[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

dam-l May 10, 1999 Bloomberg News: Morgan Stanley Asked Not to Help Fund China's Three Gorges Dam

Bloomberg News
Morgan Stanley Asked Not to Help Fund China's Three Gorges Dam
May 10, 1999 20:00

        New York, May 10 (Bloomberg) -- Morgan Stanley Dean Witter & Co. was
asked by environmentalists not to underwrite bonds that may help fund China's
Three Gorges dam, a project expected to flood hundreds of square miles and
dislocate more than a million people.  
        Morgan Vice Chairman Stephan Newhouse, Chief Legal Officer Christine
Edwards and Chief Strategic Officer John Schaefer met today with the
International Rivers Network, the National Wildlife Fund and others.
        "The meeting was a good start in our discussions," a Morgan spokesman
said.  The firm, the largest U.S. securities firm by market worth, owns 35% of
China International Capital Corp., which has underwritten domestic Chinese
bonds for the dam.  
        The environmental groups protested Morgan's China activities at its
April annual meeting and sent letters last week to Wall Street investment banks
urging they not help finance the Three Gorges project. 
        Among those receiving letters were Merrill Lynch & Co. and Salomon
Smith
Barney Inc., which tomorrow will price $500 million in bonds they're
underwriting for the China Development Bank.  The bank is a funding agency for
Chinese infrastructure projects and its top commitment is to fund the dam,
according to the bond issue's prospectus.  
        The mile-wide dam was started in 1994 and is expected to take 20 years
to finish. When completed, it's expected to generate more than 18,000 megawatts
of electricity for the country's 1.2 billion people, control damaging annual
flooding and improve navigation.

Millions to be moved
        The 400-mile reservoir it creates will displace at least 1.3 million
people and submerge 1,500 factories and hundreds of towns and archaeological
sites, IRN said.  It's also seen breeding disease because of poor sanitation
and drainage in the area, it said.  Inadequate engineering may also mean
problems with the facility's mechanics when it's finally working,
environmentalists say. 
        The World Bank and United States Export-Import bank refuse to support
the project, which IRN says could cost as much as $75 billion by completion
        The groups that met with Morgan expect to receive some form of
statement
on the firm's China environmental and social policy of statement in coming
weeks.  They will meet with the firm again next month, IRN executive director
Owen Lammers said after the meeting. 
        Letters to Merrill, Salomon and Goldman Sachs Group Inc.'s top
executvies asked them to follow minimum environmental and social guidelines
when doing business in China. 
        Goldman CEO was reminded of his position as co-chair of the Nature
Conservancy's Asia Pacific Council and his participation in China's first
international forum on the environment. Goldman underwrote a $1 billion bond
issue in China last year, of which $200 million is reported to have "found its
way" to the dam, IRN said.  
        Merrill chief executive David Komansky and Salomon Smith Barney head
Michael Carpenter were requested to stop tomorrow's bond issue.  
        Merrill said last week it was advised by CDB officials "that no
portion"
of the bond issues "will be used to fund the Three Gorges project."

--Lisa Kassenaar in the New York newsroom 212-940-1694 jh