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SR-204-002-01 ->r .. <II - e II.. F SEP 1 '1 1985 20&/'" Pt:Jz-o/ FD:CMD:gp:sadplcy Counc~l Meetl.ng September 17, 1983 Santa Mon1ca, Californ~a Date: September 10, 1985 Tb: MAYOR AND CITY COUNCIL From: C~ty Staff SUbJect: SOUTH AFRICAN DIVESTITURE PLAN On May 21, 1985, Councll d1rected staff to prepare a plan for the divest1ture of Santa Mon~ca Clty funds from f1nancial mstltutlons and corporatlons dOlng business with South Africa. ThlS report provides additional specif1c 1nformat1on requested by Council on th1s matter and subml ts the followlng recommended dlvestiture pol~cies for Councl1 conslderat1on: The C1ty shall not lnvest 1n Banker's Acceptance Wh1Ch are connected w~th South Afrlca. As of July 31, 1985 the Clty had $1.0 million invested in a Banker's Acceptance (BA). S~nce the ult1mate drawer of these funds could not be establ1shed, thlS BA was allowed be mature dur1ng August, 1985 and the funds were relnvested ln an alternate instrument pendlng Counc1l oonSlderation of th1S recommended POllCY, The C1 ty shall not invest 1n U. S. corporat1ons whl.ch are rot Sulll.van prlnclples slgnatories and which have not been rated In the top Sulllvan pr1nc1ples l.mplementatl.on rntegorles. Th1S w1ll result ln the dlvestlture of approx1mately $128,000 of eX1sting hold1ngs 1n the C1ty'S Perpetual Care FUnd. The C~ty shall not do busl.ness with banking/financial inst1 tutions WhlCh are maklng or renewlng loans to the government of South Afrlca or 1tS agenc1es, and shall only do bUSlness with banklng/f1nanclal lnst1tut1ons which make loans to the pr1vate sector 1n South Afrlca if the banklng/flnanclal institution has adopted a POllCY opposing aparthe1d and dlrects its loans in South Africa for the beneflt of all South Africans, regardless of race. II-F SEP 17\985 - 1 - .... e e The small number of bank1ng/ f1nancl.al l.nstitutlons W1 th which the City currently does bus~ness meet these POllCY requirements. All other banklng/financl.al l.nstitut1ons Wl.Sh1ng to do business Wl th the Cl ty wl11 have to meet these restrict~ons. Adoption of these recommended pollcles may reduce the local pool of ellglb1e bankl.ng/f1nancial l.nstitutlons and the range of tradltional lnvestment opportunl.tl.es utllized by the Cl.ty. lbwever, by considering banking/flnancial l.nstltutions in other p:;trts of the State and through the use of l.nvestrnent cpportunltles not prevlously pursued, staff belleves possl.ble adverse lmpacts on 1nvestment securlty, liquidlty and Y1eld, and on 1nvestment operatlons which may result from these recommended divestment pollcles can be m1tigated. Flnally, staff also bell.eves adoptlon of the recommended dlvestiture pol~cies ~s conslstent w1th eXl.stl.ng statutory and f1duc1ary respons1bll1tles governing Cl.ty lnvestments and 1nvestment practices. Background The devastatlng effects of apartheid on rn~llions of South Afrl.can Blacks and some other non-whl.te m1nor1tles have been well documented by many organ1zations. Conslstent w1th th1s documentation, the U.S. Senate has also determined that: "I. The po11.cy and practice of aparthe1d - A. de11berately separates mll110ns of South Afrlcan "migrant" workers from thelr famllles: B. denles mean1ngful, polit~cal process Afrlcan population: democratic partic1pat1on to the ma]Orlty of the 1n the South c. conslgns the mass of South Afr1can c1t1zenry to llves of economlC and educatlonal deprlvatl.On: - 2 - .... ~ e e D. den~es black c1tizens of South Africa the r~ght to travel freely w~thln the1r own country; E. leads to the arbltrary government conf1scatlon of the pr~vate property legally owned by black South Afr~can natlona1s; F. tr~es to deprlve many South Afrlcan c1tlzens of South African cltlzensh1p. 2. The POllCY and practlce of apartheld lS repugnant to the moral and po11tlcal values of democratlc and free SOc1et1es, and runs counter to Unlted States pollcies to promote democratlc governments throughout the world and respect for human rlghts: and 3. It 18 the POl1CY of the Unlted States to promote peaceful change ln South Afrlca through dlplomatlc means, but also, where necessary and approprlate, through the adoption of other measures, 1n conjunction with our allies, 1n order to relnforce United States Opposlt~on to apartheld. " As a result of such f1ndlngs, publlC funds have been d~vested or are under cons1deration for divestlture from banking/f~nancla1 lllst1tut1ons and corporat1ons dOlng bUSlness 1n South Afrlca by at least 50 c1t1es, several states, many other governmental unlts and over 50 un~versltles/colleges. The purpose of these dlvestiture actlons has been to not only clearly communicate OppOSl tlon to the Republlc of South Afr1ca IS offlcla1 POl1CY of aparthe1d, but also to encourage the South Afrlcan government to brlng an end to the POllCY of apartheld. - 3 e e Most of the States, larger cltles and un1vers~t~es have focused their divestment act10ns on employee penslon funds and only secondarlly on flnanc~al lnstl tutlons do~ng business W1 th the FepubllC flnanc~al of South Afr~ca. This is because the bulk of resources under the~r control wh~ch could affect the the gJvernment of South Afr1ca conslst of pensl0n funds which are pr1mar1ly ~nvested In stocks of compan~es some of WhlCh have operat1ons in South Afr1ca. Among clt1es of a size slmillar to Santa Monlca and wh~ch do not admin1ster pens10n funds but part1clpate 1n a State retirement systems, there has been a rather w~de dl.versity of divestment actlons taken or WhlCh are under conSlderation. unfortunately, there does not appear to be a central c1earlughouse of re11able informatlon concerning these actions. However, from lnformat1on wnlch staff has been able to gather these actlons typically have ranged from those recently taken by the Clty of Inglewood to those taken by the C1ty of Oakland. The C1ty of Inglewood has adopted a resolutlon condemnlng apartheld and lnstltuted a program to urge the State and Federal governments to ~nvoke econom1c santions aga1nst the South African government. At the ather end of the range of act10ns taken, the C~ty of Oakland has p3.ssed an ordlnance which apparently prohlblts the Clty from do1ng bUSlness with banklngjfinanclal 1nstitutlons Wh1Ch make loans to the publ1C or private sectors In South Afr1ca or Nam1bla, and prohibits the City from own1ng stocks or purchasing the products of any buslness wh~ch has operat~ons ln or does buS1ness wlth South Afr1ca or Nambla. - 4 - e e On other fronts, the Boards of D1rectors of the U.S. Conference of Mayors and the National League of Citles have adopted resolutlons recommend1ug that the1r member c1tles "remove public funds now luvested ln institut10ns dOlng bUSlness wlth South Afrlca" and to "make no l.nvestment of funds under thelr control ill South Afrlca compan1es or companles which do buslness Wl.th1n South Afrl.ca, unless they are slgnatorles to the Su11lvan Princ1ples and have made demonstrated lITlplementatlon of the Prluc1ples." progress l.n the The Sulllvan Prlnclples were developed In 1976 for U.S. companles WI. th affiliates ln South Afr1ca. Essentlally, those companles whlCh agree to ablde by them proml.se to "ell.ffil.nate all vestlges of racial d1scrlminatlon, remove all race deSl.gnatlon slgns, and desegregate all eatl.ng, comfort and work facl.li t1es," In their South Afrlcan operatlons. Fl.na1ly, both the U.S. Senate and House of Representatlves have recently passed bllls that would lmpose strong economic santlons agal.nst the Republlc of South Afrlca because of growlng publ1C dlspleasure wlth that country's policy of aparthe1d. In reaction to these actl.ons, the pres1dent of the Unlted States has recently issued an Executive Order establl.shlng economic sanctions aga1nst South Afrlca. Wh1le lt 1S recogn1zed that the only slngle program that can have a maJor effect on the South Afrlcan POl1CY of aparthel.d would be One undertaken and lmposed by the Unl ted States Government and supported by the governments of other natlons, the total effect - 5 - e e of the act~ons taken by maJor publlC ~nvestors such as State ret1rement systems and by many other smaller organizat~ons and lndlV1duals allover the world can also have a slgnlficant collectlve lmpact. A demonstration of this potential collect1ve impact was the recent Los Angeles T1mes artlcle Wh1Ch ~nd1cated that South African financial tles to U.S. and foreign banks were nearlng a crlsis p01nt because of the 1ncreasing refusal of those banks to renew the s1zeable outstandlng South Afr1can debt. H:>wever, ~ t lS also recognlzed that the C1 ty Council and staff have statutory and f1duciary responsibilities to safeguard, pLotect and prudently 1nvest the publ~c's funds. As of July 31, 1985 those funds consisted of $88.2 mlll10n which have been lnvested by Clty staff ~n varlOUS f1nanc1al lnst1tut1ons and $1.9 mill10n of Cemetery Perpetual Care Trust funds wh1ch have been invested by Scudder, Stevens and Clark (administrator of thlS trust fund) in various government and pr1vate sector investments. It lS, therefore, 1n 11ght of these cons1derations that a dlvestlture plan for the Clty of Santa Monica has been prepared. Recommended Dlvest1ture Plan Council specif1ca11y l.nstructed staff to develop a d1.vestiture plan WhlCh would pena11ze bank1ngjf1nanc1a1 l.nstitutions and oorporat1ons WhlCh cont1nue to do buslness w1th South Africa, and Wh1Ch would encourage banklngjf1nancla1 1nstltut1ons and corporatlons wh1ch have a pIan to w1thdraw or which refuse to do buS1.ness w1th South Afrlca. In add1tlon, Counc11 directed staff to: - 6 - e e a} lnventory the status of Clty owned stocks and banklng/financlal lnstltut10ns wlth WhlCh the City does buSlness in light of the d1vestlture plan; b} analyze the potential flnancla1 effects of the dl vestlture plan on the Clty ln terms of flduclary responslbilities and fUnds security; and c) ind1cate a report1ng mechan1sm whereby the "South Afrlcan status" of a banking/flnanc1al lnstltutlon and/or corporatlon aould be determined. Subsequent to Counc1I's direction, staff retained the service of Ralph Anderson and Assoclates, a prl vate consul t1ng f~rm, to asS1St 1n the preparatlon of a dlvestiture plan WhlCh would meet Counc1l's crlterla. ThlS was done because, as staff prevlously dlscovered, essentlally none of the citles Wh1Ch at that t1me had adopted dlvestlture plans had systematically assessed divest1ture options in terms of possible impacts on thelr specific f1scal operations and the fiduclary respons1b1lltles of publlC offlc1als. Durlng June, July and August, the assessment team developed and unplemented an assessment plan WhlCh focused On: a) an analysis of the C1ty'S current investment program, b) an evaluation of p.lbllcally aval1able lnformat1on concernlng the "South African status" of banklng/flnanclal 1nstltutions and corporat1ons, c) a survey and ana1ys1s of the "South Afr1can status" of the bank1ng/f1nancla1 1nstltutlons with Wh1Ch the City lS doing buslness, d) the ldentlflcat10n and evaluatlon of dlvestlture - 7 - e e pOl1CY opt~ons, e) the selectlon of a recommended divestiture plan, and f) preparat~on of a divest1ture lmp1ementat~on plan. A) D~vestlture Pollc1es In develop1ng the following dl vestl ture pol1c~es, the follow1ng maJor cr1teria were considered: 1. To be effectlve, a South African dlvestlture policy had to be deslgned so that It could be 1mplemented, admlnlstered and monltored on a continulng and reasonable bas 1 s . 2. Implementatlon of the P011CY should not reduce the securlty and llqUld1ty of the Clty'S invested funds. 3. The policy should avold constraints wh1ch would ult1mate1y reduce the C1ty'S return on lnvested funds. 4. The policy must be consistent wlth the Clty'S Charter and provlslons of State law pertalning to munlclpal lllves tments . 5. The pol~cy should be capable of belng lmplemented wlth1n the overall context of the C1ty'S eXlstlng investment pollCY concernlng the selectlon of eligible flnanclal 10Stl tutlOns . In addltlon, the assessment team dlscovered that essentla1ly there are no absolutely "South Afrl.can-clean" banklng/ flnanClal 1nstltutlons. In effect, due to the complex and extenslve network of flnanclal relatlonshlps WhlCh llnk together businesses and the banking commun1ty, If one were able to completely analyze all of the second-order, th1rd-order, ete. flnanC1al Ilnkages almost all bank1ngjfinanclal lnstltutlons are connected in some manner to South Afrlca. It was therefore necessary to choose how far along this chaln of flnanc1a1 11nkages lt was practical for Clty staff to monltor these 11nkages from "lnformat1on aval1abllty" and "demand upon staff time" pOlnts of view. Based on these two criteria, staff believes that only flrst order or - 8 - e e direct relationsh1ps, as more fully expla~ned below. should be addressed by the Clty'S d~vest1ture polley. After a careful cons~deration of these cr~teria, the following SJuth Afrlcan d~vestiture pollcles are recommended for the City of Santa Monlca. 1. The Cl ty of Santa Mon~ca shall not invest 1n Banker I s Pcceptances which are connected with the government of The Republic of South Africa its agencies, or private South African corporations. Staff Comment: Wlule the C~ty of Santa Monica ~s not r:ermitted by law to ~nvest d1rectly ln South Afr1can Inst~tut~ons. ~t ~s poss~ble that such an ~nvestment could occur ~nd1rectly through the purchase of Banker I s Acceptances (BA's). As shown at Attachment IV as of July 31, 1985, the Clty had $1.0 mlllion invested 1n a BA. S~nce the u1t~mate drawers of the Clty I S eXlstlng BA could not be established, th~s lnvestment was al10wed to mature dur~ng August and the funds relnvested ln an alternatlve lnstrument pending CounCll conslderation of this recommended POllCY. BA's, as deflned by Sect~on 53635(f) of the Government Code, are negotiable tlme drafts to flnance the export, ~port, sh~pment or storage of goods and they are termed "accepted" when a bank guarantees to pay the face value at maturity. While it lS very dlfficult ln practlce to link funds invested through BA I s to speclflc drawers of the funds, C1ty staff wlll aggressively pursue this informatlon and not purchase any BA's I1nked to the government of South Afr1ca, lts agencles, or to private South Afrlcan corporatlons. 2. The C1ty of Santa Mon1ca shall not invest ln commerClal paper, as defined in Section 53635(g) of the Government Code or equities of United States Corporations which have direct investments or operations in South Africa, unless they are signatories to the Sullivan principles and have achieved a rating on their performance which is evaluated at Categories I, II, IV, or V. Staff Comment: The Followlng ~s a summary of each of these Sullivan prlnclp1es ratlng categorles: I - Maklng good progress 1n reallzing the Ob]ectlves of the Su111van pr1nclples. - 9 - e e II - Mak~ng progress in reallzlng the objectlves of the Sullivan Pr1nclples. IV - Endorsers of the Sullivan Prlnc1ples which have no employees, fewer than 25 employees In South Afrlca, or WhlCh hold less than 50% equity in thelr South Afrlcan operat1ons. V - A new slgnatory to the Sullivan prlnclples. In order to be rated In e~ ther category I or I I, a oorporat~on must meet nlne baslc requ~rements concernlng such thlngs as desegregatlon of faci1itles, equal pay for equal work, and trade unl0n rlghts. Fallure to meet any one of the nine requlrements automatically relegates the oorporatlon I s rat~ng to a lesser category regardless of ltS performance 1n other areas. Attachment I is a detalled explanatlon of the Prlnc1ples crl terla for ratlng companles and a all rating categorles. Su1l~van list of An analys1s of the ~mpact of thlS recommended POllCY on the current holdlngs of the Cl ty' s Cemetery Perpetual Care Fund 1S at Attachment II. Th~s is the only Clty fund wh~ch has lnvestments in u. S. corporat~ons. The analys1s lndlcates that existlng lnvestments totalllng about $120,000 would have to be d1vested. An alternative consldered by staff to the recommended pollCY was to require the divest1ture of all Clty holdlngs ln companles WhlCh have operatlons in South Africa regardless of thelr adherence to the Sullivan Prlnclples or thelr ratlng category. If thlS polley optlon were adopted, investments totall1ng $367,000 would have to be dlvested from the Cl ty' s portfo11o. This :pollCY optlon was reJected by staff because lt would penallze companl.es wh~ch have taken documented an aff1rmatlve steps to lntegrate all South African races mto company operatl.ons and faclll tles, and to provlde Blual access to all company benef1 ts, along Wl th those oompanies WhlCh have not comnutted themselves to the ~plementatlon of these princlples. To treat all oompan1es the same by denying them the beneflt of City investments would, In the opln1on of staff, ul tlmately dlsadvantage mlnorlty South African workers of complYlng u.S. companies. Further, Slnce the ma]Orlty of the largest and strongest (l.e. The Fortune 500) u.s. oompanles have operations ln South Afrlca, lnvestment in such companles would be denl.ed to the City. In the opinion of staff, this would requlre the lnvestment in less substantlal companles thereby posslbly increaslng rlsk and reduclng llqU~dl.ty even while probably attainlng comparable Yle1ds over tlme. - 10 - e e Should the recommended or alternat1ve P011CY be adopted, staff w11l provlde Councll wlthln 60 days a status report an d1vestment of the C1ty's Cemetery Perpetual Care Fund. 3. The Clty of Santa Mon1ca shall only do business wlth banking/financial institutions that do not make loans to, the government of the Republ1c of .south Africa or its agencies. However, if a banking/financial institution is terminatlng a loan to the government of the Republ1c of 5:)uth Africa, the Clty of Santa Monica may do bUSlness with the banking/financial institution prov1ded that the oonking/financlal lnstitutlon has adopted a polley statement opposing apartheid. Staff Comment: None of the bank1ng/flnanc1al institutlons wlth which the City currently lnvests funds are mak1ng loans d1rectly to the government of South Afrlca or lts agencles at th1S time. One f1nanClal Instltut1on, Bank of America, has not loaned funds to the g::>vernment of South Afrlca Slnce 1980 but lS 1n the process of dlsposing of lts one rema1n1ng public sector loan WhlCh was made in 1981. Hence, 1f the recommended policy lS adopted, no dlvest1ture of funds from the Clty's current banklng/flnanclal 1nstltutions would be vequlred. Any banking/flnanclal lnstltutlons with which the C1ty should choose to do business ln the future would have to meet th1S POllCY requ1rement. The term "do bUSlness II means the flnanC1al transactions perml t ted under Sect ion 53630 et. s eq . of the Government Oode and the contract1ng by the Clty for any other flnanClal serVlces. The term "banking/f1nanclal lnstl tution" means state or nat10nal banks or state or federal saVlngs and loan associations ln the state of eal1fornla. An alternative policy consldered but reJected by staff was to requ1re the dlvestlture of Clty funds from all financla1 lnstltutlons wlth any outstanding loans to the government of South Africa or ltS agencles. ThlS option was reJected because lt would penallze those flnancia1 lnstltut10ns act1vely seek1ng to termlnate exist1ng loans and WhlCh, therefore, are behavlng In a manner consistent Wlth the lntent of the Clty'S dlvestlture obJective. If this policy alternatlve were adopted, the Clty would have to cease maklng lnvestments with or through the Bank of Amerlca. Immedlately, thlS would requlre Clty staff to transfer $8.2 ml1110n of U.S. government securltles purchased through the Bank of Amerlca to another flnanc1al 1nst1tut1on for safekeep1ng and to inltlate action to seek an al ternatl ve f1nancia1 lnstl tution for eXlsting and proposed Clty bond/COP transactions for WhlCh the Bank of Amerlca functions as trustee for the City. - 11 - e e 4. The C~ty of Santa Monlca shall not do bus~ness w~th banking/financla1 lnst~tutions wh1ch make loans dlrectly with the private sector in the Republic of South Africa, unless the banklng/flnancial institutlon has adopted a fOlicy wh~ch: (1) opposes the pol~cy of aparthel.d, and (2) guides South African prl. vate sector investments to those South Afr~can businesses Wh1Ch contrlbute to socla1 and economic beneflts for all South Africans and which do not support the policy of apartheid. Staff Comment: Staff suggests that one objectl ve in adopting a divestlture policy 1S to oppose publlcally the government of the Republic of South Afrlca 's poll.cy and laws of apartheid rather than to pena1~ze a South Afrlcan private sector which at the present t~me must exist W1thin the laws of l.ts country. Furthermore, pub1~c ll1fOrmatlon concerning the nature of financl.al relationshlps between U.S. banking/flnancial lnstitutlons and spec1f1.c South Afr1can buslnesses 1S not publlcally avallable. However, l.t lS possible to requlre adherence to the above recommended policy by U.S. bankl.ng/financlal ll1st1.tutlons w~th which the C~ty of Santa Mon1ca does bus1ness. An a1ternatlve po11.cy consl..dered but rejected by staff was to requlre the d1.Vestlture of C1ty funds from banklng/flnanc1a1 instltutl.Ons which do any bUSlness wlth the pr1 vate sector l.n South Afrlca. This po11cy optJ.on was reJected because 1t would rule out Clty 1nvolvement (however lndlrect that may be) in those flnanc~al relationships whl.ch do contr~bute to the soclal and econom1c well-being of all South Africans. If th1s pollCY optlon were adopted, the Clty would have to cease dOlng business wlth the Bank of Arner1ea and Securlty Pac1f1c National Bank. 51nee these banks are also el.ther eXlst~ng or proposed trustee parties for var10US Clty lxmd/COP transactions, the ensu1ng tranSlt10n to other banks meetl.ng the policy requ1rements could be costly and qu1te t1me consuming for staff. The Cl.ty's primary ll1vestment and dally operations banker, F1rst Interstate, has only two South Afrlcan pr1vate sector loans Wh1Ch Wlll mature and be terminated 1n November 1985. However, J.f thes e two loans are not terminated as expected, the C1.ty would have to negotlate an agreement with a new prlmary banker Wh1Ch would entall an extensive and aomplex se1eetl.on and trans1tion process taklng from nlne ITOnths to one year, undergo l.neVl table maJor operat1ons transitlon problems, dl.vests 1tself of about $5.7 of var~ous 1nvestments wlth Flrst Interstate and relocate $34.8 m1l11on of Federal securl.ties to another flnanc1.al inst1tution. The potentl.al 1mpact of recommended po11c~es 3 and 4 On bank1ng/financ1al ~nstl.tutlons wlth which the City 1S currently - 12 - e e do~ng buslness was determ~ned based on a quest~onnaire WhlCh was sent to all of those banklng / f~nancial institutions. A copy of the quest10nnalre lS at Attachment III. The results of thlS analysls are presented at Attachment IV. An appropriate South Africa Investment policy Resolutlon for Cbuncl1 approval is at Attachment v. B. Imp1ementat10n Plan A detalled plan to implement these recommended dlvestment pol~c~es ~s as follows: I} Resources for Evaluating Investments and Financial Inst1 tutlons a} The Clty should utilize the pub11cations and subscrlpt10n serVlces of the Investor Responslbllity Research Center, Inc. (IRRC). THE IRRC lS an 1ndependent non-prof1t corporation founded ~n 1972 for the purpose of compl1~ng and impartlally analyzlng 1nformation on the actlvities of business 1n soclety, on activ~t1es of inst~ tut10nal investors, on efforts to lnfluence such actlvltles, and On related publlC p:>licles. In rev~ewing alternative ~nformat~on resources on SOuth African Investments, the assessment team has determlned that the IRRC, Inc. currently provldes the most complete and accurate lnformat~on currently aval1ab1e. ThlS organizatlon's publlcation tltled Forel~n Investments in South Africa is part~cularly useful, and is a dlrectory of United States, Canadlan and Brl t1sh Corporat1ons operatlng ln South Africa and Namibia, as well as a survey of the 100 largest U. S. bank holdlng companies and their pract~ces and po1~cles on lendlng to South Afrlca. b} IRRC lnformation should be supplemented as necessary by perlodlc quest10nnalre surveys conducted by C1ty staff and prlmarlly directed at those local banking/financ~al lnstltutions not covered by the IRCC. - l3 - r . e e 2. Implementlng Investments the POI1CY Relative to Current a) Current lnvestments lnconsistent wlth the Clty'S dlvestment polley should not be renewed beyond thelr current term. b) Where the Clty would not lncur a loss or reduction 1n earnlngs, eXlst1ng lnvestments not oonslstent wlth the policy should be termlnated, Whenever posslble. 3. Implementlng the Polley for All New Investments a) All new or renewed oonslstent wlth the PJI1CY investments should be made Clty'S adopted dlvestment b) All current and prospectlve banking/financlal lnstltutlons should be evaluated and selected relatlve to the City's adopted dlvestment polley c) The Clty'S divestment policy should be implemented concurrently w1th the provislons of the Clty'S Investment P011CY, partlcularly relatlve to provlslons for evaluating securlty, llqUldlty and yield. 4. Recommended Amendments to EXlstlng Policies and Procedures. A copy of the C1ty'S current 1nvestment polley lS at Attachment VI. a) In order to offset any posslble decrease in the number of local banking/flnancial lnstitutlons resul ting from adoption of the recommended dlvesti ture POllCY, the Cl ty I S current 11St of approved banklng/flnanclal lnstltutlons should be expanded to include other bankingjfinanclal instltutlons throughout the State WhlCh meet all fOlicy requlrements and provide an appropriate Yleld on lnvested funds. Tradltlonal1y, the Councl1 has speclfled that the Treasurer 15 to lnvest Clty funds wlth bank1ng/ financial institutions located ln Santa Monlca and the West Los Angeles area. To expand the 11St of ellglble bank1ng/flnanclal lnstitutlons wl11 requlre addltional staff research, however. through the use of computer technology no adverse lmpact on current lnvestment related staffing 15 antlclpated. SUbsequent Councl1 actlon to approve an amended Re501utlon lncludlng the addltlona1 el1gible banklng/financ1a1 lnstltutlons wll1 be required. - 14 - e e b) The C1ty'S 1nvestment practlces should l.nclude addl. tlonal l.nstruments and methods perml. tted by law which have not hlstorica1ly been utl.ll.zed (e.g. commercl.al paper, brokers, etc.) In order to offset any possible decrease In investment ~ternat1ves resu1t1ng from adoption of the IEcommended d1vestlture poll.cy, Once aga1n, thlS will require subsequent Counc11 act10n to authorl.ze the use of investment brokers when approprlate select10ns have been made and necessary broker-related l.nvestment procedures have been developed. c) Flnance Department staff bell.eves that City Council should indemnlfy the Clty Treasurer/Revenue Manager and other Cl.ty staff associated wlth the investment of publlC monl.es from any lltigatl.on resulting from l.mplementation of the Clty'S d1vestment poll.cy. '!he Cl ty Councl1, as legls lati ve body, has the authorlty to 1nvest or relnvest City funds. Government Code Sect10ns 53601 and 53601.1 describe the types of lnvestments which the City CounCll may use for money not required for the nnmedlate necess1tles of the Clty. Pursuant to Sectlon 53607 of the Government Code, the Cl.ty Council's lnvestment author1 ty may be delegated to the C1ty Treasurer, who thereafter assumes full respons1bl.ll.ty for such transact1onS. The Santa Monl.ca City Councll has, by resolutl.on, delegated thlS authorl.ty to the Clty Treasurer. The Treasurer must deposlt funds ln a deposl.tory selected from those banks and sav1.ngs and loan assOCl.atlons agreeing to pay the hlghest rate of lnterest (Government Code Sectl.on 53637). Although there 1.S no dl.rect authority, the general "prudent 1nvestor rule" appllcable to fl.duclaries 1.S appll.cab1e to Cl.ty Treasurers in the1r determination of deposl tor1.es for public funds. Thl.S rule provides that the indlVl.dual nust exerClse the Judgment and care, under the circumstances that people of prudency, discretion and l.ntelligence would exerC1se 1n the management of thel.r own business affalrs. W1.th1n thlS general legal context, 1t has come to the attention of Fl.nance Department staff that dlvestiture is a relatively new issue and there has been little case law on the sub] ect . To date, there are no known cases pend1ng in Californ1a, however there has been 11.t1.gation relative to dlvestl.ture In other states, but none that provlde ample precedent. For example, - 15 - e e there has been lltlgat10n ln the states of Oregon and M1ch~gan c1a1mlng that divestiture had not been conslstent w1th the obllgation for prudent Investments. In the case of Assoc1ated Students of the Un1verslty of Oregon vs. Oregon Investment O:mncil, et. al., the Lane County Circuit Court appears to have held that there lS an obligation to be prudent w1th lnvested funds and at the same time there can be an exerC1se of public consc1ence; however, prudency should not be sacrlf1ced for soc1al lssues. In l~ght of the above, F1nance Department staff telieves lt would be appropr~ate for the C~ty CbunCll to take th~s recommended action. Sim1l1ar lndemn~f1catlon resolutions have been adopted ln the c~t1es of Berkeley and Santa Cruz, callfornla. However, the Santa Monlca Clty Attorney has lnd1cated verbally that a special llldemnlflcation resolutlon is not necessary as implementat10n by C1ty staff of C~ty Counc1l !X)l~cy 1S W1 thln the II scope of employment II of those C~ ty staff and they would therefore normally be lndemnified. It lS therefore recommended that the C~ty Counc1l d1rect the C1ty Attorney to lssue a formal written opin1on a:mcern~ng whether lmplementatlon of the Clty I s SOuth Afrlcan Dlvestlture policy comes within the scope of employment of the D1rector of F1nance, City Treasurer/Revenue Manager and other Clty anployees, as they may be directly involved in the lnvestment of C1ty funds. 5. Other Recommended Respons~blll t1es Report~ng Procedures and a) The City's Investment Comm1 ttee composed of the DJ..rector of F1nance, C1ty Treasurer !Revenue Ma.nager, Assistant Dlrector of Flnance and Ass1stant C1 ty Treasurer !Revenue Manager should reVlew the lmplementatlon of the Clty'S d1. vestment POl1CY as part of 1 ts regular responslbi1i ties for mon1 tor~ng and gU1dlng investments, and take appropr1ate act10ns to assure the full ~mplementation of the adopted divestment po11cy. b) The C1ty Treasurer should lnclude 1n hlS monthly report of 1nvestments, a report on the progress of implement1ng the C1ty'S dlvestment po11cy. In summary, staff belleves that the recommended South African d1vestment pollc1es and lmplementatlon plan can be carrled out - 16 - e e without any lnvestments lnvestments. nay requlre adverse f1nancial lmpact to the City's current or the safety, llqUldity and Y1eld of future Further, while lmplementing the recommended polley conslderlng the use of additional lnvestment 1nstruments and means not tradl tlonally employed by the Cl ty, staff belleves th1S can be done In a prudent manner with eXlstlng staff. RECOMMENDATION It lS therefore recommended that the City Counc1l: 1. Adopt the resolutlon at Attachment V establlshlng the City's South Afrlcan Dlvestment policy. 2. Dlrect the Clty Attorney to lssue a formal wrltten op~nlon concern1ng whether 1mplementatlon of the C1 ty' s South Afr1can Dlvestiture Polley comes wlthln the scope of employment of the Dlrector of Finance, Cl ty Treasurer /Revenue Manager and other C1ty employees, as they may be may be directly 1nvolved 10 the lnvestment of C1ty funds. 3. D1rect staff to lmp1ement Clty'S South Afrlcan D1vestment pollCY as set forth 1n this report. 4. D1rect the Mayor to transmlt the City's D1vestment POllCY Do the members of the Clty'S, State and Federal 1egislatlve delegat1on, the Natlona1 and Callfornia Leagues of Clt1es, and to the Executlve Offlcer and Board - 17 - of e e Admlnlstratlon of State Publ1C Employees' the Ret~rement System (PERS). Prepared by: ltt. tachment I Attachment I I Attachment III Attachment IV At tachment V Attachment VI . Mike Denn1s, D1rector of Flnance Ray Watanabe, C1ty Treasurer/Revenue Manager ELll Ramsey, Assistant D1rector of Flnance Ralph Bursey, Asst. C1ty Treasurer/Rev. Manager The Sul11van Prlnciples Impact of Recommended Divestment POllCY on CEmetery Perpetual Care Fund Investments ln U.S. Corporations South Afr1can Questlonnaire Impact of Recommended D2vestment pol1cy on CUrrent C1ty Investments ln Banklng Institut10ns A Resolution of the City Council of the C1ty of Santa Mon1ca Adopting a P011CY to Dlvest Clty Funds from Banklng/Flnanc~al Instltut10ns and Bus1nesses Do~ng Buslness In the Repub11c of South Afr lea Investment policy for the Clty of Santa Monlca (January 1, 1985) - 18 - I- I I I I I I I I I I I I I I I I I I , . e e Attachment I IHE SULLIVAN PRINCIPLES 7l,e Sulhvan principles have been amplified on four occasions since thelf' appearance 10 1977. ihe most recent amplification was in November 1984 and 15 underlined in the following text. ?rmciple 1. Non-segregation of the races in all eating, comfort and work facilities. :ach slgnator of the Statement of Principles will proceed immediately to: . Eliminate all vestiges of racial discrimination. . Remove all race designation si.gns. . Desegregate all eatmg, comiort and work facilities. Principle U. Equal and fair employment practices for all employees. Each signator of the Statement of Principles Will proceed immediately to: . Implement equal and fair terms and conditions of employment. . Provide non-<hscriminatory eligibility for benefit plans. . Establish an appropriate and comprehensive procedure for handling and re- solving individual employee complaints. . Support the elimination of all industrial racial discriminatory laws which im- pede the Implementation of equal and fair terms and conditions of employ- ment, such as abolition of job reservations, Job fragmentatlon, and appren- ticeship restrictions for blacks and other non-whites. . Support the elimmation of discriminatIon against the rights of bLacks to form or belong to government registered and unregistered unions and acknowledge generally the rights of blacks to form their own unions or be represented by trade unions which already exlst. . Secure nghts of black workers to the freedom of assoclation and assure pro- tection agalnst victimization whlle pursumg and after attairung these nghts.. . Involve black workers or their representatives in the development of programs that address thell' educational and other needs and those of their dependents and the local community. PrmcIple Ill. Equal pay for all employees domg equal or comparable work for the same penod of time. Each slgnator of the Statement of PrInciples Will proceed immediately to: I j e e A' (f . Design and implement a wage and salary administratIOn plan which is applied equally to all employees, regardless of race, who are performmg equal or com- parable work. . Ensure an equitable system of Job classificatIons, Includmg a reView of the distinction between hourly and salaried classifications. . Determme the extent upgradmg of personnel and/or Jobs 10 the upper echelons 1S needed, and accordmgly implement programs to accomplish tius objective 10 representative numbers, ensunng the employment of blacks and other non- whites at all levels of company operations. . Assign equitable wage and sal~ry ranges, the minimum of these to be weB above the appropriate local mmlmum economic lIvmg level. Principle IV. Initiation of and development of training programs that will prepare, 1n sub- stantial numbers, blacks and other non-whites for superVISOry, administrative, clencal and technical Jobs. Each signator of the Statement of PrinCiples will proceed Immediately to: . Determine employee traiOlng needs and capabll1ties, and Identify employees With potential for further advancement. . Take advantage of eXJsting outSide training resources and actJVitJes, such as exchange programs, technical colleges, and similar institutions or programs. . Support the development of outs1de trammg faCIl1tles, mdlvldually or collec- tively-including technical centers, professional traming exposure, correspon- dence and extenSIon courses, as appropnate, for extensive trainmg outreach. . Imtiate and expand Inside traming programs and facilities. Principle V. IncreaslOg the number of blacks and other non-whites 10 management and supervisory pOSitions. Each signator of the Statement of Principies Will proceed Immediately to: . Identify, actively recruit, train and develop a sufficient and significant number of blacks and other non-whites to assure that as quickly as possible there wlll be appropriate representation of blacks and other non-whites in the manage- ment group of each company at aU levels of operations. . Establish management development programs for blacks and other non-whites, as needed, and lmprove eXisting programs and facil1ties for developmg manage- ment sldlls of blacks and other non-whites. . Identify and channel high management potential blacks and other non-white employees mto management deveiopment programs.. Principle VI: Improving the quality of employeesf lives outside the work environment in such areas as housing, transportation, schoolmg, recreation and health facilities. I -- I I I I I I I I I I I I I I I I I I ~--- e- , - -- ---~ Each signator of the Statement of Principles w1l1 proceed Immediately to: o Evaluate eXiStIng and/or develop programs, as appropnate, to address the spe- cIfic needs of black and other non-whIte employees m the areas of housmg, health care, transportatIon and recreatIOn. o Evaluate methods for UtilIZing eXIstmg, expanded or newly established in- house medical faCll1ties or other medical programs to Improve medIcal care for aU non-whl tes and theIr dependents. o PartiCIpate 1n the development of programs that address the educational needs of employees, theIr dependents, and the local commumty. Both mdivIdual and collectIve programs should be conSIdered, In addItIon to techmcal educatIon, mcluding such actIvitIes as lIteracy educatIon, busmess tra.lmng, dlCect aSSIS- tance to local schools, contnbutlons and scholarshIps. o Support changes In mflux control laws to proVIde for the rIght of black mIgrant workers to normal famIly life. o Increase uulizatlOn of and aSSIst in the development of black and other non- whIte owned and operated busmess enterpnses includmg dIstributors, supphers of goods and services and manufacturers. With all the foregomg in mmd, it is the Objective of the compames to involve and aSSIst in the education and trammg of large and tellmg numbers of blacks and other non-whItes as quickly as poSSible. The ultimate impact of thiS effort 15 lOtended to be of massive propor- tion, readung millIons. INCREASED DIMENSIONS OF ACTIVITIES OUTSIDE THE WORKPLACE o Use mfluence and support the unrestricted C'lRhts of black businesses to l.?cate in the urban areas of the natwn. o influence other companies in South Afnca to foHow the, standards of equal np;hts principles.. o Support the ,freedom of mobility of black workers to seek employment oppor- ~unIt!es whereve~ 1hey eXIst, and make possible prOViSIons for adequate hOlJs- InR for famI~les of employees WithIn the prOXImity of workers' employment. o Supoort the recenSion of aU apartheId laws. PERIODIC REPORTING The Signatory Compames of the Statement of PrinCiples will proceed Jmmecilately to: o Report progress on an annual baSIS to Reverend SullIvan through the mdepen- dent admmistratIve Unlt he has established. o Have aU areas speCIfied by Reverend Sull1van audited by a certltled publIc accounting firm. o Inform aU employees of the companyls annual penodic report ratmg and invlte their lOput on ways to improve the rating. e e If a company has signed the Sullivan principles, it measuring compliance with the Sullivan principles. more than one subsidiary in South Africa, each annual rating. receives rati ngs I f a company has receives its own At a minilllJm, a company must meet nine IIbasic requirementsll in order to be rated in either of the top two rating categories. Failure to meet anyone of these requirements automatically consigns a company to Category II I, regardl ess of its performance in other areas. The basic requirements cover such issues as desegregation, minimum wages, trade union rights, equal pay for equal work, and elimination of racial discrimination in payor benefits--the cbjectives covered by the first three Sullivan principles. In addition, the basic requirements direct the company to inform all its employees tJ1at it has signed the principles, to tell them its Sullivan rating, and to review its implementation of the principles with respresentative groups of employees several times each year. Since 1982, each com- pany also is required to submit its compT eted questionnaire to its accounting firm to veri fy the company I s responses concerning its total payroll, total employment, mi nimum wage, and total expendi- tures made for educati on, tra ining and communi ty development pro- grams. If a company meets all the basic requirements it is then evaluated and assigned points for its performance in three major areas--efforts on behalf of black education, training and advancement for its black employees, and community development. ,- I' I I I I I I I I I I I I I I I. I I I e e For 1984, Sullivan signers were rated by the consul ting firm of Arthur D. Little in the following categories: Category I Ca tegory I I II-A II-B Category III II I-A III-B III-C Category IV IV-A IV-B IV-C IV-D Ca te gory V Category VI Category VII -- Making good progress -- Making progress -- Making progress based on full reporting -- Mak ing progress based on a short-form quest; on- naire avail abl e for the first time in 1984 to compani es wi th fewer than 25 employees and 1 ess than 50 percent equity in a South African subsi- diary Needs to become more active Passed basi c requirements for the first three principles but received low point ratings on the other three princi pl es Does not meet basic requirements of first three princi pl es Did not submit a report Endorsers of the princi pl es tha t have few or no employees -- Meeting basic requirements -- With no employees -- Wi th 25 Dr fewer employees Hol ds less than 50 percent equity in its South Africa operation Ntw si gna tory This category was discontinued in 1984 Signatory with headquarters outside the U.S. I- I I I I I I I I I. I I I I I I I I I , , e e For 1981 J 1982, and 1983, Sullivan signers were rated according to a system s1 i ght1y di fferent than that used in 1984: Category I Ca tegory II Category III 111-A 111-8 Category IV IV-A IV-B IV-C Ca te gory V Category VI Category VII -- Making good progress -- Making progress -- Needs to become more active -- Passed basic requirements but recieved low point rati ng Does not meet basic requirements Endorser of the princi pl es that has few or no employees -- With no employees -- \~ith 10 or fewer employees in a subsidiary or operation Hal ds 1 ess th an 19 percent equi ty in its South Africian operation New signa tory Signatory that did not report -- Signatory with headquarters outside the U.S. . l e e Attachment II TI4PACT OF RECOMMENDED DIVESTMENT POLICY ON CEMETERY PERPETUAL CARE FUND INVESTMENTS IN U.S. CORPORATIONS* (AS OF 7131/85) Operatwn in Signatory to South Africa Sullivan Princlples Sullivan Prlnciples Corporat_~on Yes No Yes No ~a~~?6_ Catesory fur roughs Corp. X X I General Motors Corp. X X I illinoIs TermInal Railroad Co. X N/A N/A Montana Power Co. X N/A N/A Southwest Bell Telephone Co. X N/A N/A D=!ere & Co. X X IIA FetrIe Stores Corp. X N/A NIA Kern McGree Corp. X N/A N/A Amerlcan GreetIngs X N/A N/A Ibw Jones & Co. X N/A N/A Times Mirror Co. X X N/A** PfIzer Inc. X X I AmerIcan Standard Inc. X N/A N/A IBM Corp. X X I General ElectrIc Co. X X IIA and IIBu. Eoeing Co. X X N/A**** Minnesota Mining & Manufacturing Co. X X I Nynex Corp. X N/A N/A U.S. West, Inc. X N/A N/A Energas Co. X N/A N/A Dayton Hudson Corp. X N/A MIA J\nheuser Busch X N/A MIA CSX Corp. X N/A N/A Mernll Lynch X N/A MIA Paclhc TeleS1S X N/A N/A SecurIty PacifIc Corp. X N/A NIA 5Juthern Co. X N/A N/A Dun & Bradstreet Corp. X X N/A..... ; - 1 - e e NOTES: * Per July 31, 1985 f~nanc~al status report fro~ Lloyds Bank of Cal~forn~a fur Cemetery Perpetual Care Fund. H L~sted as the Los Angeles Times H* More than one rating category lnd~cates that South African subs~d~ar~es ware rated seperately. **** Less than 10 employees ~n South Afrlca ***** More than 10 employees in South Africa Q1D:gp:d~vstatt , - 2 - e e ATTACHMENT III QUESTIONNAIRE CITY OF SANTA MONICA INVESTMENT COMMITTEE Name of Institution Address Questlonnalre Prepared by Name: Tltle: S~gnature: Phone ~: YES NO 1. Do you have a POllCY on ~nvestment ~n or lendlng to South Afrlca? Please send a copy lf you have a polley. lA. If the answer to questlon ~o. 1 lS yes, does thlS pol~cy restrlct ~nvestment 1n, lendlng to, or tradlng In the securltles of: a. The South Afrlcan Government b. South Afrlcan State-Owned Corporations c. Prlvate South Afrlcan Corporat~ons d. South Afr1can Banks and/or Investment Flrms e. Amerlcan bUSlnesses operat~ng in South Afrlca f. Other fore1gn buslnesses operat1ng In South Africa , 2. On what date was thlS policy adopted? - 2 e e 3. Do you now own or trade In securltles of or provlde l~nes of cred~t to: a. The South Afrlcan Government (Includlng Krugerrands) b. South Afrlcan State-Owned Corporatlons c. Private South African Corporations d. South African Banks and/or Investment Flrms e. Amerlcan businesses operating in South Africa f. Other forelgn bUSlnesses operating In South Africa 4. Do you borrow or lend as part of a consortlum to: a. The South African Government (Includlng Krugerrands) b. South Afrlcan State-Owned Corporatlons c. Prlvate South Afrlcan Corporatlons d. South Afrlcan Banks and Investment Flrms e. Amerlcan bUSlnesses operatlng ln South Afr1ca f. Other forelgn buslnesses operatlng in South Afrlca 5. Do you subscrlbe to the Sull1van Prlnclples? See the attached the llstlng of the Sullivan Prlnclples. 6. Does the fact that a company subscribes to the Sullivan Prlnclp1es affect your lnvestment!lendlng polley? 7. Do you malntaln an office or branch ln South Afrlca? 8. Is your flrm a wholly owned subsidlary of another corporation or holdlng company? 8A. If the answer to question 8 ~s yes please glve the name of the corporatlon or holdlng company. - 3 - e e 9. Does your f1rm or other Subsldlarles of the holdlUg company have factorles, offices, sales establlshments or other bus1ness operatlons in South Afrlca? 9A. If the answer to question 9 was yes, please briefly descrlbe its, or thelr, maJor functlons. 10. Comments, lf any 11. Please complete this questlonnalre and return to: City of Santa Monlca 1685 Ma1n Street Santa Monlca, CA 90401 ATTE~TION: Kay Watanabe, Clty Treasurer Thank you for your cooperatlon. , - 4 - e e STATS~ENT OF THE SULLIVAN PRINCIPLES The Sul11van Principles are SlX prlnciples that Dr. Leon H. Sull1van origl.nally developed to guide Amerlcan-owned companles operat1ng In South Afrlca. They constitute an employment code now adm1nlstered by the Internat10nal Council for Equallty of Opportun1 ty Pr inc~p1es I Inc. The Slgnatorl.es to the Sullivan Prlnc1ples are compan~es that support the Prlncl.ples. PrlnClple 1 - Princ~ple 2 - Pr1nclple 3 - Prlnc1ple 4 - Pr1nClple 5 - Principle 6 - Nonsegregatlon of the Races In All Eating, Comfort, Locker Rooms and Work FaC1lities Equal and Fa~r Employment Practlces for All Employees Equal Pay for All Employees D01ng Equal or Comparable Work for the Same Perlod of Tlme Inltiat10n and Development of Tralnlng Programs that W~ll Prepare Blacks, Coloureds, and ASlans l.n Substantlal Numbers for Superv1sory, Admln1stratl.ve, C1erlcal and Technlcal Jobs Increaslng the Number of Blacks, Coloureds, and ASlans In Management and Supervlsory Posltlons Improvlng the Qual1ty of Employees' L1ves Outside the Work Envlronment In Such Areas as Houslng, Transportatlon, Schoo11ng, Recreatlon, and Health FacllJ...t1es. - 5 - e e Attachment IV (Page -If - lMPACT OF RECO~MENDED DIVESTMENT POLICY ON CURRENT CITY INVESTMENTS IN BANKING INSTITUTIONS -- ----<iri-milllOnS;-as ot-1j31-jS5j------------- Federal Cert~ficate Ci:lvernment of ~~?urI~y!J-BI11* ~~po~~~ FIrst Interstate Bank $34.8 Santa MonIca Bank Lloyds Bank 8.3 B:lnk of AmerIca 8.2 Gal. 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"0 0 lI.l 0 .....:::: 0').0 :::l :3 o 0. o (I) to-...c rl+> C1l 0 5+> ..-I .p III ('IJ s:: C rei s.... 0 Q)r-l .p C Q) .....::.: ro III e ~+> s:: .... m a:l tIl Q) C 0 0-0 ..-I s::: s.... ::> 0 C ro ro o () ..... '..-1 s.... s.... (,...,<.-. ~< ..c:..c .p+> :::l :::l o 0 [/)tfl C C -..-I ..-I +> fI) c Q) Q) 0 e .... Q)r... >r.... rl 0 o > 0 c C ..-I fI) o m c..c o'l~ ro C ..c m .0 ~ s:: lLI roJ:: a:lE-< 1lI C 0 o ...-1 ...... 8 s.... c .... r... ::>cc:c:e: If'l '-' - s::: ...-1 "0 QJ s.... Q) .&-l s.... ro :::l 0- "0 ro Q) ..c >. C 1lI a. e o C) tlD C ..... "0 rl"O o Q) ..c..c o ~ ro c+> ro+> .0 ro fI) tti ..-I C III o 0 ..-I ..-I .p s.... ror... Cc:e: s.... Q).c .p.j..) C :J ..-I 0 (/) C C1l toO C ..-I 0"0 ...J s.... c.. ~ Q) ] s.... s.....&-l Q) C .p Q) s.... E ('IJ OJ J::+> o ('IJ .&-l "0 tIl s.... ro C "0 0 C .... ro.p .p ..-I tf) III o (,..., a. o fI) >-~ s.... QJ C1J s.... ..-I QJ "O.p ..-I s.... l/) C\l .oJ:: ~u '0 m s.... ro III '0 ...-1 lii ~~ C C1l CO c c 0 0"0 '.-l C C 0 ::>....3 . ~ .4 . . STANDARD CIIAR'l'ER.PLC Position stateme~on South Africa e ... " The Standard Chartered Group, which has ltS headquarters in London, England. provldes a versatile range of bank1ng, flnancia1 and related serVlces through more than 2,000 offices in some 60 countrles. The Group's interests in Africa were founded in 1862 and, today. Standard Chartered is represented in 15 African countries, includlng South Afrlca. Standard Chartered holds a minority interest in Standard Bank Investment Corporatlon (Stanbic), which has its headquarters in Johannesburg, South Africa. Stanbic's po1icles and practlces are entirely non-sectarian and the Group is recognized as a leader in the application of non- raciallsm. All faci11tles at the workplace are integrated and~ employees enjoy equal treatment in every respect, including benefits and promotion, wlthout distinctions of race. The Group undertakes afflrmative actlon programs where these do not conflict wlth its prlnclple of non-racialism. In its considerable tralning facllitles for staff members at every level, no effort is spared to train people from culturally disadvantaged communities to compete on equal terms in the workplace and to benefit fully from their membershlp in a modern, forward-looking bUslness organizatlon. The Group offers ltS services to all racial groups without distinction and has some elements wh~ch concentrate on serving underprlvileged communities. Th~s commltment extends to the Group's social responsibl1lty activities. As a concerned corporate citizen, the Group extends assistance to many different areas of South African life, spanning a wide range of educat1onal, social and community projects. Most of this program is directed to black lnterests, in both urban and rural communit1es. While the group maintains a non-partisan political stance in keeplng wlth its commltment to all sectors of the community, its chief executive and other responsible off1cers take every sU1table occasion to promote the princlple of equal opportunity in ~ll aspects of South African life. Nole: The American Broadcastlng Company used Stanbic's Johannesburg headquarters as its example of a non- racial environment in a "Nlghtllne" transmission in 1985. Note: For some years, a report has been submitted to the British government in accordance with the code lald down for countries in the European Economic Community wh1ch lists the positive progress made in employment and training condltions in South Africil. e RESOLUTION ~'VTT.T, BE FORI'HCCMING e A'ITACHMENT V I- I I I I I I I I I I I I I I I I I e e , ~ q ~b~t ~ January 1, 1985 INVESTMENT POLICY for the CITY of SANTA MONICA A. PURPOSE The purpose of establishing a- formal investment policy is to set broad guidelines within which the Clty Treasurer is to lawfully invest City funds. These guidelines do not supersede applicable State laws and Clty codes. B. SCOPE This investment policy applies to all cash and financial investments of the various funds of the City of Santa Mon1ca as identified in the Clty'S Comprehensive Annual Financial Report, with the exception of those financial assets explicitly excluded from coverage by these policies for legal or operational reasons. All City Funds are listed 1n Attachment A and all cash and financial investments WhlCh are excluded from coverage by this investment policy are identified in Attachment B. C. ADMINISTRATION 1. An Investment Committee shall be established conslsting of the Director of Finance, City Treasurer/Revenue Manager, Assistant Director of Finance, and Assistant City Treasurer/Revenue Manager. 2. The Investment Committee will meet at least once each calendar quarter to review and evaluate previous investment activlty and Yleldt to review the current status of all funds held by the City, to discuss anticipated cash requirements and investment activity for the next quarter, and to recommend investment strategy to the City Treasurer. 3. All investment policies and all changes to those policies must be approved by a maJority of the Investment Committee. 4. Any two members of the Committee may call a special meet~ng, and three members shall constitute a quorum. 5. Minutes will be pub11shed of all Investment Commlttee meetings. 6. The Investment CommIttee w111 meet at least annually with the City's outslde auditors to reVIew accounting controls and to design adequate audit procedures to Identify any non-compllance with the Clty Investment policy. I- I I I I I I I I I I I I I I I I I I e e 7. The City investment policy will be reviewed annually by the Investment Committee and submitted annually to the City Counc~l. D. INVESTMENT OBJECTIVES The objectives of all City investments shall be as follows: 1. To ensure the safety and avallability of all funds which come into the Treasurer's possession. a. Safety means that the overall value of City funds shall not be dimlnished 1n the process of securing and investing those funds or over the duration of the investments. b. Availability means that funds shall be made available to meet all anticipated Clty obligatlons and a prudent reserve shall be kept avaIlable to meet unanticipated cash requirements. Avallability has two aspects, llquidity and the scheduling of cash flows. LiquidIty is the ability to change an investment into its cash equivalent on short notice and at its prevailing market value. Scheduling of cash flows means that investments are to mature or are to be converted lnto cash in tandem with the City's antlcipated cash requirements. 2. To earn the optimum interest income commensurate with the objectives of safety and the principle Invested. from City funds availability of E. INVESTMENT AUTHORITY and DELEGATION In accordance with the Santa Monica City Charter, section 711, the City Treasurer 1s responsible for conducting the City's investment transactions. The Treasurer may delegate this authorlty to the Assistant Treasurer or, in extraordinary circumstances, to the Director of Finance or the Assistant Director of FInance. F. PRUDENCE 1. Investments shall be made with judgement and care, under circumstances then prevailing, which persons of prudence, discretion and lntelllgence exercise In the management of their own affairs, not for speculation, but for Investment, considerlng the probable safety of their capital as well as the probable Income to be derived. ThIS standard of prudence shall be applIed in the context of managIng an overall portfolIo. Investment officers actIng in accordance with written procedures and exerclsing due dIlIgence shall be relieved of personal responsibIlity for an indiVIdual security's credIt rlsk or market prIce changes, provided that deviations from expectatIons I' I I I I I I I I I I I I I I I I I I e - are reported in wrIting to the Director of Finance in a timely fashIon, and approprIate action is taken to control adverse developments 2. Investment officers shall avoid any transactions that might impair public confldence in the Santa Monica City government. G. RECORDS and REPORTS Records of all Investment transactions will be kept, and monthly reports will be made to the Investment Committee and the City Manager detailing and summarizing all transactions and stating the present status_of City investments H. DIVERSIFICATION 1. All City funds which are not required for immedIate cash expenditures or to maintain required compensating cash balances shall be Inves~ed in interest bearing investments or accounts. 2. To reduce overall portfolio risk while attempting to attain market rates of return consistent with the objectlves of safety and availability of funds , investments shall be diversifIed among types of investments, maturities of those investments, and instltutions in which those investments are made. a. Investment Instruments Investments shall be made only in those instruments speCIfically authorIzed by California State Laws, and to no greater an extent than authorized by those laws. Said laws are summarized in Attachment C. b. Maturities Maturities of indIvidual investments shall be diversIfied to meet the following objectives: i. No Investment will be purchased WhICh matures more than three years from the date of purchase unless speCIfically recommended by a unanImous vote of the Investment CommIttee. No lnvestment wIll be purchased which matures more than five years from the date of purchase wlthout the addltional approval of the CIty Manager. ii. The average weIghted maturIty of all pooled CIty investments shall not exceed 18 months (547 days). IiI. To minImlze the large Investments at temporarily very low, mature so that durlng rIsk of havIng to make unusually times when interest rates are investments will be scheduled to any given month there wIll be a -..~ -.- I I I I I I I I I I e - comparable investable maturities expenses. magnitude of funds to be funds will be estimated plus antlcipated revenues reInvested. These based on schedule minus anticipated IV. To the maximum extent practical, monthly operational cash requirements wlII be met by uSlng antiCIpated revenues and maturing investments. The sale of securitles to meet operating cash requirements shall be considered an unusual occurrence and shall be reported to the Investment Commlttee. v. To reduce the market and interest rate risks which would result from the excess concentration of assets in a speciflc maturlty, a specifiC lssue or a specific class of securities, no more than 5.0% of the Clty'S investable funds may be invested in any single issue maturing in a given month. c. Institutions To minimize the risk to the portfOlio from the default by which City funds are on deposit policies shall be observed: City's overall investment a single institution in or invested, the following I I I I I I I I i. City funds shall only be deposited in a financial institutlon whose performance has been rellable and whose safety rating, as determined by the Investment Committee or a reputable independent ratIng service selected by the Investment Commlttee, is in the upper 60% of its peer group. These same standards apply to institutions in which securities owned by the City are held in safekeeping. Exceptions to these standards may be made on an individual basis if they are unanimously recommended by the Investment Committee. 11. The City shall not deposit, in the form of certificates of deposit, time or demand deposits, or similar instruments, in a single institution more than 10~ of the City's investable funds. 111. No single institution shall have, in cumulatIve total, as deposits, investments or as securIties held In safekeeping, more than 50% of the City's lnvestable fu nd 5 . I. RELATIONSHIPS WITH FINANCIAL INSTITUTIONS 1. The City may only purchase statutorially authorized investments not purchased directly form the issuer from eIther an lnstItutlon lIcensed by the state as a broker/dealer, from a -;,. _~;:';'."f- ~'ft. ... . ,,- < I- I I I I I I I I I I I I I I I I I I e e national or state chartered bank, from a federal or savings institutlon, from a brokerage firm designated primary government dealer by the Federal Reserve BankJ or member of a federally regulated securities exchange. state as a from a 2. All flnancial instltutions with investment activitles must agree reasonable efforts to prevent transactions involvlng City funds. which the City in writIng to illegal and/or conducts undertake Imprudent 3. Primary government securities dealers which report to the New York Federal Reserve are preferred for conducting transactions of all eligible securities other than non-negotIable certifIcates of deposit. Other security dealers who wish to engage in transactIons with the CIty must meet the CIty'S requirements for reliability and safetYJ and any purchases made by the CIty from such secondary sources shall require third party safekeeping or delIvery of the securities to the CIty. 4. To ensure yields consistent with this policy and to provide for the objectlve investment of City funds, the City's investment procedures shall be designed to include transactions wlth several firms that compete directly for publIC business, and to encourage competitive bidding on transactions. Such bids shall be included in the monthly report to the Investment Committee and the City Manager. J. CUSTODY AND SAFEKEEPING OF SECURITIES AND CITY FUNDS 1. All City investments shall have the City of Santa Monica as registered owner, and all interest and principle payments and withdrawals shall indicate the C1ty of Santa Monica as the payee. 2. All securIties shall be kept 1n the custody of the City or of a qualified safekeeping instltution. If not in the the City's custody, the Clty shall have access to buy and sell such securities independently of any broker or institution. 3. Original copies of non-negotiable certificates of deposit and confirming coples of all other investment transactions must be delivered to the City. K. IMPLEMENTATION The Clty Treasurer is responsible for conducting and reporting on all City investments. To facllltate thlS function, the Treasurer WIll prepare and maintain an Investment Procedures Manual to detail operatIng procedures to be practiced by the Treasury in lnvesting CIty funds. All such procedures shall be in accordance WIth applicable State laws, CIty codes and the investment policies set by the Investment Commlttee. All procedures will be subject to review and approval by the I- I I I I I I I I I , . I I I I I I I I e e Investment Committee. The Manual will explicItly include a current listIng of all City of Santa Monica financial Institut~on deposit and Investment accounts, a current list of all financial Institutions with WhICh the City currently is authorized to conduct investment transactions, a current copy of State laws pertinent to City investments, a descript10n of specific controls to ensure the proper executIon of the City investment policy, and copies, with instructions, of all investment reports required by law or by City investment POlICY. L. INDEMNIFICATION OF INVESTMENT OFFICIALS Any investment officer exerc1sing his or her authority with due diligence and prudence, and 1n accordance with the City of Santa Monica Investment Policy, will not be held personally liable for any Individual Investment losses or for total portfolio losses. ~;L. .....~... I' I I I I I I I I I I I I I I I I I I e e ATTACHMENT A: C~ty of Santa Monica Funds for Cash Pooling The following cash balances or portIon of for exclusion listed CIty of Santa Monica Funds shall have their pooled for lnvestment purposes except for any fund one or more funds WhICh is specifically identified in Attachment B of the City Investment POlICY: Fund Number Fund Name 01 11 12 13 14 15 16 17 18 19 20 25 27 29 30 31 32 33 37 41 42 43 46 51 53 56 57 58 59 77 80 81 82 84 89 99 GENERAL FUND BEACH FUND HOUSING AUTHORITY FUND EARTHQUAKE-DISASTER TORCA FUND REDEVELOPMENT FUND DWNTWN REDEV PROJECT OIP FED ALLOCATION OIP TAX ALLOCATION COMM DEV BLOCK GRANT MISCELLANEOUS GRANTS WATER OPERATING FUND REFUSE COLLECTION FD RENT CONTROL 3M PIER FUND SANITARY SEWER FUND AUDITORIUM FUND AIRPORT OPERATING FD CEMETERY OPERAr FUND TRANS OPERATING FUND TRAFFIC SAFETY FUND 3T GAS TAX FUND CAPITAL IMPROVE FUND CABLE COMMUNICATIONS PARKS and RECREATIONAL FACILITIES FUND SELF-INS-COMPRE FUND SELF INS-BUS FUND SELF INS-AUTO FUND SELF INS-W/C FUND PARKING AUTHORITY GENERAL TRUST/AGY FD DEFERRED COMP CEMETERY PIC FUND FED REV SHARING FUND MAUSOLEUM ENDOW FUND GENERAL SERVICE FUND I- I I I I I I I I I I I I I I I I I I e . ATTACHMENT B: City of Santa Monica Financial Assets Excluded from the Coverage of the City Investment POllCY The following listed City of Santa Monica specifically excluded from coverage of Policy. This exclusion does not exempt these exempted assets from exercising due in the management of the asse~s. Auditorium Box Office Trust - Established by City Council Resolutlon 4243 ~o hold 1n trust Santa Monica Clvic Auditorium box office operation receipts for each lndivldual permittee. Funds held 1n this trust are managed by the Auditorium through a checking account at First Interstate Bank and are accounted for in Fund 32, the Auditorium Fund. financial assets are the City Investment the administrators of dillgence and prudence Bail Bond Account - This is a clearing account established at Flrst Interstate Bank for the operational convenience of the courts and the Police Department in processing bail bond payments. It is administered by the Police Department and the Finance Department. Cemeterey Perpetual Care Fund Investments - The City Councilt on February 17, 1976, authorized the investment consulting firm of Scudder, Stevens and Clark to manage these investments. They are accounted for in Fund 82, the Cemetery Perpetual Care Fund. City Employees Deferred Compensation - Established by City Council Resolutlon 6759, these funds are managed under contract by the Great Western Savings and Loan Association, and are accounted for in Fund 81, the Deferred Compensation Fund. Downtown Redevelopment Project Bonds - Under the covenants of the Downtown Redevelopment Project Bonds, 1978, certain specif1c funds must be held by the fiscal agent, Union Bank, for payment of principle and Interest and for reserve requirements. The amount of funds held by the fiscal agent varies from year to year as the bonds mature, but at no time will exceed $2,379,410. The status of these funds are reported to the City monthly and are accounted for in Fund 16, the Downtown Redevelopment Project Fund. LiabIlity Insurance Account This checklng account was established at Wells Fargo Bank in accordance with City of Santa Monlca contract number 3608 wlth Leonard J. Russo Claim Servlce, Inc. This account provides a means to adminIster liabillty clalms relatlng to the Munlcipal Bus Line, and automotive liablllty and general comprehenslve claims. The transactlons are accounted for In Funds 56, 57, and 58, the Self Insurance Comprehensive, Bus and Auto funds. Library Book Purchase Account - Established by Clty Council Resolution 5088 to facilItate book purchases, these funds are I. I I I I I I I I I I I I I I I I I I e e managed by the Library through a check~ng account with Santa Monica Bank. There is a $100.00 lim~t per transaction. Funds are accounted for in Fund 01, the General Fund. Ocean Park Bond Debt Service Fund - Under the covenants of the Ocean Park Redevelopment ProJect Tax Allocatlon Bonds, Series 1984, certain specific funds must be held by the fiscal agent, the Bank of America, for payment of principle and interest and for reserve requirements. The amount of funds held by the fiscal agent varies from year to year as the bonds mature, but at no tlme wlll exceed $1,408,000. The status of these funds are reported to the City monthly and are accounted for in Fund 18, the Ocean Park Tax Allocation Fund. Parkin~ Authority Bonds - Under the covenants of the Park1ng Revenue Bonds, 1966, certaln specific funds must be held by the flscal agent, the Bank of America, for payment of principle and interest. The amount of funds held by the fiscal agent varies from year to year as the bonds mature, but at no time will exceed $525,000. The status of these funds are reported to the City each montp that there is actlvity 1n the account and are accounted for in Fund 77, the Parking Authority Fund. Petty Cash - Section 1513 of the City Charter provides for the establishment of petty cash funds for use by department heads to make cash expenditures of a minor nature. Petty cash funds are managed by each indiVidual department and are accounted for in each department's financial records. Santa Monica Rehabilitation Loan Funds - Established by City Council Resolution to promote low cost housing by providing loans to rehabilitate homes. These funds are held in trust by the Flrst Federal Savlngs Bank of California, and are administered by the Commun1ty and Economic Development Department and the Finance Department. The funds are accounted for in Fund 19, the Community Development Block Grant Fund. Workers' Compensation Account This checking account was established at Santa Honlca Bank in accordance with City Council Resolution 6692 to provide a means to administer the City's contract With the workers' compensation insurance adjusters. It is administered by the Personnel and Finance departments and accounted for in Fund 59, the Self-Insurance Workers' Compensat1on Fund. ~- ~- I' I" I I I I I I I I e e . ATTACHMENT C: Summary of State of California Statutes Applicable to Municipal Investments The following investments are authorized by California State Code, Title 5, Division 2, sections 53601, 53635, 53638 and 53643. Authorized Investment Legal Limit (%) Other Constraints - Certificate of Deposit No Iimlt Banks: deposit not to exceed the total of pald- in capital and surplus. S&Ls: deposlt not to exceed the greater of total net worth or $500,000. Must be col- lateralized to 110% of the CD value by other eligible securities. Treasury Bills and Federal Agencies No limit Bankers Acceptance 40$ Eligible for purchase by the Federal Reserve System and not to exceed 270 days to maturity. I I I I I I I I Repurchase Agreement None Negotiable Certificates of Deposit 30$ Commercial Paper 15~ "Prime" quality; corporate assets over $500,000,000; "A" debt rating; not purchase more than 10% of outstanding paper; not to exceed 180 days to maturity. Mortgage Securities 25% Shall not exceed 95% of the mortgage security's fair market value. ~"fF .,. e e 44)1> ~ (0 If..F SEP 1 7 1985 INTERDEPARTMENT MEMO Date: September 16, 1985 To: MAYOR AND CITY COUNCIL From: Clty Staff SubJect: SOUTH AFRICAN DIVESTITURE PLAN RESOLUTION Attached lS Attachment V to the "South Afr1can Dlvestiture Plan" staff report for the Councll Meetlng of 9/17/85. The staff report was prevlously dlstrlbuted to all Council members. Attachment V lS the Council Resolutlon by which the Cl ty could adopt the recommended divest1ture policles set forth In the staff report. Prepared by Mlke Dennls, Director of Flnance Attachment ~ 1; U-F SEP 1 7 \99S - 1 - ..--- VOTE: Affirmatlve: Negatlve: Abstain: Absent- ~~ ~ ~ PROOF VOTES WI TH A'NC5'HI}1'R PERSO}\T BEFORE Al\TYTHING DISTRIBUTIO~. ORIGINKL ~o oe signeci, seaied and "'l , - :l ,J - '"l " J .J . -f :l .. J I.l > ~ ]) J ]) oJ ? . ~ ..... ~ - - ... ~ oJ oJ :t: ..) ~ - ..) ::l 1) o..l .n (j) ::3 .'S iD I-t Q) t) .-l l-I l-I o VI >.. Q) ~ f-< o ~ ~ < >.. +-l r-I U 4-1 o td +-l f-< 0. .0 o ~ ... e - BEFORE DISTRIBUTION CHECK CONTENT OF ALL FOR CITY C~ERK'S ACTION DISTRIBUTION OF RESOLUTION if 70 9 / ORDINANCE # tpi/ ?/?S-- Introduced: //-F /YO S:~O Council Meeting Date Agenda Item # Adopted: All'l1AYS PUBLISH AOOPl'W ORDINANCES* *Cross out Attorney's approval Was it amended? flIed in Vault. NEWSPAPER PUBLICATION (Date: ) ) Department orIgInating staff report ( Management Serv.~sep Lynne Barrette -urdlnances only , - !:-- . Agency mentioned In document or staff report (certl fied?) Sub) ect file (agenda packet) I Counter file 1 Others: , Airport Parking Auth. Auditoi:um Personnel BuildIng Dept. PlannIng Police (en- forcement?) EnVIron. Servo FInance I . Purchasing Fire Recr/Parks General Servo TransportatIon Library Treasurer Manager SEND FOUR COPIES OF ALL ORDINANCES TO: CODED SYSTEMS, Attn Pete-t- tvtaci"eari.e 120'i\1ain S'traet AV0~l N~w Jersey_OZ7l7 SEND FOUR COPIES OF ATlll ORnTNANrFS TO: PRESIDING ,JUDGE SANTA MONICA MUNICIPAL COURT ,'.725 t>1AIN STREET SANTA MONICA, CA 90401 *Check COde sections before sendmg. TOTAL COPIES 3 . . e e "\ FD:CMD:gp:sadpattV COuncil Meet1ng: September 10, 1985 Santa Monica, California Resolution No. 7091(CCS) (C1ty Council Ser1es) A RESOLU~ION OF THE CITY COUNCIL OF THE CITY OF Sfu~TA MONICA ADOPTING A POLICY TO DIVEST CITY FUNDS FROM BANKING/FINANCIAL INSTITUTIONS PND BUSINESSES DOING BUSINESS IN THE REPUBLIC OF SOUTH AFRICA WHEREAS, the po11cy of apartheid WhlCh is being enforced in the Republ1c of South Afrlca represents institutlonalized d1.scr1mlnatlon and vlolates the human r1ghts of more than 23 m11l10n South AfrlCanSj and ~mEREAS, the lmpos1t1on of strong sanctions by ind1v1dual nunlclpal governments 1n the United States can be effective 1n helping to brlng an end to the system of apartheld and encourage the development of a government In South Afr1ca that w1ll respect the fundamental human rlghts of all lts citlzenSj and WHEREAS, the clt1zens and government of the Clty of Santa Monlca reflect a commun1ty un1ted 1n lts commltment to policies wn1ch guarantee broad human rlghts to people throughout the worldj NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: - 1 - .. . l ~ e e SECTION 1. The City of Santa Monica shall not invest in Banker's Acceptance, as defined ~n Section 53635(f) of the Government Code, which are connected with the government of the Republ~c of South Africa, lts agencies, or private South African corporatlons. SECTION 2. The C1.ty of Santa Mon1.ca shall not invest in oommerclal paper, as deflned ln Sectlon 53635(g) of the Government Code or eqUltles of United States Corporat~ons wh~ch have direct investments or operations ln South Africa, unless they are signatories to the Sullivan pr1.nclples and have achieved a rating on their performance WhlCh is evaluated at Su1l1van Rating Categorles I, II, IV, or V. SECTION 3. The City of Santa Monlca shall only do business (defined as financlal transactlons permltted under Section 53630 et. seq. of the Government Code and the contacting by the City for any other financla1 servlces) with banking/financial institut1.ons (def1.ned by Sectlon 53630 et. seq. of the Government Code) that do not make loans to the government of the Republic of South Afrlca or its agencies. However, lf the banking/financial institut1.on is terminat1.ng a loan to the government of the Republlc of South Afrlca, the C1ty of Santa Monica may do business W1. th the banking/ f1.nanc~al lnstl tutlon provided that the banking/ financial 1.nstl tution has adopted a policy statement opposing apartheld. SECTION 4. The City of Santa Monica shall not do bus1ness (as deflned 1n Sectlon 3) with banking/flnancial lnstltutions (as - 2 - ~, - e e defined in Section 3) WhlCh make loans d1rect1y with the private sector in the Republic of South Africa; unless the banking/financ1al institution has adopted a policy which: (I) c:pposes the polley of apartheid, and (2) guides South Afr1can pr1vate sector investments to those South Afr1can businesses Which contr1bute to soc1al and economic benefits for all South Afr1cans and do not tend to support the policy of apartheid. SECTION 5. The C1ty Clerk shall certlfy to the adoption of thlS Resolution, and thenceforth and thereafter the same shall be ~n full force and effect. APPROVED AS TO FORM: ~Wt,..;~ ~bert M. Myers 0 C1ty Attorney - 3 - . ~ . -J' ~..; "t .. e e Adopted and approved this 17th day of September, 1985. /IP..~,g~ )k/~ ~~r I hereby certify that the foregoing Resolution No. 7091(CCS) was duly adopted by the City CouncIl of the City of Santa MonIca a t a meetIng thereof held on September 17, 1985 by the following Council vote: Ayes: Councilmembers: Conn, Epstein, Jennings, Zane and Mayor Reed Noes: Councilmembers: None Abstain: Councllmembers: None Absent: Councilmembers: Katz ATTEST: ~,m/tf~ ~ LJc . ;TEM ll-F of Clty CtltCll Agenda of 9/17/85 Re 4Ituth Afrlcan Dlvestlture (Transcrlpt of portion of this item) .I ./ f?5: '-f --r /-- 0-- ;' 7 -~\( I 'f 0.J / - \; Staff Report was glven Epstein: questlons... \ rC \....\.\"1 --I - ~~! .' '1 \~'..' \~ . .' , \ D1ScusSlon was held: Myers: cemetery funds... Dennls: answered questlons .,~~--- Reed: attachrrent B... Zane: followup questlon on Epsteln's questlons Dennls: answer Zane: securlty problems re lnvestments... Reed: corrments re councllrrenbers' oersonal llablllty (Speaker from publlC, Brad Jones) : Conn: commend staff.... Reed: comments Zane: strengthenlng Clty POllCY... Conn: ~ move the staff report for ... ~:J~Hu.- ~"-'~ Reed: OK, thank you, Mr. Conn. OK, It's been moved and seconded and Mr. Epsteln wlshes to address the Counell. Epsteln: Yeah, I'd llke to glve my thoughts on this~ ~. I have some concerns about It and I thlnk we're dOlng the right thing but I have some probleros wlth lt, some reservatlons, and I'll Just state what my reservations are because I think that lS an lwportant part of thlS debate as well. I think I should preface lt by saylng that ~, the whole lOglc of the aparthe1d lS despicable Just as the lOglC of the segregation In the U.S. wasr ln fact 1 t' s worst. .JI6r, ~t, at the same tune,~, the fact 1S that there are other governroents that are worst 1n partlcular respects... .. 1.L.J11 ... ... page 2 transcr1pt e e Epsteln (contlnued): ...nevertheless, I bel1eve that its proner for us to put pressure on South Afrlca both on the federal and Zane: local level. I thlnk the key reason 1S what makes s~ Africa f dlfferent 1S 1tS the only country I know of that deprlves ~aJorlty of ltS cltlzens of rights as a matter of law on the basls of race... ...I would llke you to know lf you want to propose thlS (laughter, Jokes) lnvestment from Chll1, lid be wlll1ng to consider 1t. Reed: lye have the recommendatlons of the staff before us WhlCh are enumerated generally on ~17, I would 11ke to ask that . ln the recommendatlon for (or #4?) whlch 1S directlng me to tranSITU t thlS dluestment POllCY to all these people, that the staff draft the policy the letter and accoAplish In a Sllghtly shorter form than in the staff report so that -d~~l 1t can be In fact, dlrected and also add to that/the staff draft a letter to be sent to the chlef exec officersbf the banks w1th whow we do bus1ness w1th whom we are concerned about the1r pollcles, V1Z.a V1Z, loans to the prlvate sector ln S. Afrlca adv1s1ng them that the act10ns that we have taken were ln fact the flrst step 1n our efforts to ask for accountabllity and urglng them to contlnue to divest themselves of those relatlonshlps and hoplng that they to move any further. ~~..OK 1f wlll so that we don1t have there's no obJection to addlTIg that particular dlrectlve In , then we:before us the staff recownendat1on as moved by Mr. Conn and seconded by Mr. Epsteln to adopt the resolution and dlrect the C1ty Attorney to lssue the oplTI10n that1s requested to dlrect the staff to ... !io. ,. :;: .. page 3 transcrlpe e Reed (contlnued): implement the dlvestment polley as set forth, and then dlrect the tranSffilSSlon of thlS POllCY to all the peo?le we've enu~erated. Please call the roll. Shore: Councllmember Conn Conn: Aye Epsteln: Yes JennlDgs: Yes Zane: Yes Peed: Yes Shore: The motlon carrles Reed: OK, thank you very much. That theD~ leads us wlth one ltem left WhlCh is the request for closed seSSlon. Mr. Clty Attorney, wlll we need more than half hour In your oplDlon. )('xx,X ~ ,)o,R~) I (7Jl.-~'t.J . -L~ l"- 10- 1--- (S'i' ~ (~Jt, {IuJ~ / .... ~,... , I ,I oj Li e e /~.' S.lfjfl1~Ln '7-PL,/--t?I?Zr-N fJ &i!v>t-~~~ Santa Monlca, Californla June 6, 1985 r~, '~ (l .'~ A -'~ TO: Mayor and City COUDCll FROM: Clty Staff SUBJECT: Presentation on Divestment A leadlng expert on dl vestment policles, Robert Zevin, Senior Vlce presldent, U.S. Trust of Boston will be 1n the Los Angeles area on June 12 to testlfy before the U. S. Board of Regents and the Los Angeles Clty COUDC11. Between hlS appolntments he has agreed to spend some time wlth interested City, School and College officlals to dlSCUSS this issue. He will be coming to the City Manager's office on Wednesday, June 12 at 11:00 a.m. Unified School Dlstrict and College Boards and staffs have been lnvlted to Join lnterested Clty Cauncll and staff members for the dlScussion. Please let us know if you are lnterested in attending so that we may reserve an adequate Slze meeting space. Prepared by: Lynne C. Barrette Asslstant Clty Manager (afrlca) - 1 - << " ~-~ - .-- ...~.=---- Tin e- e 5-8: SQUId AFRICA DISINVESTMENT: P>"eseJ"lted was the -equest of Cour,cllmembe~s Carr. and Zarie to dISCUSS development of a POllCY of dIslnvestmept In [I-ms dealIng wIth South Af~lca. CcunCllme~be~ Conn Ir,t~oduced dlScusslor. Courcllmember Co~r. moved to d I-ec t staff to l~ventory a'1d deteriJll ne" the status of stocks the clty owns lY: their relatIonship to South Af:"lca; to ~nventory and determIne the status of fInanCIal lr.stltutlons In wh~ch the CIty holds money as lt relates to South Af-Ica; and to develop a pI al1 that punishes those corpo!"'at ions and f1 nano lal 1I'~StltutIOr.5 that de bUSll"leSS In South A.f"'lca by a systematlc plan to Wlthdraw Clty funds from those corporatlons or flnar,clal Instltutlons and that would provIde encouragement to corporatIons who a!"'e elther begInning to WIthdraw from Ir,vestment from South Af-lca or who have -efused to have anythIng to do with Investments I~ South AfrIca, wlth perIodIC reVIew and returp wIthln 60-90 days wlth this plar, and to agerdlze to allow for a publIC hearIng. Second by Cou~cllmember Edwards. With the conSent of the second, Councllmember Conn Included Ir, the motIon the suggestlo~ of CounCllmembe>" Katz to dlrect staff to analyze the effect of dlvestlture on the Clty monetarlly and speclflcally on pens 10f1 sand '"etl-ees and how, 1 f at all, 1 t effects them. D1ScussIon was held. (Couf1cl1member Zane entered the Chambe~s at 8:23 P.M.) Furthe~ dlScusslon was held. The motIon was approved by the followlrg vote: Councll Vote: U~ar.lmously approved 7-0 CITY COUNCIL MINUTES May 21, 1985 # .. Clerk:JC:DZ:fu~S~ Cl ty Councl1 tie_Lng: 5/14/85 Santa4ltnlca, Callfornla /4 -v MAY 1 4 1985 S-B MAY 2 1 1985 TO: ~ayor and Councllmembers FRon: Councllmembers Conn and Zane SUBJECT: D1Slnvestment of Flrms Deallng wlth South Afrlca It lS requested that Councl1 dlSCUSS a POllCY of dlS1nvest- ~ent ln flrns deallnq wlth South Afrlca. JC:DZ:AMS:JJ S-B MAY 2 1 1985 /4.:J:> HAY 1 4 1985 ...- e ~~r~ ')00- \0J.e cv~ ~\~ u CO(1 - I~..J ~::-........ i - .L d"-' .- tit e ;: 1 _-=~61~e ~_'.3 -"'-ed i~1 =, ;; 3 -," Q ~ - + U !13~ :-IUt. ."p;:: + ::!'::;~I'C!~ l t~......, _ -=-~.;.:::: e..- _T d j--'"ll?= CCJr--.tt~ ~= [it H-JI- ~ ~] ~ _" -:. n + e ,--~ -+ :=.. :.. -=. t- ~ i-~nn :::-1-10~E i~-~~Pk..-O~ ~~ -e ti ~C'~~APC'.~ '-:::::"I'ji'C,- [~a"ld C~H:::-T~I--.J _ ,~-,L~~ JC ~ !=I 1 111 ~ III 3't1 .JEr-~~..J I t-~l~ '-=. 1=_-JIJf-.~.H=~ C 1 ....te-~- t. f< ~T= L UI~!hiC L [! 1 C t-Lr--- l"=:: t 1 P e ;:;'EE~) L tJLlhll=~ ell ~e ~ n} :: -.... r- L-.wf'lt:.. c [~Ur-tCL - :=~ 1 'i--" 3!'- I - - ~ -.1::j I . - ~ -. ~d'=-1 ::ir 1 -.-- e-;~L T-::-~ ..... ..-~ e ~ - 'Qi..: 1...l. :=tcer:-C:3 IL=I d15CUS-= -:1l.rec.+lng == -:: 3';:- f + c. d ~ \.! e l 0 c. , 3 Ot-:J~l:~~' I:~'" i=:J:i == In lie 5 +M-=-n 1- l.n L:1 ppJ=, de=::! 2-1.1:10; v..Jl ft""" "= I:E u t ----I ~.r i""'" 1 Cd ..1. """l:j 1-.- e .....!-_... - - 'r ...:.."=- ~~~~ect ~n behGl~ '=i~ C.OlJn-C 11rieMbet-:: =-::tne anc P'I~' 5~ ~; Jl-'l~e 'r-. ~...ie;Ai "(.-,,-i,.f I ':=b+:3 lr-t=:-C:= .::j """'sdei c~rCln.:=!PC2 ue'I-::-IDpeo C1i...E t~EC" ,--= ~ +..... , CDl_in-= l-.L +tier.;:::, :3n(j tle1.ril~ con"=, lder e-'~ , ['";;'1.... ::eller3~ o Ir-ler 91=l lier ~""'Ien t a ~ : 1""'""1 -::, T l -I- 'J "T" l D [""I.s i:dJ.-~--L h:3i~l-=- i~ /erq....e.j :JrJr& dl::Tr1.0uteij -!-':) ~=.=~unc-ll'TlaMe{]e:--==- ~G~ LO~~lder~.lC~ ~n.j Gf" T tP.i~ 7' . I.~_-- - ....---..~ ---------~ ,. . DATE TO FROM SUBJECT: -- '" /30 CITY OF SANTA MONICA .zCt/ ,,--tPP z - t:?/ 1^aA SEP 9 '<leu INTER-DEPARTMENT MEMO August 27, 1980 Ann Shore, Clty Clerk Ruth Yannatta Goi~ay,{~yor Pro Tempore , ,1- Agenda Item L Vj// "I I would like to place on the agenda the quest~on of the adoptlon of a Councll POllCY regardlng City deposlts In banks wlth princlpal bank~ng relatlonshlps wlth a South Afrlcan entlty or banks holdlng as a part of their lnvestment portfolloS securlt~es issued by the South Afrlcan government. ,)( l \... \.. (\.., ~L- t~ ~ RYG:dar l.'~ - \ \ ~. c: l - --<.. ~ 1- '-- '-t L '-'__ .- <: ~ \....:_-'-~.......-'-'- "-\ L "-" '- -4- L-v -::- ~ L-- --.. S,L SEP 2 3 1980 J(_~_ ,+-\ ~ v ~ S,L SEP 2 3 1980 13 D SEP 9 t980 -- fit Jt)5C ~~l.rp-,,;t-A~' .r-_..~ p"I,t'Fj !":r1.~';:'- ..".. r...:.JI~~ JT o'"r -:: {')(,24 associated students ~'-lly 3:), 1980 ucla Dear PUjlic 8~~ic~2l; He wou2c. l.:.~e "to ~<=.-..; yo-:::- ~..::-:s::-:::.c::: -::::e ::-act that on Friday, July 18th, the Associa~s:. S--::::~e::::s __ --.....-! ~;:==-:: o:=- :::-_-=~0: 7cted in favor of the dives~ent of its f\L,Cs =~~~ ~ac~s ~~~~ ~~~~ .:.::.23~~::-:S .:.:: SJ~t~ A~rica. Associated Students or UCLA ope~c~~s t2~ cs~~~:'s _=:~~3~ c~-~~~~s stc~ 2nd all food serllces en the (CL..-'I. ca=:;~ ',~i~~ __ :...:.:::.:::_ ::::::?:-~-:::"';'6 2-~~~S-:: 0:: c.v"er $25,000,000. The dec:.sion further est~~~5~ec ~~e ~~~~~~::_g ~~~e~~~ =~~ ~~~~re ~~n~ing relatio~s~~?S~ Associatec S~~~e~~s 0= ~:~_ _____ ::~-: ~~::-::~:.= _ ?~inclpa1 banking re~atio:::ship ~Tit~ a fina.:-:-::2.~ ~~SL:'-:":~:':::-_ -....:.._:..::..::: =.:.:::'tE:::-: 1. p-a2-:1-::aL'1S a ?~.:.::c.:.?;o - ==::-.:.f:~::g re~"'--: .:.:::-_s::::p wi 1.].'J d South African en"'t-=:'~j-, O~ 2. hol~ ~s ~2~ c:: ~7=~e:::~ ~~~::8:=-O securities issued by the SO~~~ ~=~~~~ 6~=~~~=~. In adc.:..::.:.o:J.~ i~p1e~e~ta~=-~= c~ ="~::e~ --......-- .---- ::::._ __......_... n,~ -;;......~--. --~ ~eeting to ensure e~fectiye ~~?:iance rust be met by M2~ch 31, 1981. ~::e 38~=- ~-- -----.. -......--- .. - - - By ado?~.:.,-g ~~.:.s ~2_~~., ~s~J~.:.~~ec S~~~s;.~s ~:: UCLA joins rlye o~her U~iversity of Californ':'2 -:::2::-:?;.:.ses ~,,~e::'e .".35::;::;':'=.::e::: 3::-':;::=::::5 crga.'1izations have voted to move their ~unG.s' :.;: 3e~:<:e:'=~?, :::= S~::. :.:.eg~, -:: ?:.7e::nsice ~ DC Santa Barbara and DC Davis. The B02~d 0= =c=-:~o:"s c~==-s=-~~ ~~~~~r ~~::~:=-s~e~ ~he prlority of social responsi- bility over =c::et~. ga~= :.:: -::-~ ~?2 0= ~_,es~s~~s~ for the transfer in accounts ~ay cost ~ss~c~a~=~ S-:~~~::.~s ~_ ___ ~. =S::~~2::e~ S~O~QOQ. The majori~y of t~e board r.--em~er3, ~c-,.j-="'Il"'e~, cec:i:.==-:. __."- _ -:--::':5. ==---=-3~'::~:: ccst ,,^Tas 0::: seconda~.f iT'1po~tance. The Board 0= :~~~~~~ cec~5':'c= ~~~~ ~-::~gz~~~~-~y ~~?u~iates the notio~ oz enited States firr=:..s :":1 S0~:-: _:"~=~:;a ~:.-:-:: --:~ ~5 T.::::=~-::.es o=- c~2.:lge, 1t but rather points to the necessl~Y 0= ~~Ba<i~g a~ sc~=~~~~ ~~€S ~~~~ S~~~~ P~rica as a means of ending the unj l:st a?c:rt:-.2ic ::c-eg::.~~=. ta\:ing the -:c 3e~~ 1.5 Co s-=~::~=e=:.-: 0:: ----,.., .-- ::05::'~lon on nov~ent against enited we woule appreciate your the divestnent ~uestion. In v::e...; c= States eCO:1c::-",::c ~~-= r:a-:::"c:-...-..;:'=-3: s=B~se:--_::e .......... ~-.:=. C:'-llestTIlent l':":l~S ~.::.-:= ~==.:.s-: 3~:.:-=:-_ _:~:.::a :r-eg1 'TIe,. ?~~~ sincerely, . sident Student Association ?~d Gaines, :':ncergradua ~~ LJ. avrr/MrvQ - ~ouis D. Annmand, Vice President ~~e~al Affairs Officer G~aG~ate Student Association ../ Office of rhe Presldem InformaTIon ServIces J08 WeslKood Plaza Los Angeles. Califorma 90014 associated students ucla July 18, 1980 Contact. Be"':' Garber (213) 825-7068 On Fr~da~-, July lBt.'!, ,,:-"'1e ]l.3VC~ Board of Control voted in favor of the Cl "tJes t.'""':9r. t O-F ~-- ........ ---:::;, =ur:ds =ron banks that ~ave investments ~n sou~~ A=rica. Asec-~~ o?erates b~e country's largest on-c~~pus stude~t store and all =oJd serVlces on the UCLA campus with a total operating budget a= over $25 nill~on. The vote was 6 to 4 wiL~ a:l s~uGen~s O~ ~~e Board supportive of the measure. Board ?o:i~J =o~ future ~a~klng relationships outlines that ASUCLA shall ~O~ ~a~~ta~~ a ?~l~ci?al 3a~~ing Re1ationsh~p W1L~ a finan- elal i~st~~~~~o~ h~ic~ e~t~er : 1. ~aln~a~ns a ?ri~clna1 Ba~~lng Relationship wiD' a So~t, Africa~ ~~tl~Y, or 2. ~o:ds as nar~ ~= its lnvesboentportfo1io securities issued ~y L~e S~~~~ A=r1Cfu~ Government. ~ Fred Gal~es, U~cergra2~a~e ?reslde~~ of UCLA and C~a~rperson of t.~e Boare., stro:-!;ly sL;:':?0rted t.~J..s rr.easure. Gaines feels "t..~at It lS extra~ely l~appr~?rla~e for p$UCLA to support the govern- ~e~t of SO~~. A=~lca 2~C ~~s nractice of apartheid. 1 feel that . ASUCLA has ~aken a gi~c~ s~ep In pronoting a greater sense of social re5?O~sibility O~ c~~9uS and in the co~~unlty. I hope t..~at ou:::- ac-':.ions toda"' w::.11 set an example for our University and L,at o~~er orSaniza~ionsJ corporations and J..ndlVlduals will be proffi?ted ~o take s~~lar steps. We were fortunate to be able to take ~~e true feeli~gs of t.~e campus community and tie them to a posltive actlon aqa~nst the criminal apartheid policies of the South A=rlcan gover:l.."Cent. II In addit~on, =ur~'er action was ta~en at the meeting to insure effective i~?le~9~tatlon 0= the Board POI1CY~ Conplete cOMpllance wust be ~et by ~arch 3:, 1981. \. PRESS RELEASE