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dam-l (Fwd) 4/20/99 WSJ: Some Shareholders Protest the Role Morgan S


------- Forwarded Message Follows -------
Date sent:      	Thu, 22 Apr 1999 14:13:54 -0700
From:           	Doris Shen <threegorges@irn.org>
Subject:        	4/20/99 WSJ: Some Shareholders Protest the Role Morgan Stanley
 	Played in Chinese Dam
To:             	irn-three-gorges@igc.org

April 20, 1999 

  Business and Finance - Asia
  Some Shareholders Protest the Role
  Morgan Stanley Played in Chinese Dam

  By MATT FORNEY 
  Staff Reporter of THE WALL STREET JOURNAL

  BEIJING -- An environmentalist attack on Morgan Stanley Dean 
Witter &
  Co. shows how difficult it can be to keep today's amoeba-like 
global
  companies out of trouble.

  At issue is China's Three Gorges Dam, now being built in mountainous
  Sichuan province. The dam will force more than a million people from
  their homes along the Yangtze River's banks and turn the mustard-colored
  waters of the river's upper reaches into a tremendous lake.
  Environmental activists inside and outside China oppose its
  construction.

  The U.S. government opposes it, too. The U.S. Export-Import Bank,
  which finances overseas deals involving U.S. companies, refuses to lend
  to the project. That has effectively barred U.S. companies from bidding
  for contracts related to the dam.

  Yet China International Capital Corp., a joint-venture investment bank
  35%-owned by Morgan Stanley, co-underwrote a domestic bond valued at
  nearly $250 million to partially finance the dam. That issue made Morgan
  Stanley the target of a shareholder protest at its April 9 annual
  meeting.

  "We are going to challenge every firm that attempts to fund the Three
  Gorges Dam," said Simon Billenness, author of the shareholder
  resolution.

  Had it been passed, the resolution would have required Morgan Stanley to
  issue a report reviewing its criteria for underwriting, investing and
lending.
  But the resolution was defeated, receiving only 5% of the votes cast.

  Yet in discussions at the annual meeting, John Mack, Morgan Stanley's
  president, distanced his firm from the joint venture. He suggested that
  his company's roughly one-third stake gives it little say over
  decisions, and
that
  Morgan Stanley executives are scarcely welcome at CICC, anyway. Mr. Mack
  said that of the seven Morgan Stanley people now seconded to the
  venture, "I think it will go down to zero shortly."

  CICC executives, however, disagreed with Mr. Mack's characterization.
  "We have 144 employees. Seven of them are from Morgan Stanley, and I see
  no reason to believe it won't stay that way," said Elaine LaRoche, the
  chief executive officer of CICC, who was herself seconded from Morgan
  Stanley. She noted that Morgan Stanley recently extended its management
  contract with CICC for two more years.

  Ms. LaRoche also said the shareholder resolution wouldn't affect CICC's
  future decisions to finance the dam, or any other project: "CICC makes
  its business decisions based on things independent of Morgan Stanley."

  CICC is China's only Sino-foreign investment bank, and its biggest
  shareholder is the state-run China Construction Bank. The company
  earned a pretax profit of $35 million on revenue of $50 million in 1997,
  the last year for which figures are available.

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