Council’s Blacks Stall Wiesenthal Project Over Apartheid
The three black members of the Los Angeles City Council blocked efforts on Wednesday by one of Wall Street’s largest investment firms to obtain an exemption from the city’s anti-apartheid ordinance so that it can help the Simon Wiesenthal Center build a Holocaust museum in West Los Angeles.
Councilmen Robert Farrell, Nate Holden and Gilbert Lindsay voted against a measure that would have allowed Bear, Stearns and Co. to underwrite $14.7 million in city-issued certificates of participation needed to finance the $30-million Beit Hashoah Museum of Tolerance. The council voted 7-3 to grant the exemption--one short of the eight votes needed to pass the measure. Five council members were not present for the vote.
“Some time you have to draw the line,” Holden said during a debate on the measure. “Some time you have to make a decision. Some time you have to bite the bullet. And I say to you that now is the time, unless you continue to send the wrong signal to other companies that do business with us that do not intend to divest in South Africa.” The council vote came after representatives from several organizations that oppose apartheid in South Africa urged the council to reject the exemption, despite assurances by Bear Stearns that it is in the process of severing its ties to South Africa.
“I would . . . call to task those at the Simon Wiesenthal Center, and ask them to be sensitive to our community, the African-American community, as we are often asked to be sensitive to their community,” said Danny Bakewell, co-chairman of the Los Angeles Free South Africa Movement, a group that helped craft the city ordinance.
Former Garden Grove Assemblyman Richard Robinson, manager of public finance in Bear Stearns’ Los Angeles office, decried the council action, saying opponents of the exemption “set a trap” for the firm. Robinson and Bear Stearns executives in New York characterized the firm as a leader in the divestiture movement on Wall Street and said it is being unjustly characterized as the bad guy.
“If the opposition was properly motivated, they would have brought (their objections) to my attention” before the council meeting, Robinson said after the council vote. “This is a sandbag. They are coming up at the last minute.”
Rabbi Marvin Hier, dean of the Simon Wiesenthal Center, said the center has good relations with the black community and said the Bear Stearns exemption should not be viewed as a blacks-versus-Jews issue. While the Wiesenthal Center takes no position on political matters, Hier has been an outspoken critic of presidential candidate Jesse Jackson, who he says lacks sensitivity toward Israel and other issues concerning Jews. Hier’s views have drawn criticism from Jackson’s supporters, including one who spoke at Wednesday’s meeting.
Hier said the new museum, while focusing on the Holocaust, will also include exhibits on racism in the United States and the civil rights movement. He said his views on Jackson’s presidential campaign have nothing to do with the museum or its mission.
“I hardly think that this is the kind of museum that anyone wants to (use to) make a political point,” he said.
Bear Stearns requested the exemption after city officials determined that a bank account used by the firm in South Africa violates the city’s 2-year-old ordinance banning companies that do business in South Africa from involvement in city projects. The Museum of Tolerance fell under the restrictions in March when the City Council voted to issue up to $16 million in tax-exempt certificates to help finance the project. The City Council has exempted about a dozen firms from the ordinance, while other city agencies--such as the Community Redevelopment Agency--have exempted many more, city officials said.
Bear Stearns contends that the custodial account that it maintains in South Africa does not violate the ordinance because it is used only to sell South African stocks previously purchased by its customers. Robinson said the account actually facilitates divestiture through the sale of stocks owned by clients outside South Africa. Last year, he said, the firm was not required to get an exemption when it served as underwriters for a Jewish community center project in Canoga Park. City officials said they did not realize the account existed at that time.
Even so, Bear Stearns promised last week to close its South African account--which Robinson said contains no more than $300,000 at a time--to avoid any appearance of impropriety. Robinson said the firm still needs the exemption, however, because it will take several weeks to notify its customers that the account will no longer be available. The Simon Wiesenthal Center will be ready next week to move forward with financing arrangements, and any delay could create hardships for the center, he said.
While Robinson and company officials in New York downplayed the significance of the Bear Stearns account, a company source in New York said several top managers were furious about it. The source said the firm’s top management was unaware of the bank account until the city of Los Angeles started asking questions about a city-required form filled out by Bear Stearns regarding its business ties to South Africa.
“It has been very embarrassing,” the source said.
The City Council may reconsider the company’s request for an exemption at its next meeting on Friday. Since the council did not actually reject the request, the council could decide to take another vote on it anytime.
Rabbi Hier of the Wiesenthal Center said he expects easy approval when the issue is considered by all 15 council members.