Bradley Opposes a Public Vote on Divestiture, Aide Says

Los Angeles Mayor Tom Bradley wants to avoid submitting his plan for strong economic sanctions against South Africa to voters because he thinks it will lose, Deputy Mayor Tom Houston said Wednesday.

The idea of submitting the plan to a popular vote was suggested Tuesday by a City Council committee in an effort to break an impasse between Bradley and the city’s pension fund commissioners, who have taken no action on divestiture since Bradley proposed it last May.

In an interview, Houston said that Bradley is confident that he can persuade a majority of the commissioners, who he appoints, to go along with the program, thus avoiding a need to put divestiture to a vote.

The main thrust of Bradley’s plan is to purge the $4-billion pension funds of investments in firms doing business in South Africa.

Houston said that if the measure were put to a popular vote, it would face difficult opposition in the form of a well-financed campaign by unions representing city employees who fear the divestiture could threaten the earning power of the pension funds.

Partly as a result of union opposition, the city’s three pension commissions have not approved the mayor’s divestiture plan in spite of a threat by Bradley in May to replace any commissioner who resisted the plan.

On Wednesday, before Houston made his remarks, it was announced that Bradley had replaced the chairman of the largest of the city’s three pension systems, the $1.8-billion Police and Fire Pension System, with someone more supportive of the mayor’s proposed divestiture program.

Houston insisted that the replacement of David Bow Woo, whose term on the commission had expired, was not due to his reservations about divestiture. Rather, Houston said, Bow Woo was not reappointed in order to make room for someone with greater expertise on disability payments, an area where the commission has been accused of being too generous.

However, Houston said that Bow Woo’s successor, psychologist Kenyon Chan, held views on divestiture “compatible with the mayor’s program.”

Neither Bow Woo nor Chan could be reached for comment.

Houston said the replacement of Bow Woo should not be interpreted as a message to other commissioners who have misgivings about divesting the pension funds.

But Houston did say that Bradley does have the “moral leverage” and the “power of persuasion” to get his way on divestiture with two of the three commissions, the Police and Fire Pension Commission to which he appoints five of seven members, and the $1.3-billion City Employee Retirement System to which Bradley appoints three of five commissioners.

Houston said that the mayor has been working quietly with the members of those two commissions since last May, and he predicted that at least four of Bradley’s five appointees to the Police and Fire Pension Commission and all three of his appointees to the five-member City Employees Pension Commission would support divestiture.

William Woods, appointed by Bradley to the City Employees Pension Commission, said Wednesday that he was “very optimistic” that his commission would approve the mayor’s divestiture plan in the near future.

Houston said, however, that the mayor is not confident of getting his way with the board that oversees the $1-billion Water and Power Employees Retirement System. The mayor makes no appointments to that system’s seven-member board.

Vincent Foley, the president of the water and power board, said Wednesday that his board probably was not inclined to divest.

“I would say that the overwhelming evidence presented to us to date would be not to divest,” Foley said.

Lack of Authority

Neither the mayor nor the City Council has authority over the pension commissioners. However, the mayor, with the council’s consent, can fire any of the commissioners he appoints. A major obstacle to approval of divestiture is the fear by some of the commissioners that they would be personally liable if they were sued by beneficiaries of the pension systems who oppose divestiture.

Such opposition stems from the concern that divestiture would eliminate so many lucrative investments that the financial health of the funds would be jeopardized.

According to officials of the Police and Fire Pension System, two local unions already have threatened to sue the commissioners if they authorize divestment.

Personal Liability

Adding to the commissioners’ anxieties, spokesmen for the city attorney’s office said this week they were not certain whether the city could protect the commissioners from personal liability.

City Councilman Zev Yaroslavsky, chairman of the council’s Finance Committee, said Wednesday that the council should look for a way to insulate the commissioners from any liability that might arise from divestiture.

It was the Finance Committee that proposed placing the issue of divestiture up for a popular vote--in the form of a City Charter amendment--in the event the pension commissioners could not be persuaded to approve the mayor’s plan.