Banks doing business with Saudi Arabia may face Chicago's ire

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CHICAGO – Financial institutions and other businesses with ties to Saudi Arabia would face a ban on doing business with Chicago under an ordinance being proposed by several aldermen.

The legislation is in response to the killing of journalist Jamal Khashoggi, who was a Saudi national and permanent resident of United States.

After two weeks of denying it knew of his death, Saudi Arabia recently confirmed that Khashoggi was killed at the Saudi consulate in Istanbul on Oct. 2. Saudi officials have said it was an interrogation gone wrong, though their story is widely doubted.

Despite calls for action by the U.S. government to impose sanctions or take other punitive action, the Trump administration said it’s allowing Saudi Arabia more time to conduct its probe.

“It’s frustrating I think that Americans watch our government apparently unable to take action to express the revulsion of Americans at what we see taking place in Saudi Arabia and perhaps other units of government around the nation might join with Chicago as a way of expressing our repugnance,” said Alderman Edward Burke, chairman of the council’s Finance Committee.

The proposed ban would extend to banks that underwrite Chicago bonds, provide credit support, or invest city funds and the city would be barred from investing in institutions with financial ties to the Saudi Arabia. Firms would be asked to disclose any ties and given period of time to shed them or face the loss of business.

“Many times the city has undertaken this kind of process to encourage businesses to do what’s right,” Burke said.

Other sponsors include Mayor Rahm Emanuel’s floor leader, Alderman Patrick O’Connor, and aldermen Roderick Sawyer and Brendan O’Reilly.

The city has used its political muscle in the past to pressure financial institutions to take action.

They include the 1990 Anti-Apartheid Ordinance that imposed a financial penalty on companies seeking to do business with Chicago that maintained business ties with South Africa and a later ordinance that required firms seeking bond and other business to disclose their historical ties to slavery. The council also introduced in 1997 an ordinance to cut ties with banks that do business with Swiss governments as a means to press them to release money and valuables belonging to Holocaust survivors.

Most recently, Burke and Emanuel earlier this year introduced an ordinance that would ban city work with financial institutions that don’t agree to impose certain gun control policies on their retail business clients.

Banks warned that they could be forced to forgo city bond business due to the far-reaching scope of the ordinance. Fearing damage to its capital markets access, city officials put the legislation on hold for further negotiation.

It remains on hold.

“That doesn’t mean we shouldn’t raise these issues and discuss them and urge other units of governments” to do so, Burke said Monday of his sponsorship of the new ordinance.

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