Princeton May Protest South African Loan

PRINCETON, N.J.-- Princeton University trustees are considering protesting Citibank's proposed $250 million loan to the South African government, and if the loan is approved Princeton may divest its holdings in Citibank, university officials said.

The trustees' policy and budget sub-committee was scheduled to meet with Citibank officials to discuss the proposed loan. In the past, the subcommittee has met with officials from Morgan Guaranty Trust and Union Carbide to discuss princeton's policy on South African loans and investments.

Stanley N. Katz, chairman of the resources committee of the university council, said the committee probably will protest the proposed loan. Katz added that the committee probably will recommend that the trustees "consider divestment if a satisfactory response is not forthcoming from Citibank."

Direct Support

The trustees said in a May 1978 policy statement banks should not loan money directly to the South African government because "such loans... constitute direct support for the government."

Citibank previously had promised not to make further loans to the South African government. The loan would be the first by any American bank to South Africa's government in more than two years.

Citibank's loan also might violate a University of Pennsylvania policy that states that the university should not invest in banks making loans to South Africa unless the loans "substantially benefit non-whites." UPenn now has $1.5 million invested in Citibank.

UPenn General Counsel Mathew Hall said the administration will not officially discuss the issue until the trustees meet in January to discuss external affairs.

A Citibank spokesman said the loan would not violate UPenn's policy because "the loan agreement specifies that the money will be used to build three types of projects--hospitals, schools and housing for Blacks and 'coloreds."