The delicate issue of South African divestment, which has split corporations and colleges along moral and business lines around this country, is now driving a wedge between the Maryland-National Capital Park and Planning Commission and the separate retirement board that administers more than $60 million in its employes' pension funds.
In June, the commission, which oversees zoning, recreation and planning in Montgomery and Prince George's counties, voted 5 to 3 to bar transactions with firms that have business ties to South Africa and Namibia, a territory controlled by the South African government.
At the same time, the commissioners, who oversee the agency's $70 million annual budget, urged its appointed retirement board to do likewise.
But the retirement board's trustees, who take pains to operate separately from the commission, voted on July 17 to adopt a milder version of the sanctions. They decided instead to divest only from those companies that do not voluntarily adhere to the Sullivan Principles, a set of antiapartheid guidelines developed with the help of the American business community.
Apartheid is the system of legally sanctioned racial segregation in South Africa. The Sullivan Principles require that businesses provide for integrated work places and other measures designed to protect black workers.
The rift between the planning commission and its retirement board is the first in the five years that they have operated as separate limbs of the same branch of government, according to officials.
"Since 1979 there have, from time to time, been questions raised about that relationship, but nothing of the magnitude that took place in the general counsel's opinion about the South Africa situation," said Thomas H. Countee Jr., executive director of the commission.
D.S. Sastri, the associate general counsel for the commission, said in an eight-page opinion dated July 10 that the commission, not the trustees, should decide how divestiture should occur.
But retirement system trustees took issue with Sastri's decision and got Jeff Zyontz, a trustee who is an attorney, to research the issue.
In his three-page report, Zyontz said Sastri, as attorney for both the commission and the trustees, had a conflict of interest in making any decision concerning the respective powers of both boards.
Based on Zyontz's conclusion that they are ultimately responsible for investments, the seven trustees voted to implement their own plan.
"The Sullivan Principles are very strict," said Jay Bixby, the administrator of the retirement system.
"They are putting more pressure on companies to do something, because if you just sell the stocks, most of them are not going to know you sold them," he said.
Bixby said the trustees' policy would affect approximately $4 million of the retirement board's more than $60 million in investments.
Countee said the commission's stricter policy would affect about $7 million in purchases and investments.
The difference of opinion between the two boards is disturbing a relationship that Bixby described as "normally a very compatible situation" and jeopardizing the overall moral impact of any new divestment policy, Countee said.
"From a standpoint of fiduciary responsibility, it is not good to divest from businesses in South Africa, or Northern Ireland or anywhere, if it would jeopardize the investments," Bixby said.
But Countee maintained that, "in the matter of investment decisions, the commission's decisions are paramount."
The trustees are scheduled to meet on Sept. 11 over the dispute, and the commission's divestment guidelines are to go into effect by Sept. 30.