Bradley Calls for $1-Billion Divestiture From S. Africa : Apartheid Target of City Action

Los Angeles Mayor Tom Bradley today proposed a broad policy of economic sanctions against South Africa that, over a period of several years, could remove up to $1 billion in city-controlled assets from banks and businesses with ties to South Africa.

If the proposal is embraced by the City Council and pension commissioners, the sanctions will represent one of the two largest divestment actions taken by U.S. cities in protest against South African racial oppression. Among the 20 U.S. states and cities that have enacted divestment laws of varying severity, New York City has declared the most to divest--a $9-billion pension fund with close to $1 billion invested in companies doing business in South Africa.

Neither as radical as some divestment laws nor as moderate as others, the approach outlined by Bradley, in certain respects, parallels the kind of action taken by New York City last year. It calls for immediate removal of all deposits of city money from banks with loans to South Africa and it recommends that, over a period of five years, city pension funds be divested from companies doing business in South Africa. The pension divestment would start with firms that sell military goods to the South African government.

$4 Billion in Pension Funds

About 20% of the city’s nearly $4 billion in pension funds are invested in businesses with ties to South Africa, according to city officials. In addition, an unspecified portion of the city’s $1.5 billion in daily bank deposits would be affected by the mayor’s divestment plan. Officials could not say how much of that money is currently deposited in banks doing business with South Africa.

Bradley said the city would also refrain from making new investments in corporations doing business in South Africa; avoid purchasing any goods or services from the South African government; impose a local fee on the sale of South African gold coins, known as krugerrands, and use the fees to help pay for creating “a public, nonprofit anti-apartheid corporation to take an active part in fighting apartheid in South Africa.”

Flanked by City Councilmen Robert Farrell and Zev Yaroslavsky, the two council members who have worked hardest to develop a divestment policy, Bradley said his proposal is the correct response to “the most vicious and morally reprehensible form of institutional racism.” Farrell had been arrested earlier this year in Washington for taking part in an anti-apartheid demonstration outside the South African Embassy.

To Protect Beneficiaries

At the same time, Bradley said, his approach to divestment was designed to protect the financial interests of the city and, in particular, the beneficiaries of its pension system.

However, his proposals must clear at least two legislative hurdles before they can become law.

The City Council must approve. And while Yaroslavsky said he believed that the council would be supportive, he said at least one member has raised a question about the legality of the proposed fee on the sale of krugerrands.

Bradley said he is confident that such a fee would be legal.

Divestment of the city’s pension funds would also require the consent of the city’s three pension commissions, which have independent authority over the funds.

Bradley appoints the members of those commissions and said he is confident that they will approve of divestment.

But if they balk, Yaroslavsky said, the council will propose a ballot initiative that would authorize divestment of the funds.