Bank of America: Pressure Mounts Over Guatemalan Involvement

Pressure is mounting on Bank of America to change its Guatemalan investment policy. After deflecting a challenge from church stockholders (see MM, March 1982), the bank is fielding questions from some of its largest shareholders, and from local human rights activists.

Bank of America is the largest private bank in Guatemala and has a history of close ties with wealthy Guatemalan landowners and the army officer corps, which has been implicated in many of the 17,000 murders in Guatemala over the past three years.

"We are more than troubled" by the allegations surrounding the bank's Guatemalan activities, says Katherine McKenney, who chairs the California State Teachers Retirement System's board of directors. The pension group owns 225,000 shares in Bank of America, worth over $4 million.

"Basically, there are two questions," McKenney says. "Do the shareholders want to align themselves with the ruling military junta, and do the shareholders want to maintain funds with risks of expropriation."

The concern of the State Teachers Retirement System is "primarily economic," says McKenney. The bank's large exposure in Guatemala is highly "risky" in view of the growing political instability there, McKenney claims.

Social concern also contributes to the pension group's misgivings, McKenney says. "The members do not want to subsidize the abuse of human rights generally," she notes.

Bank of America has tried to allay the fears of California's State Teachers Retirement System. "We met with the bank privately in February," says McKenney, and "they were most gracious." Still, "we are not satisfied with the posture of the bank," she says.

Another California pension group, even more significant to the bank, has begun to express an interest in the issue. The Public Employee Retirement System owns 2,035,800 shares in Bank of America, worth over $37 million, and accounting for about 1% of the bank's total common stock.

"We have in fact written to Bank of America asking for bank commentary" on its investments in Guatemala, says Sid McCausland, deputy executive officer of investments for the Public Employee Retirement System. Though this is "not a matter our investment committee has commented on or taken a position on," McCausland says, "we do have a general policy that corporate entities have social responsibilities to conform to the highest ethical standards."

Bank of America "has had inquiries from pension groups," says Ray Toman, public affairs officer for the bank. Toman would not, however, provide details about the bank's reaction. "We are not about to enter into a discussion with a third party about a privileged communication in response to a shareholder's inquiry."

The bank is also being besieged by a San Francisco group called the Guatemala News and Information Bureau, which opposes U.S. support for the Guatemalan government. "We are starting our campaign against the Bank of America's patronage of the Guatemalan regime," the group declared in mid-February, charging the bank with maintaining "a posture of support for the Guatemalan regime's campaign of military terror."

The group is urging people to write letters to the bank's executives asking them about the bank's Guatemalan investment policy.

"The object of our campaign is to make the Bank of America take a firm stand on human rights," the group says. The Archdiocese of San Francisco has supported the letter -writing campaign.

"We've generated a lot of interest," says Peter Harrington, one of the organizers of the campaign. "We're very surprised at how good our response has been."

The bank is writing back to "individuals who have inquired" about the Guatemala issue, says Toman, who claims that the "allegations about the bank and its so-called coziness with the elite there are just slanted," "irresponsible," and "untrue." He adds that the negative publicity is "of some concern" to the bank.