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HomeMy WebLinkAbout0148.091• ----------..---- ~ ':w F~ary 14~ 1991 THE HONO~~LE CITY COUNCIL Palo Alto, California Members of the Council: This is an informational report and no Council action is necessary. The Government of South Africa is making progress towards repealing apartheid laws. Staff will return to Council with a recommendation to amend or remove the restrictions contained in the City'S State­ aent of Investment Policy, when the President and the Conqress suspend or modify the restrictions contained in the Compreh~nsive Anti-Apartheid Act of 1986 or the African National congress recommends liftir~ the sanctions. If neither event occurs, staff will return with an update vhen the policy is reviewed as part of the normal budget process. 'actgrgund The statement of Investment Policy, reviewed and amended by the City council on May 14, 1990$ contains the following paragraph on apartheid: The city of Palo Alto is prohibited from depositin9'1 investing $ or using City funds with banks, financial institutions, investment firms, O~ o~~er investmant-type organizations \."hich do busine5s with either the public or private sector of South Africa or Namibia so long as apart,heid is the official policy of those countries. CKR:14!:91 steff has ca.refully monitored this policy. Most recently, on OCtober 18, 1990 in CMR:546:0, staff reporte.d that Security Pacifi~ Bank terminated the issuance and services of American Depository Receipts (ADR), which are used for covering securities issued by SOWth African companies. At that ti~e staff indicated that they would continue to monitor the policy ~nd ke~p the council informed of developments. ~e current restriction has not adversely affected the high rate of return on the City' 5 portfol io. During 1990, staff placed $97 million in inv~stments. Approximately one-half ot the purchases were treasury bills, and most of the other invest~ents were short­ term investments in Certificates of Deposit with five strong savinqs and loans in california. All investments were completely free of the South Africa concern. The return on the portfolio was 8.94 percent for 1989-90 and 8.78 percent for the first six months of 1990-91. curreDt EVtpta in South Africa News reports indicate that President F. W. de Klerk has introduced legislation aimed at dismantling apartheid in South A.frica. On Oecember 15 6 1990~ leaders of the European Community nations met in Rome and lifted a ban imposed in 1986 on new investments in South Africa as a reward to the initiatives by Mr. de Xlerk. However, at the sa.me tim.e, the African National Congress appeale.d for sanctions to be maintained against South Africa. 0., February 1, 1991, Kr. de klerk asked Parliament to repeal all legal bulwarks of apartheid: the Group Areas Act, which mandates residential segregation; the Land Acts of 1913 and 1936~ which reserved most of the land for the ~hite minority; and the Population Registration Act~ which classifies South Africans b)" race. The state Department in WaShington hailed Hr. de Klerk~s proposels, but pointed out that not all political prisoners in South Africa have been released; until they are, the sanctions mandated by the Corr,prehensive Anti­ Apartheid Act of 1986 remain in place. fUture Staff Action The Comprehensive Anti-Apartheid Act enacted by the U. s. congress in 1986 provided that sanctions would end when certain actions were taken by the Government of South Africa. It further permitted the president to suspend or modify sanctions when most of the desired actions were ta~en. steff will return with a recommendation to &Blend or remove the restrictions in our Statement of Investment policy if the President suspends or modifies the O~ S. sanctions 6 or t.he ac.tions taken by the Governr:r:ent of SOuth Africa are sufficient tor the African National Congress to recommend lifting the sanctions. CMR:148:91 ~i ' '. If neither event occurs, statf recommendation ot any changes in of the normal budget process. Respectfully submitted, ~~p~ GORDON B. PORl) Treasury .Manager ;, ", will return with an update and the wording of the ~~licy as part Related Staft Reports: CKR:476:0 CHR:S46:0 <:MR: 148: 91 ..