The London School of Economics and Political Science Disinvestment? Out of the question. Managing German business subsidiaries in apartheid South Africa during the tenure of P.W. Botha, 1978-1989 Gaurav Pratap Sud A thesis submitted to the Department of International History of the London School of Economics and Political Science for the degree of Doctor of Philosophy, London, February 2021 1 DECLARATION I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 101,942 words. 2 ABSTRACT This thesis re-evaluates the case for business disinvestment from South Africa during the tenure of P.W. Botha (1978-1989). Using neglected corporate archives as well as oral testimony by former directors, the thesis scrutinizes the decision-making processes employed by the outlier on disinvestment – German business. Through seven case studies, the thesis illustrates how Apartheid policies, rather than being the foundation for business success, were the originators of enduring financial and operational woes. By continuing operations, management faced enduring uncertainty whilst grappling with the fallout from Botha’s reform and security measures. This research highlights that not only was international business entangled to an unprecedented degree with Botha’s policy agenda, but also that established narratives presented by anti-apartheid stakeholders on disinvestment require more critical evaluation. Most importantly, it illustrates that the ‘last decade of apartheid’ deserves a wider interdisciplinary approach that includes an engagement with the voice of management. For, these foreign corporate responses go beyond the historic South African context by having spearheaded several institutions, processes and interlinkages that define today’s globalised world. 3 ACKNOWLEDGEMENTS Returning to academia to undertake a PhD after a ten-year hiatus would not have been possible without the encouragement of Dr Erica Wald, Dr Antony Best, and my supervisor Dr Joanna Lewis. Dr Lewis, an adamant champion of my return, gave freely of her time and knowledge in not only reviewing multiple thesis proposals but also subsequently adjusting to a demanding thesis completion pace. Without her continuous insights, support, and personal introductions, this dissertation would be a lesser work. Similar gratitude must be expressed to Professor Philip Murphy of the Institute of Commonwealth Studies for his generous feedback as well as Dr Tanya Harmer of the LSE for enduring all my foibles in pursuit of timely completion. The manuscript you hold in your hands would never have seen the light of day without multiple corporate archivists allowing me access to the private collections under their oversight. These include Dietrich Kuhlgatz of Robert Bosch Historical Communications, Dr Isabella Blank of BASF Corporate History, Mario Riederer, Andreas Harz and Fred Jakobs of the BMW Group Archive, Dr Ulrike Gutzmann of Volkswagen Heritage Communications, Dr Andrea Hohmeyer and Dr Frank Becker of Evonik Records Management, Dr Frank Wittendorfer, Christopher Heise and Sebastian Stahn of Siemens Historical Institute, Stephan Dinges of Sanofi Business Services, Mr Hofmann of the Firmenarchiv Hoechst, and finally Benjamin Obermüller and Thomas Seidel of the Henkel Corporate Archives. The stories these records contained were not only brought to life but expounded upon by several personal interviews, lengthy transnational telephone calls and e- mails with former executives. Their patience and their time have been greatly appreciated. These include Dr Walter Hasselkus, Niels von Ekesparre, Johan Trotskie, Peter Searle, Dr Klaus-Günther Borchers, Peter Klews, Dr Roman Dohr, Dr Hans-Otto Wieschermann, and Reinhard Traub. The corporate records and recollections, however, are only one side of the coin. Fritz Ziefer and former Ambassador Immo Stabreit were kind enough to augment the records of the German government by recounting their time stationed at the German Embassy in Pretoria in the 1980s. Completing the thesis under conditions imposed by the COVID-19 pandemic would not have been possible were it not for two key individuals. Both Victor Gwande of the University of the Free State and Gabriele Mohane of the Historical Papers Research Archive at the University of the Witwatersrand facilitated timely thesis completion. By enduring and complying with my requests to scan hundreds of pages of archival documents over weeks from multiple collections, they ensured that whilst South Africa was closed to international visitors, its archival collections were not. Moreover, I am also indebted to those few academics who despite their busy schedules took a moment or two to point me in the right direction on questions of detail and confirm my assumptions. Professor Sarah Stockwell of King’s College London, Professor Geoffrey G. Jones of Harvard Business School, Associate Professor Eric Louw of the University of Queensland, Dr Knud Andresen of the University of Hamburg, and Professor Christian Kleinschmidt of the University of Marburg exemplified the spirit of academic co-operation in the pursuit of knowledge. Special thanks are also due to Dr Claudius Wenzel and Dr David Duncan for providing me personal copies of their seminal work that proved difficult to source. Finally, I wish to thank my parents, Shobha Banerji and Atul Sud. They provided the initial financial assistance necessary for an ultimately, self-funded PhD to pursue my two inherent passions – business and history. 4 TABLE OF CONTENTS Abstract 3 Acknowledgements 4 Note on quotations and terminology 6 List of illustrations 7 List of appendices 8 List of acronyms 9 Dramatis Personae 12 Chronology 21 Preamble 23 Introduction 27 - Incl. Historiography Section I (The Motor Industry) - 1. Robert Bosch South Africa: The spider’s web 67 - 2. Volkswagen of South Africa: No time left for day-to-day business 102 - 3. BMW South Africa: Pretoria’s darling? 146 Section II (The Chemists) - 4. Hoechst South Africa: South African solutions to South African problems 198 - 5. Degussa South Africa: Peer pressure 225 - 6. Henkel South Africa: An obsolescence of facts 251 Section III (The Conglomerate) - 7. Siemens in South Africa: The Old Guard 273 Conclusion 295 Appendix 313 Bibliography 337 5 NOTE ON QUOTATIONS AND TERMINOLOGY • On grounds of brevity, the bilingual author has translated all applicable quotations from German into English and only includes the translation in the thesis. The respectively fewer quotations from Afrikaans reflect the fact that South African government ministers and officials nearly exclusively communicated with German corporates in German due to their fluency in the shared language. However, any existing quotations expressed in Afrikaans, also include the Afrikaans original in the main text alongside the English translation. • The terms German/FRG (Federal Republic of Germany) are used interchangeably throughout this dissertation to refer to West Germany. The GDR did not have any political or economic relations with SA after the 1960s (instead the socialist regime supported the liberation struggle outside SA’s borders) and only resumed talks in 1989/90.1 • The thesis contains terminology and abbreviations that are commonplace in historical analysis and literature on Modern South African history, especially as regards apartheid-era SA. Specifically, as regards the employment of wording to denote racial categories, such as Black/White/Coloured/Indian, their usage serves to maintain accuracy and clarity within the narrative. As with all scholars constituting the cadre of historians, I use these terms solely as tools of analysis - not judgement. • Following the introduction, the term AAM is used to refer to the German anti-apartheid movement, unless explicitly stated otherwise. 1 Ulrich van der Heyden, Zwischen Solidarität und Wirtschaftsinteressen: die “geheimen” Beziehungen der DDR zum südafrikanischen Apartheidregime (Münster: LIT, 2005), 79. 6 LIST OF ILLUSTRATIONS Scan 1: Cover page of Czaya’s Achse zum Kap 46 Graph 1: AESA Budgeted wages vs MLL 82 Photograph 1: Hector Mbau with a customer 101 Cartoon 1: Botha defiant 107 Posters 1 and 2: HNP political posters 138 Photograph 2: BMWSA CSR advert in SA business press, 1980 155 Photograph 3: BMW-built housing, Bophuthatswana 162 Photograph 4: Cutting of interior trim, BMW plant, Bophuthatswana 163 Video still 1: BMWSA plant, Ga-Rankuwa, Bophuthatswana 164 Video stills 2 and 3: Anti-Tutu protests 166 Graph 2: BMWSA’s sales growth post-1975 in SA 171 Photograph 5: Dr Walter Hasselkus 189 Illustration 1: Hoechst sites in SA and Namibia, 1995 206 Photograph 6: Hoechst advertising, Johannesburg, 1979 210 Press clipping 1: South African Hoechst advert, 1980 213 Photograph 7: Henkel 1970s advert 253 Poster 3: Henkel boycott 269 Photograph 8: Dr Gerd Tacke with Vorster, 1968 276 Photograph 9: Cover page of Siemens (Pty) Limited Business Review report 1971-2 279