L.A. Adopts S. Africa Fund Divesting Plan

The Los Angeles City Council, by a 14-0 vote, today adopted a cautiously worded policy on divestiture that would withdraw city deposits from banks doing business in South Africa and, over a period of five years, purge the city’s $4-billion pension funds of stocks in companies with South African connections.

Council approval of the divestiture plan, proposed by Mayor Tom Bradley in May, empowers the city to begin withdrawal of its bank deposits. Divestiture of the pension funds, however, requires the consent of the city’s pension commissioners, and they have not voted on the issue.

Boycott Proposed

The council also voted 10 to 4 to refer to committee a proposal by Councilmen Joel Wachs and John Ferraro calling for the city to stop purchasing the goods and services of any firms that do business in South Africa. Wachs and Ferraro argued that their proposal could be adopted without going to committee, and they voted against sending it to committee, along with Council members Ernani Bernardi and Joan Flores.

Only two councilmen, Gilbert Lindsay, who represents the city’s downtown business district, and Hal Bernson, a Republican, expressed reservations about the policy. But both voted for it.

The plan adopted by the council lacks two provisions that were part of Bradley’s original divestiture proposal. Bradley’s proposal called for a tax on local sales of krugerrands, South African gold coins.

Federal Right

The city attorney ruled, however, that such a tax would violate the federal government’s exclusive right to regulate foreign currencies. The second provision dropped by the council would have used proceeds from the tax on krugerrands to establish a nonprofit corporation to fight apartheid.

Shortly after the mayor introduced his divestiture plan, he threatened to fire any pension commissioners who resisted it.

Last month, Bradley 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 his proposed divestiture program.