Quietly Following Policy

It's been almost three years since 3500 students would through Cambridge in a torchlight march to protest Harvard's financial ties to the apartheid government of South Africa. As a matter of fact, the investments controversy has been all but forgotten.

But last fall, long-graduated protesters won their biggest single victory. Following a policy adopted in the heat of the controversy, Harvard sold more than $50 million in notes and a certificate of deposit after Citibank announced it would join a consortium of banks extending a multimillion dollar line of credit to South Africa.

When Harvard's Corporation released its policy on South Africa in April 1978 it carefully avoided outright prohibitions on investing in companies doing business in South Africa, recommending instead, and to the anger of many students, a case-by-case review. But the corporation noted an exception to the case-by-case method: "...loans to the South African government and state-owned corporations constitute a more direct support of apartheid," the report stated.

The rule has been applied only once before, when Morgan Guaranty Trust refused to say where its loans were going. But when Lawrence F. Stevens '65, secretary to the Advisory Committee on Shareholder Responsibility (ACSR), came across news reports of the Citibank loan in late September, he says he knew he had little choice but to inovke the rule once again.

After a trip to New York to meet with Citibank officials, Stevens returned to Cambridge to confer with Harvard's treasurer and other officials. Within days, the sale of the $5 million certificate of deposit and the $45 million in floating rate notes had begun.

"The loan is for housing, medical care and education in the Black townships," Robert Brannan, Citibank's vice president for international public affairs, said Wednesday. "We went over all this with the Harvard people, and I thought they understood the purposes of the loan. We think it worthwhile," he added.

Brannan said that Citibank had talked to "a number of universities" since the news of its South African loan emerged. He named Princeton, Yale, and "two or three others," but said he did not know what action, if any, those institutions had taken.

Selling the Citibank holdings took Harvard until early January and cost the University an undeterminable amount "measured in the millions of dollars," Michael Thonis, a partner in the Harvard Management Co., said this week.

Though University officials later in the week said the loss may have been smaller and though Thonis stressed that it was "impossible to quantity" exactly the costs of the early sale, he did say "the market was moving in the wrong direction" at the time of the divestment.

Though the sale and other such actions were exactly what demonstrating students demanded in the spring of 1978, some of those activists said, after they heard of the transaction, that they were unhappy it had been done in secret. "The whole point of these things is to do them publicly," Pat Flaherty, a member of the ACSR said, explaining that public sale would focus attention on the apartheid South African regime and help persuade other banks to avoid the country.