HOW YOU CAN FIGHT THE BOYCOTT

MASLOW, WILL

HOW YOU CAN FIGHT THE BOYCOTT WILL MASLOW A new weapon against the Arab boycott, developed and applied by the American Jewish Congress last year, is now being widely deployed: a stockholder's...

...Similar assurances were received from a score of other companies...
...Accordingly, we withdrew our resolution...
...Questioning revealed, however, that the com- pany was certifying to Arab purchasers (a) that the goods it was selling were not of Israeli origin, (b) that the vessel on which they were shipped was neither an Israeli flagship nor on the blacklist, and (c) that their American suppliers were not on the blacklist...
...management spends corporate money to engage professional solicitors who canvass institutional shareholders to vote in favor of management's position...
...The conference began by the submission to us of a detailed, four-page letter responsive to the questions listed in our resolution...
...The statements of company policy we agreed upon were individually adapted to the nature of the company's operations in the Mideast...
...Soon we had submitted resolutions to the pillars of American industry: Exxon, General Motors, Ford, Texaco, Chase Manhattan,—names that are household words in the United States...
...The resolution, drafted and sponsored by AJCongress, requests the individual corporation to report to its shareholders on the extent of its business dealings with Arab lands and with Israel and to disclose the extent, if any, of its involvement in the Arab boycott...
...Some 30 companies have agreed in writing that they will report these statements of policy to their shareholders, either in the next quarterly report or in the report of the annual meeting, both of which are distributed to all stockholders...
...Bucyrus-Erie (heavy equipment) stated that its policy was not to submit to any boycott demands...
...What we sought were assurances of present and future company policy...
...origin and that the vessel that was carrying them was not an Israeli flagship...
...We pointed out that every such certificate helped strengthen the Arab boycott and requested that they certify merely that the goods were of exclusive U.S...
...A company whose sales to Arab lands are only a tiny percentage of its global sales may well decide that it is not in their interest to risk negative public or shareholder opinion, particularly in view of the new federal legislation and new regulations...
...They are also engaged in a secondary boycott: Arab purchasers will not trade with any company that has a plant, or licensing agreement, or joint venture in Israel...
...We reminded the company that sales to Israel were not forbidden by the Arab boycott regulations (presumably because selling goods to Israel does not build up her economy...
...General Motors does not...
...How the boycott works Twenty Arab nations are engaged in a primary boycott against Israel: they do not allow Israeli products in their lands or Israeli vessels to dock at their ports...
...A stockholder's resolution seems a questioning of management wisdom, a rift in the happy family of shareholders...
...We made it clear that we were not seeking to hold these companies up to public scorn for their past deeds or misdeeds...
...The individual shareholder must rely on thepersuasiveness of his resolution...
...Purchasing a few shares of stock in half a dozen major companies, AJCongress last year invited its members who held stock in others to join in the project...
...When the company received our proposal, they offered to have the company jet pick us up and fly us to their national headquarters, an invitation we politely declined, pointing out that everyone else had come to Congress House to negotiate...
...Ford Motor Company, seeking to get off the Arab blacklist, assured us that it would not abandon its assembly plant in Israel...
...Thus, one could understand the hurt expression of the chairman of a billion dollar corporation who asked, "Why couldn't you simply have asked us for the information you wanted, instead of introducing a formal stockholder's resolution...
...Where less than three percent is reached, the shareholder may not present "substantially the same proposal...
...Scott Paper told its shareholders it would "take no action, including even the making of routine factual statements on export documents," which could be construed as supporting the Arab boycott...
...The Hilton chain operates hotels in both Israel and Arab lands...
...Instead of leaving to lawyers, lobbyists, and public relations men the defense of their rights, individuals were able, through this project, to utilize their resources in striking a blow at a hated adversary...
...What we did, therefore, was to send our resolutions to any corporation of the Fortune 500 list in which we had a cooperative shareholder...
...Ford has such a plant in Israel...
...In administering the statute, the Department of Commerce states that no American company may comply with any Arab request or issue any certificate that would have the effect of discriminating against American citizens because of their religion or national origin...
...The letter to the company from each individual shareholder...
...We decided to take advantage of this sensitivity...
...We probed about the lack of an economic presence in Israel and the reply was that the decision not to open a plant in Israel had been made many years ago but that the Arab licensing agreements had been signed only in the last year or so...
...In addition, we asked for a private assurance that if the company declined to open a plant in Israel, the reasons would be discussed with us...
...Likewise, top management has been compelled to consider the problem from a new vantage point: the protest of shareholders, consumers, and the general public...
...Nor can a company remain tranquil because the boycott resolutions have been defeated by overwhelming margins...
...We were, of course, not satisfied with pious declarations that companies believed in free trade and opposed religious discrimination...
...We then inquired whether they had any licensing agreements in the Mideast...
...The Fortune list consists of America's 500 largest industrial corporations (plus supplemental lists for banks, retail companies, utilities, and others...
...IBM is not blacklisted, nor is the American company that sells military aircraft to both Israel and Kuwait...
...the largest, Exxon, of $42 billion...
...An extensive series of negotiations then took place...
...American law on the boycott is expressed in the Export Administration Act of 1969, which begins with a sweeping statement that "It is the policy of the United States to...
...All such companies (including 1800 American firms) are placed on the Arab blacklist...
...The blacklist process is capricious: companies whose products the Arabs seek are not blacklisted...
...We were then told that their sales to Arab lands were $11 million last year, and to Israel $4 million...
...When we began mailing our resolution to Corporate Secretaries, we found an anticipated dearth of Jewish names...
...Will Maslow, General Counsel of the American Jewish Congress, directs its shareholder project...
...AJCongress negotiations have, we believe, compelled a large number of multinational compan- ies to reassess their situation...
...Gulf Oil, for example, no puny adversary, agreed publicly to cease financing Arab propaganda centers when a flood of cancelled gasoline credit cards inundated its headquarters...
...Indeed, no such list is in existence...
...was submitted on the letterhead of American Jewish Congress, so that it would be recognized that the individual shareholder's request was supported and sponsored by AJCongress...
...When an Arab purchaser orders goods from an American exporter, the Arab opens a letter of credit in an American bank, instructing the bank to pay the exporter when the goods are shipped, provided the exporter furnishes proof to the bank that it has complied with the regulations of the Arab Boycott Office...
...For example, G. C. Searle Company, the drug manufacturer, wrote its shareholders as follows: "The company, as a mat- ter of policy, will not issue any certificates, or enter into any agreements, stating that it has not dealt with and/or will not deal with any blacklisted supplier, company, vessel, or insurance company...
...When there was no Jew with a top position in their legal department, they would come in with a Jewish president of a subsidiary or a Jewish communal leader to show their friendship for American Jewry...
...It is difficult to show that any American company has avoided establishing a plant in Israel because of Arab threats when the company can dream up hosts of commercial objections...
...So they dutifully incorporated our resolution in their proxy statements and asked their shareholders to vote against it when it came before the annual meeting...
...Why, then, does management react to these shareholders' proposals with horror, and struggle incessantly with the SEC against their inclusion in proxy statements, when they can be so easily defeated...
...In the long run, however, unless this cumulative agitation within the community results in federal legislation with teeth—legislation, for example, that will absolutely forbid any American company to engage in any restrictive practice imposed by the Arab boycott—a long and arduous effort is still ahead of us...
...It will select its target companies more carefully, concentrating on companies with an economic presence in an Arab land and not in Israel...
...What has made this project feasible is a set of rules adopted by the Securities and Exchange Commission that requires any corporation soliciting proxies for the annual election of corporate directors (and they all do) to include, in its printed proxy solicitation, resolutions submitted by a shareholder...
...HOW YOU CAN FIGHT THE BOYCOTT WILL MASLOW A new weapon against the Arab boycott, developed and applied by the American Jewish Congress last year, is now being widely deployed: a stockholder's resolution which the company is required to include in its proxy statement and distribute at its expense to its tens of thousands of share-holders...
...We thereupon stated that we would procure the withdrawal of the Arab boycott resolution, provided the company reported to its shareholders (a) that henceforth it would not issue certificates relating to blacklist status, (b) that it would certify only that its goods were of exclusive U.S...
...It was soon apparent that our titans of industry were dredging the Executive Suite to find Jews...
...Two weeks later we received written assurance that our conditions, public and private, would be met...
...Some 32 companies never bothered to contact us or, after the initial meeting, decided that they could not agree upon a statement of policy...
...It will solicit the support of institutional shareholders such as foundations, pension funds, and universities...
...Billion dollar corporations are extremely sensitive to shareholder opinion...
...There is still plenty of room left for innovative action, when people care enough...
...They answered that they had such agreements in three Arab lands and none in Israel...
...The smallest company on that list had sales in 1974 of $286 million...
...Companies with whom the Arabs trade are asked to certify that goods sold are not of Israeli origin, that none of its suppliers is on the blacklist, that goods are not shipped on a blacklisted vessel, and that marine insurance is not carried by a blacklisted insurance agency...
...In selecting the corporations to which AJCongress submitted its resolution, AJCongress had no ready list of those who were engaged in a boycott of Israel or otherwise complying with Arab boycott demands...
...We also asked them to refuse hereafter any certificates relating to boycott status...
...It is important to note that nothing in the tax reform legislation of 1976, or in the President's order to the Commerce Department regarding public disclosure of business firms that comply with the boycott, alters the utility of or the need for the shareholders' boycott...
...oppose restrictive trade practices or boycotts fostered or imposed by foreign countries against other countries friendly to the United States...
...American Brands (tobacco) stated that it was company policy "to resist any pressure by any of our customers to do business, conditional on any kind of discriminatory practice...
...The conference was adjourned to give the negotiators a chance to talk to the chairman of the board...
...The rules exclude certain forms of resolutions: they must not deal with personal grievances, be false or misleading, relate to the daily operation of the company, or attempt to interfere with management control, and they must be "significantly related" to the company's business...
...AJCongress hopes to continue its shareholders' project with a new, improved, 1977 model...
...No corporation can safely disregard views intensely held by even five percent of its shareholders...
...Under SEC rules, a vote of at least three percent entitles the shareholder to present his resolution again at the following year's annual meeting...
...But when the corporate executives came in to negotiate, we were struck by the high incidence of Jews among them...
...While an increasing number of such public issue resolutions have appeared in proxy statements in recent years (dealing with such issues as women's rights, minority employment, strip mining, political contributions, South Africa), in the entire ten year history of such efforts not a single one has ever been adopted...
...We insisted on meaningful and significant declarations...
...Continental Can assured its shareholders that it would not accept restrictions upon its right to trade with Israel or any blacklisted American company...
...To make sure that the corporations understood this, the Association of Corporate Secretaries and various investor news services were informed of exactly what AJCongress was planning...
...Our experience with "X" company, a giant multinational with sales running into the billions of dollars, may be of interest...
...Once a resolution is included in the proxy statement, all shareholders must be given a chance to approve or disapprove it, either by mailing in their proxy card, suitably marked, or by attending the annual shareholders' meeting and voting in person...
...More than 300 individual shareholders agreed to do so and asked AJCongress to submit resolutions in their name to their companies...
...When top executives came trooping into the AJCongress offices, we surprised them by offering to withdraw our resolution if they would meet two conditions: (1) they would write AJCongress explaining their business operations in the Mideast and the extent of their involvement, if any, in the Arab boycott, and (2) they would report to their shareholders a statement of future company policy on the Arab boycott that we could regard as meaningful and satisfactory...
...Nevertheless, our Arab boycoti resolution has been supported by four to ten percent of the outstanding shares of such companies as AVCO, Irving Trust, E.G.&G., International Harvester and Frue-hauf...
...Despite a message from the Federal Reserve Board that it is a "misuse of the privileges and benefits conferred upon banking institutions" to process such letters of credit, the major banks of the United States, in contemptuous disregard of the Federal Reserve Board, continue to honor these discriminatory letters of credit...
...We made it clear that such tokens were of no consequence to us and were resented...
...At the first visit, a trio of negotiators showed up: the senior vice president in charge of public affairs, the general counsel, and the "coordinator of management information...
...The main thrust of the Arab boycott, the pressure put on American companies to avoid an economic presence in Israel, is difficult to combat...
...They do not wish to appear in an adversary position with reputable and well-intentioned organizations which offer such resolutions or to appear opposed to the good causes they involve...
...Owners of 95 percent of the shares may have voted against the boycott resolution, but the five percent who voted for it may be intensely concerned...
...origin and not carried on a vessel stopping at an Israeli port, (c) that it would reopen the question of establishing a plant in Israel and would decide that question solely upon commercial considerations...
...A company that is consumer oriented, one that sells directly to the small customer, is fearful of consumer boycotts...
...However, the Commerce Department does not forbid American companies to comply with demands that further the primary boycott against Israel or the secondary boycott against blacklisted American companies...
...That Jews are shareholders far out of proportion to their numbers facilitated the enrollment of shareholders in this enterprise...
...It then merely "encourages and requests domestic concerns" not to support the boycott...
...The letter assured us that the company was opposed to discrimination against Jews and that its actual practices had not been and would not be affected by any Arab boycott demand...
...We reached the three percent figure in 21 of the 27 votes held last year...
...As a result, hundreds of thousands of shareholders have, perhaps for the first time, been made aware of the Arab boycott...
...A company receiving a shareholder resolution must include it in its proxy statement or give a written explanation to the SEC and the shareholder of the reasons for its refusal (supported by an opinion of its legal counsel...
...Many American companies, therefore, have insisted that they will cease doing what is forbidden by law, but statutory American "policy" is of no concern to them...

Vol. 2 • December 1976 • No. 3


 
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