Firm Exempted From Anti-Apartheid Law

Times Staff Writer

The Los Angeles City Council voted Friday to exempt a Wall Street investment firm from a city anti-apartheid law so that it can help finance construction of a Holocaust museum on the city’s Westside.

The action came as Councilman Zev Yaroslavsky released a report showing that the vote was not a rare departure inasmuch as city officials and the council have granted 300 such exemptions since the law was enacted in 1986. The law bars companies that do business in South Africa from involvement in city projects.

After temporarily blocking approval on Wednesday, the council mustered the eight votes needed to allow Bear, Stearns & Co. to underwrite $14.7 million in tax-free bonds needed to finance the Museum of Tolerance at the Simon Wiesenthal Center.

Supporters of the exemption fell one vote short of approval Wednesday because of opposition from the three black council members and the absence of five other members. Councilman Richard Alatorre, who was absent Wednesday, voted for the exemption Friday.


Councilmen Robert Farrell and Nate Holden, who are black, again voted no. The third black councilman, Gilbert W. Lindsay, was in Washington receiving an honorary degree from Howard University. However, his vote added to the other two could not have stopped the exemption.

Yaroslavsky, clearly miffed by the attention focused on the museum project, cited a report showing that exemptions were nothing new. The councilman, expected to run against Mayor Tom Bradley next year, also pointed out that of the 300 exemptions granted before Friday’s action, 277 were granted by city departments under the mayor’s control.

“I think the council has been much more cautious than the administration in granting exemptions,” Yaroslavsky said.

Yaroslavsky later acknowledged in an interview that he had not scrutinized the exemptions enough to say whether they should have been granted. He asked for the list because critics of Bear, Stearns’ request had attacked the company’s request for an exemption as extraordinary.


Sixty-five of the exemptions on the list were for minor purchases of less than $100, in one instance a couple of construction bolts costing a total of 26 cents. Since the items were purchased, the council has changed the law to exempt all purchases under $500.

Under the ordinance, city department heads can grant some exemptions without the approval of the council and mayor, if, for example, there is a substantial financial savings for the city or if the goods or services are unavailable elsewhere.

Bradley, who championed the anti-apartheid ordinance, could not be reached for comment. But Assistant City Administrative Officer Phyllis Currie said the list of exemptions, which her office prepared, should not be viewed as suggesting that the ordinance is not working.

Many Firms Acting

“The whole purpose behind the ordinance was to encourage firms to get out of South Africa, and in many cases, that is exactly what is occurring,” Currie said in an interview. She said that many of the firms that received exemptions have taken steps to divest from South Africa.

The exemption was required because of an account that Bear, Stearns maintains in South Africa. Company officials said they have moved to close the account, which is used to sell South African stocks previously purchased by its customers.

“It seems to me that we’ve already accomplished what we wanted,” Councilman Joel Wachs, a supporter of the exemption, said, referring to Bear, Stearns’ efforts to sever its last link to South Africa.