Faith-Based Proxy Item: Laundering Policies
Garver, Rob, American Banker
Capitalizing on the post-Sept. 11 push to toughen anti-money-laundering standards, a coalition of faith-based institutional investors has filed shareholder proposals with six major financial services companies that would require them to adopt stricter rules than those in the new anti-terrorism law.
The resolutions -- sent to Citigroup Inc., J.P. Morgan Chase & Co., Bank of America Corp., Merrill Lynch & Co., FleetBoston Financial Corp., and Morgan Stanley Dean Witter & Co. -- were filed by members of the Interfaith Center on Corporate Responsibility, a coalition of 275 investors with a combined $110 billion of assets under management.
The resolutions will appear in the companies' proxy statements and will be voted on at their annual meetings next year, unless they are withdrawn by the sponsors or successfully challenged by the companies before the Securities and Exchange Commission.
The resolution sent to Morgan Chase, for example, was primarily sponsored by the Sisters of Charity of St. Elizabeth and asked the board of directors to "develop a policy that the corporation will provide no financial transactions, including no correspondent or payable-through accounts, for any financial institution that is not willing to provide the identity and address of the participants in transactions or relationships or the identity of the beneficial ownership of funds."
The anti-terrorism law enacted last month tightened the rules on correspondent and payable-through accounts, but it did not ban transactions with institutions that guard their customers' identities.
"I think one of the things that is incumbent on these institutions is to address these issues openly with all shareholders," said Sister Barbara Aires of the Sisters of Charity, who helped organize the effort.
The one-page resolution refers to recent laundering scandals at Citibank and Bank of New York, as well as the Sept. 11 terrorist attacks, in urging shareholders to adopt the proposal. "We believe that such steps will enhance the corporation's public reputation in this time of national crisis as well as forestall demands for possible additional government regulation."
Similar resolutions were sent to the other five financial institutions and were primarily sponsored by the United Methodist Church's General Board of Pension and Health Benefits (Fleet and Merrill), the Adrian Dominican Sisters (Bank of America), the Congregation of the Passion (Citi), and the Oblates of Mary Immaculate (Morgan Stanley).
Sister Aires said in an interview Wednesday that the groups would be willing to withdraw the resolutions under certain circumstances. …