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Home My WebLink About0546.000~ ... '45} ... ' , ".' ", October 1B, 1990 HONORABL£ CITY COUNCIL Palo Alto, Cdlifornia Members of the Council: Iltpor1; ia Brief , '. " , , / o This is an inf~rmation ~eport and no Council action is necessary. As the Council ~as informed in CMR 476:0, staff has been monitoring Security Pacific's withdrawal from American Depository Receipts (ADR) involvinq South A.frican securities. security Pacific now states they have terminated the issuance and services of covering securities issued by South African companies. On December 2, 1985, city Council directed staff to add to the City"s Investment Policy a statement prohibiting the "deposit, invest.ent, or use of City funds with banks, financial institu tions, invest1!lent finns, or other investment~type organizations 'Who Jjc business with either the public or private sector of South Africa or Namibia, so long as apartheid is the official policy of these countries~~ Staff incorporated this recommendation into the investment policy. On August 3,1990, staff received a letter from Mr. Jack Sheinkman, President of Amalqamated Clothing and Textile Workers unior., AFL CIO, CLC r~ardin9 the city's cur-:rent bank, Security Pacific. According to the Uninn""s Research Departrr.ent, Security Pacific, through several of its subsidiaries. has since January I, 1989 become a depositary for American Depositary Receipts (ADR) of a large number .of South African companies. An AOR is a dOCllment issued by a bank in which shares in a foreign company have been depos.ited~ These. receipts are then traded or. stoc'lc markets in the United states. The bank issuing the ADR must file "With the Securities and Exchange Commission. CMR:546:0 The union believes and staff dealings in -'OR"S may make it city's south Africa policy. o concurs that Security Pacific's e1 igible for sanctions under the On ~uqust 9, 1990, staff reported (CMR:476: OJ it \oIould monitor Security Paciric's vithdrawal from ADR's involving South African securitiea~ On August 21, 1990, Staff sent a letter to Security Pacific requesting information on their ADR involvement and Anti-Apartheid policy. Jl __ cuzity Pacifio Policy Attachment A is a letter from Security Pacific stating their terlPination of the issuance and serviciuq of American Depository Receipts coverinq securities issued by South African companies. At.tached to the letter is a Resolution troll Security Pacific Corporation d~ted December 16 J 1986 and an ~~ti-Ap3rtheid Policy dated Auqust 29, 1990. Staff is continuing to monitor Security Pacific's compliance with the City's Invest~ent Policy. GORDON FORD Tre~~ury Manager '" ' . ---((J l/(f{..'-.<.J4-0 !:'!fLY HARRl {uifectol" of" F' @,f. , f Jl1NE FLEMI G A'sistant city Related CKR:4J6:0 GBF/l!H:djr CMR:546:0 2 , , ·. <"-' o SECURITY PACIFIC NATiONAL BANK ONE EJ.jaAACI\Oi:.RQCE~rEP~ T:L(""'QNE (4''!'J~5-4{OO c;o.oEA~Mf~'T s{~K:E.s. DI ~I'$ION september 21, 1990 Gorc!on Ford Treasury Kanager City of palo Alto P. 04 Box 10250 Palo Alto, CA 9430) Dear Mr. Ford: SAt< F'RAI'JCISCD, Cl.LtFOANiA 9-11 i I I would like to report to you that security Pacific terminated the issuance and servicing of American Depository Raceipts C-ADRs·) cove~in9 securities issued by South African companies. Security Pacific National Trust Company, which is a New York-based sllbsldiary of security Pacific National Bank!s holding company and is the security Pacific entity engaged in the ADR business, continues to issue and service }.DRs for securities issued by companies of a number of othe.r nations. While I ca~~ot locate Mr. Warr,2rs' February 1988 response to the city. I have enclosed our Resolution in effect at that time as well as ~~r current Anti-Apartheid Policy of Security pacific corporation. ~incerely yours. ~. D a L. HockJ50n Vice President calLtxt • o Rl:SOl..lITI011 \,\,XLREA.,s" Security pac:ltic corporation dees not sUPPQrt; or con~o.n. the pO.liel" ot apartheid. in the .Republic of $ollth Atrica: and, WHEREAS, it has been th. policy of the principal subsidiary of this Corpor~tion, SecyrLty PacitiQ National Sank, no~ to make qovarnment or pUblic sector leans in the Republic ot SQ~th Atrica tor aaveral ysars and not to cake privata sector loans since 19151 and, WHrREAS, Security pacific National Sank .ndorse~ tne sullivan Principle. in 1979, and this Corporation iupporta the sa~e, and, WHEREAS I this corporation and its sub.!ciarie. and aftl1ites have no offices or personnel atatlon~d in the Republic ot South Atrica.; and, WHEREAS, tho Stat. of Calitornia re~ir •• that thes, policies ot this corporation and its sUbsidiaries .nd .!tiliate. Q8 tormally Idoptsd pursuant to Chapter 5 to Part 2 ot Oivision , ot Titl. 2 at the CQve~nment Co~. ot SAid state; NQW THEREFORE BE IT RESOLVED, that it is tho policy of Security Pacitic Corporation, ita .ubsi~iariis ~nd atrillatla: 1. not to expand existing, or establish new business operations in South Atrica or to rene. existlnq butiness &rr4nqe:enes or make a44iticnal or new business arrangements vith ths"qovarnment ot South Africa: and l 2. not to renew existinq lQans and not to make any additional or n.v loans to any south African corporation or to tha q-o'lernm.nt ot south Atrica.. Tho restriction. 0: this policy sholl not apply to loans or renevals nec ••• ary or appropriate to facilitate repayment ot loan:l cr other credJ.ts cOlUDitted or provi::lad b.tcra .1arn.l:4ry 1,. 1987. • I hereby ~ertif7 that the foresoing is a true copy ~f ... re~olyt1on adopted by the Bo~rd cf Directors of SecY~1t' Pacitic Corpot~tian at .. regular meet1nB of 5aid B~~rd ~f Dlr.ctarl held nec~~.~ 16, 198~ a~d that said usolut1ora has not been revoked ar,d 1::1 still ira rul1 for~e and .. fteeC.. D.ud: Oecl!.lDber 16, 19S6 '-Irittr'dl Jj. ix h .' Asst. S.c:r.,.r.ry SEC.~ITY PACIFIC CORPQRA!ION "/ security Pacitic Corporation Anti-Apartheid ,I=lol.i£y security Pacific Corporation dces not support or condone the policy of apartheid in the Republic of South Africa. In 1979 ~ securjty Pacific became a signatory to the sullivan principles. On December 16, 1986 the Bo~rd of Directors of Security pacific Corporation ad'Opted the following policy concerning South Africa on behalf of itself and its subsidiaries~ 1. Not to e~tend existing, or establish new business operations in South Africa or to rene. existing business arrangements ~ith the government of South Africa: and 2. Not to r~new existin9 loans and not to make any additional or new loans to any South African corporation or to the gcvernment of South Africa. Management has decided to specify that our anci-apartheid policies preclude participating in business transactions relating to south Africa, such as the following practices! 1. Buying or selling (for clients of our-own account) South African ordinary shares, ADRs, securities~ or other South Afcican investments or cOmQodities except for liquidation sales executed to reQuce a client "5 South African holdings ~ 2. Making a secondary market in any South African securities or ~~~er South African in .... estments. 3. Committing to make any loan or issue, confirm or advise vi~h respect to, any letter of credit expreszly for the purpose of fin~ncinq a transaction .... hich begins in, ends in, or passes through South Africa. ... Buying or selling private securities, commodities or othe:r investments for clients residing in South Africa or incorporated the~ein or located therein for bUsiness purposes or organized under the la'W of South Africa. • o s~ Maintaining any b~nk account ~ith a South African-based banlc:, or subsidiary the,reof, for securities clearing, custodianship cr any ather purpose. 6. Affiliating .. ith an insurance companj.~ \I,thich has reinsurance agreement(s) .ith a South African insurance company~ 1. Having an agent Qr ~mployee in South ~frica. a~ owning property in South ~frica. 9. Permittinq~ with or vithout consideraticn, our names, trademarks~ trade names, trade secr~ts, or patents to be used by an entity doing business in or with South ~frica. 10.. Paying a tax, le,,"y~ fee, duty, charge or similar sum to the government of South Africa except for those payments necessary to prevent the use _of our names, traaemarks., trade na~es, trade secrets, copyrights to patents in South Africa. 11~ Doing' business 'ilith the q.cvernment of South ".trica. Our policies will not be deemed to pI'ohibit activities required to assure repa~ent of credit e~tended before institution of our original policy in 1986, althol.:gh Security Pacific vill take expeditious action to repatriat02 such fur!ds as soon as possible. Robert li. Smith Pr~sident and Chief Executive Officer August 2~, 1990 •