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5 December 2002 Edition

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Shareholder pressure on KFC over loyalist threats

The New York City Comptroller's office, along with New York State and the State of Minnesota, are taking action against Yum! Brands, the owner of Kentucky Fried Chicken, to demand that the fast food outlets in the Six Counties implement the MacBride Principles, barring the investment of city and state pension funds in companies that practice sectarian or political discrimination.

A resolution sponsored by New York City and co-sponsored by New York State was put on Friday, 29 November, formally notifying the Kentucky-based Yum! Brands that New York intends to put the issue before shareholders demanding that the MacBride Principles be implemented in all 28 KFC outlets across the North. According to sources in New York, the resolution is now filed and the company must send it to all its shareholders worldwide.

The company must respond to defend its investment franchise in the North. A vote on the resolution will take place in the spring at the company's AGM. However, it is likely that the company will implement the MacBride Principles before the spring AGM to nullify the pressure it has come under.

KFC is part of Yum! Brands, which has over 30,000 restaurants around the world including Taco Bell, A&W, Long John Silvers and Pizza Hut.

A spokesman for the New York Comptroller's office said: "We would like them (KFC) to implement the principles and to urge their franchises to stick by them and agree to independent monitoring. Failure to comply with this demand could mean the loss of huge amounts of money through disinvestment."

The move comes after KFC in the North was criticised over its handling of threats and intimidation of Catholic workers, which included the display of blatantly sectarian slogans in Antrim Town. In response, KFC management in the Antrim outlet transferred the workers involuntarily to other branches. The company later claimed that no worker had been forced to transfer.

In September, controversy erupted around the KFC outlet on the Lower Shankill Road, where a mural depicting UDA gunmen was painted on a wall of the restaurant.

That mural has since been removed after the New York City comptroller's office protested to Yum! Brands.

Currently, New York City has some 1 million shares in Kentucky Fried Chicken worth about $30 million. New York State owns 1.2 million shares, worth around $35 million. The money comes from police, teachers, fire department, and New York City and state employees pension funds.

Minnesota has some $3 million worth of shares invested in KFC. It is expected that Connecticut, which has some 256,000 shares, worth around $9 million, will also take action.

Recently, the Investor Responsibility Research Centre, which monitors the application of the MacBride Principles, wrote to Yum! Brands expressing concern about the mural and allegations related to sectarian intimidation.

Yum! Brands Senior Vice President Jonathan Blum replied: "After looking at the matter, I learned the painting was placed on the restaurant by members of a political faction. We informed our franchisee that we don't condone the association of our brands with any political agenda or organisation, and the signage would need to be removed. About two months ago, this was accomplished."

Blum went on to assure the Centre that "the franchisee fully complies with the British Equal Opportunities Commission and all other federal laws and regulations, including employment practices".

The franchise for KFC in the Six Counties is held by Herbal Restaurants, which has been the franchisee for 20 years.

A statement from office of William Thompson, the New York City Comptroller, said: "The full implementation of the MacBride Principles is the best way for Yum! Brands to handle issues of discrimination and prevent problems like this from occurring in the future. To this end, I am filing a shareholder proposal within the next few days with Yum! Brands to see that its franchise holders in Northern Ireland [sic] implement the MacBride Principles. Two-thirds of US companies in that part of the world already implemented the principles.

"Discrimination and sectarian intimidation is not only wrong, it's bad for business."

Sinn Féin councillor Martin Meehan told An Phoblacht that he welcomed the "persistence and highly professional intervention of the American-based, Investor Responsibility Research Centre with this endeavour to enhance employment practice at KFC's 28 outlets throughout the Six Counties".

Meehan added: "Discrimination and harassment is wrong in all circumstances. Therefore, I am deeply concerned that any American investor intervention or indeed that the MacBride principles are still necessary to enforce fair employment practice in the north of Ireland, despite all the new equality legislation arising from the Good Friday Agreement."
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