Committee supports divestment

By Jeannie Baumann

Daily Staff Reporter

The University Advisory Committee on Tobacco Investments announced, in a report released today, a unanimous recommendation for the University to divest from the stocks it holds in tobacco manufacturing companies.

"Our only serious option, if we choose to act at all, is to disassociate ourselves from the industry; and the only way to do that effectively is by divestment," the report stated.

The University Board of Regents, who must ultimately decide whether or not to divest from tobacco stocks, plan to vote on the issue during their monthly meeting in May.

Law Prof. Kyle Logue, who chaired the eight-member committee, said he was happy with the work of the committee.

"We worked really hard to come to a reasonable conclusion, given such a difficult question," he said.

The committee addressed two basic questions in the 38 page report. The first question was what features of tobacco products and what activities of the tobacco industry warrant singling out tobacco securities for potential divestment. The second asked if these issues contradict the essential values of the University.

The report concluded that owning tobacco stocks was antithetical to the teaching, research and service - the core University missions stated in the University bylaws.

"The brazen dishonesty of the tobacco industry for so many years about such enormous public-health significance is, in the view of this committee, unquestionably antithetical to the core missions of the University," it stated.

University Chief Financial Officer Robert Kasdin, who charged the committee last September, said the committee thoroughly and appropriately addressed the divestiture issue in the report.

"Any decision to divest has to be seen as an extraordinary event that merits the closest consideration because it introduces non-existent consideration into the investigation of the University's portfolio," he said.

As a general policy the University bases its investment decisions only on financial factors such as risk and return.

But the regents passed a resolution in 1978 to divest stocks from companies who engaged in business in South Africa due to the nation's Apartheid policies.

Their resolution set precedent for any future concerns raised about the University's endowment portfolio. Essentially, the issue at hand must be of "serious moral or ethical questions which are of a concern to many members of the University community" and an advisory committee must be appointed.

In the report, the committee addressed possible arguments opposing divestment, such as the slippery-slope problem that the decision to divest from tobacco may invoke a process that "has no clear stopping point."

But the committee decided, among other factors, that history has deterred the relevancy of this argument.

"The regents voted in 1978 to take action in the South Africa case (finally divesting in 1983), and that did not open a floodgate of 'next cases' in which the University was subject to significant pressure to divest in every other country in the world that violated human rights," the report stated.

The tobacco industry is the first time since Apartheid that the issue of divestment has been addressed.

The committee also eliminated the possibility of alternative actions to divestment, such as petitioning tobacco companies to change their practices. But the report stated that other institutions have initiated such practices with little effect.

"Thus, we conclude that it would be pointless to try to influence the tobacco industry in that way," the report stated.

Regent David Brandon (R-Ann Arbor) said Friday that he had not had the opportunity to read the report yet, but he has concerns that a decision to divest may not eliminate the conflict between the University's core values and the practices of the tobacco industries.

"Clearly, if the intent of the committee is to isolate the tobacco companies, then how do you do effectively do that in light of the fact that these companies are so far reaching?" Brandon asked. "I want to understand before we embark upon a policy and be consistent."

The Senate Advisory Committee on University Affairs passed a resolution in 1997 supporting tobacco divestment.

"We pushed very hard to divest. We're very pleased with the report of the committee," SACUA Chair Sherrie Kossoudji said.

The Michigan Student Assembly passed a similar resolution in January 1999.

Former MSA Rep. Sumeet Karnik, who brought the divestment issue to the assembly's table, said he was happy with the committee and the report.

"It shows the legitimacy and debate of student leaders and student government. We're making our University challenge itself," Karnik said.