South African Loan Scrutiny Continues
Episcopal News Service. March 27, 1986 [86070]
NEW YORK (DPS, April 3) -- The Churches' Emergency Committee on Southern Africa (CECSA) has announced that a number of banks under pressure from churches have developed new policies prohibiting any future loans to South Africa. The Committee noted that, according to World Council of Churches reports, policy changes by several banks are "morally and fiscally responsible in light of South Africa's extremely unstable economic and political situation, and the continuation of apartheid."
Press reports on Feb. 20 indicated that South Africa already had developed a consensus with the banks on its debt rescheduling. In fact, the rescheduling process is continuing and 12 banks, including Citibank, J.P. Morgan and Manufacturers Hanover Trust, have formed a task force to prepare a new debt plan. These latter were among the ten banks that received a Feb. 11 telegram from the Committee urging them to oppose any extension of the repayment schedule and roll-over of South Africa's loans; demand immediate payment of all short-term credits; and not to renew any loans nor make new loans to the public or private sector until apartheid was dismantled. Presiding Bishop Edmond L. Browning was among the signatories of that telegram. (Eds.: see DPS 86028)
Bankers Trust, the nation's eighth largest bank, has recently adopted a policy prohibiting loans to South Africa's private sector. In addition, Chase Manhattan's 1986 proxy statement includes a Church-sponsored shareholder resolution calling on the bank to adopt a policy of no further loans of any kind to South Africa.
In its response, the bank states, "We believe that the current political and economic situation in South Africa is so inherently unstable and unpredictable, that it presents unacceptable risks for any new lending or voluntary extension of current lending. Prudence and the interest of shareholders requires our bank to press vigorously for the shortest possible extension" for debt repayment.
The Committee's co-chairs, the Rev. Avery Post and the Rev. Lorenzo Shepard, maintain that these actions are important starting points for broad and comprehensive sanctions against South Africa -- one of the key objectives of the Committee's anti-apartheid efforts.
"It is our hope that the U.S. banks will also follow the significant and timely decision (March 8) of Barclay's Bank in Britain, one of the largest foreign investors in South Africa, to make no further loans to that country and not to be a party to any debt rescheduling until the government has demonstrated it can reduce its debt, and abolish the apartheid system," expressed the co-chairs on behalf of the Committee. Post is president of the United Church of Christ, and Shepard is the president of the Progressive National Baptist Convention, Inc.
According to Tim Smith, director of the Interfaith Center on Corporate Responsibility -- a consultant group to the CECSA, these decisions "come at an extremely important time" and "exert a new wave of pressure on the Botha Government and other banks which are re-evaluating their policies." He added that pressure by Church shareholders, along with state and city pension funds, universities and others is growing rapidly and is having a significant impact on bank decisions. Shareholder resolutions to end all loans to South Africa will be presented at the April shareholders' meetings of Citibank, Manufacturers Hanover, Irving Trust, J.P. Morgan and Bank of America. Moreover, many of the churches are in the process of planning meetings between Church leaders and bank officials and evaluating the withdrawal of business from banks who continue lending to South Africa.
These churches' actions follow the mandate of the Harare Declaration, created by 60 Church leaders from throughout the world at a December 1985 "emergency meeting on South Africa" called by the World Council of Churches on behalf of the South African Council of Churches.
On Feb. 10, 1986, the CECSA decided to take immediate steps to inform U.S. lending institutions and to lay the groundwork for related tasks, including public policy briefings in Washington, D.C. and the June observance of the World Day of Prayer and Fast to end unjust rule in South Africa.