been treated in an equally brutal fashion. When a conglomerate took over a San Leandro, Calif., factory recently they laid off all 380 employees without notice. They will hire some of them back later, they said. Meanwhile any union contract the workers had with the old management is now null and void.

While workers usually lose in a merger others are in a position to make a killing. These include the stockholders who sold out, the investment bankers who get hefty fees for arranging the financing, and the conglomerates that can use the assets of the acquired company to make further profitable mergers.

The result has been a wave of mergers that has swept the country for the last two decades. In 1984, 2543 deals were struck involving $122 billion. With every merger power is concentrated in fewer hands.

Of more immediate concern to many economists is the new breed of player in the merger game. These are the wheeler-dealers who play the game solely for the millions to be made in consummating a merger.

"This sort of thing could give capitalism a bad name.

In the process they rape the companies involved.

Saul Steinberg, who never made a movie in his life, made Disney Studios give him a profit of $4.5 million just by threatening to take over the company. This is greenmail—quite legal and very profitable.

T. Boone Pickens, a Texas oil man, failed in his attempt to take over Phillips Petroleum. However he could laugh all the way to the bank as he cashed in on the increased value of the stock he bought.

The raiders have found they do not need money to play merger mania. They play it with paper. Bonds are issued by a dummy corporation and offered to stockholders in exchange for their stock. The offer is attractive because the bonds pay an interest rate of 17 percent, compared to the 3 percent that the target company's stock is paying in dividends.

Most corporations' stocks today are held in huge blocks by pension funds and institutions. Their money managers are under pressure to make immediate profits. Many will leap at a chance to make a deal that will look so good on their books.

What is behind these bonds are the assets of the company the raiders hope to take over. Such speculative securities are known on Wall Street as junk bonds. No conservative investor would risk a penny on them. However, in the frenzy of merger mania, junk bonds can be used to take over a conglomerate with billions of dollars in assets.

Ted Turner vs. CBS This is the situation of the giant CBS TV and radio conglomerate. It is mobolizing a Il its resources to repel a raid by Ted Turner who owns a few TV and radio stations based in Atlanta, Ga. Turner's resources are less than a tenth of those of CBS.

By CAROLE SELIGMAN "A brutality unseen since the days of Stalin.

This was how Polish Solidarity leader Lech Walesa described the conduct of the trial of Wladyslaw Frasyniuk, Bogdan Lis, and Adam Michnik.

The three Solidarity activists were handed stiff sentences of from two to three and one-half years on June 14. Their crime, in the eyes of the Polish bureaucracy, was "fomenting civil disorder" by holding a meeting to plan for a 15-minute work stoppage to protest food price increases. The strike never did take place.

ntetationa Subscribe MOU Turner, however, has raised $5.4 billion in paper credits to launch his attack. With literally billions involved in these maneuvers, it is not surprising that a few million can stick to various fingers. E.F. Hutton, which recently was fined for a scam that netted them millions of dollars, is going to reap $50 million for helping to arrange Turner's financing.

All the money involved in this deal will eventually come from the assets of CBS. Turner has already announced that he will sell off a recording company and other CBS subsidiaries when he gains control. He will cannibalize the corporation to pay his debts.

CBS is fighting back in a struggle known on Wall Street as the Siege of Black Rock, the name of CBS headquarters in New York. The besieged CBS has a number of defensive options, including the "poison pill" and the "white knight."

The poison pill is the ploy of loading the company with so much debt it is no longer an inviting target. The white knight is the friendly conglomerate who is invited by the management to merge with the threatened company and freeze out the raider.

CBS has taken a third option. It has appealed to the courts to halt the raider. From the standpoint of the ruling elite, Turner and his friends are outsiders who are threatening the stability of the established order. The courts will make decisions and Congress will probably pass laws that will curb the wheelerdealers.

"Economic suicide"

Still, the tide of mergers that is changing certain aspects of American capitalism will not be ended. The editors of Business Week have expressed concern over the merger mania and its implications.

They point out that $68.6 billion was spent in 1984 to take over existing firms, and only $1 billion to fund new enterprises. When Texaco wanted more oil reserves they bought Getty Oil Co. instead of investing in new exploration.

"The long-term implications of such decisions are awesome" says Business Week. Fewer start-up operations and less development of new products could add up to the slow "de-industrialization" of America. "If the trend continues,, says a partner in a banking house, "it means economic suicide."

Liberals will heed these warnings and call for the suppression of the monopolies, the mergers, and the raiders. They will proclaim the need to restore free competition. However the restoration of free capitalist competition is impossible-assuming if it ever even existed.

What is needed is the ultimate raid and takeover. This is the takeover of all industry by the organized working class so it can be operated for the benefit of all the people.

The trial itself, which was not open to the international press, was conducted in such a way as to guarantee its outcome. Michnik, in a letter to the public smuggled out of his jail cell prior to the trial, wrote, "If they refuse you visas and passes for the courtroom, that will be irrefutable evidence that what takes place in court will be an illegal sham."

According to the Michnik letter, the sole concrete evidence offered by the government in the case was a doctored tape recording of a conversation between Bogdan Lis and Waclaw Jan Ulanowski, a security official of the Ministry of Internal Affairs.

The defense was not allowed to make statements necessary for proving its case. "The judge has made it impossible to conduct a defense, said defendant Lis. At one point Michnik protested the partiality of the judge and asked that he be replaced. For this he was violently thrown out of the courtroom.

Given the conduct of the trial, the defendants made only short final trial statements, denouncing the unfairness of the whole proceedings.

In Lis' final trial statement he said, "The indictment was a provocation and this has been proved."

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Harsh terms for Polish activists