Council Panel Urges End to Investments in S. Africa

Times Staff Writer

Saying they did not want their city to condone an “evil” government, four members of the San Diego City Council’s Rules Committee on Monday asked the city employees’ Retirement Board to sell its $39 million in holdings in firms doing business with South Africa.

The 4-0 committee vote, seeking divestment by June 30, 1986, came at Mayor Roger Hedgecock’s urging after half a dozen speakers from San Diegans for Divestment had compared investing in apartheid South Africa to investing in Nazi Germany.

“I have a straightforward feeling about this,” Hedgecock said. “City policy should not condone South Africa’s policy of socially separating people by their race . . . If the best way to do that is to divest of companies propping up that region, then I believe we ought to do it.”

The full council must still approve the committee’s action. But even if it does, the impact of such a vote is far from clear.


Under San Diego’s charter, the City Council may establish investment guidelines for the city employees’ $378-million retirement portfolio, but it cannot order the 13-member Retirement Board to make specific investment decisions. Retirement board members have strongly opposed divestment, saying that such an action would result in higher-risk investments and losses for the fund.

Retirement board members said later Monday that they did not want to discuss a divestment request until after final council action. But Jack Savidge, chairman of the board’s investment committee, said the board’s charter bars a social or ethical investment policy; it requires the board to seek the highest return based on the rules of “the prudent investor.”

Investing “cannot be done for social or political reasons. That’s the law,” Savidge said. San Diego’s divestment effort, begun in January at the request of city typist Marian Howell, follows a national effort to protest South Africa’s apartheid policy by refusing to invest in firms that do business there.

Over the last two years, 20 U.S. states and cities, including New York, Berkeley and Boston, have sold $200 million in common stock shares in blue-chip companies that had some business with South Africa. Another 20 cities, including Los Angeles, are considering such a policy.


For all the effort, divestment in San Diego would affect only 8.8% of the Retirement Board’s investments and affect holdings in only six firms.

All six are so-called Sullivan Signatories, meaning they have signed an agreement pledging not to discriminate against blacks in their business in South Africa. They are Avery International, with a labeling business in South Africa; Dun & Bradstreet, with credit and collection services; IBM, with computer sales and servicing; Minnesota Mining & Manufacturing, with adhesives, recording tape and health care products sold in South Africa; Phillips Petroleum, with sales in South Africa, and Times Mirror, with a news bureau (Times Mirror owns the Los Angeles Times).

The committee vote came over the opposition of the city Retirement Board, the city manager’s office and the city attorney, who argued that investment decisions should be made without council interference.

A report from the city manager’s office also said that divestment would cost the retirement fund $500,000 to $1 million a year but would provide no guarantee that conditions for South African blacks would improve. Rather, the eventual withdrawal of U.S. companies from South Africa could create economic instability there and fewer jobs for black workers, the manager’s report said.

Instead of divestment, the city manager’s office urged the Retirement Board to adopt “activist shareholding,” in which the fund manager would vote by proxy and introduce shareholder resolutions asking that U.S. companies in South Africa treat black workers properly.

A parade of speakers from San Diegans for Divestment termed the city manager’s proposal unacceptable and urged divestment. One of them was Tommy Swana, 60, a native of South Africa who is a retired construction business executive living in San Diego.

“I am the bone of contention. I am a black from South Africa,” Swana said. “I do not see the prudence. . . . Anybody looking at the prudence has to glance at the countries south of the Zambezi or north of the Zambezi. In the longer term, I would not consider risking any money down there. The whole setup down there is extremely unsafe.”

As the Rules Committee met, about 60 city employees gathered in the wide plaza below City Hall for a protest rally. For about 20 minutes, they stood in silence to show their opposition to the use of city retirement funds to invest in companies doing business in South Africa.


About 237 city employees have signed a petition in support of the effort, said Howell, who started the campaign in January.

“We want to do something to let them know that we care how our money is being used,” Howell said. “If we don’t, they will continue to do what they wish.”

The four votes for divestment were by Hedgecock and Councilmen Uvaldo Martinez, Bill Mitchell and William Jones.

Times staff writer Michael A. Fairley contributed to this story.