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DAM-L Press Advisory: Activists Caution Proceeds from China Sovereign (fwd)

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Date: Wed, 30 May 2001 16:24:24 -0700 (PDT)
Message-ID: <200105302324.f4UNOO523559@DaVinci.NetVista.net>
Subject: Press Advisory:  Activists Caution Proceeds from China Sovereign 

Bonds Could Fund Three Gorges Dam
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FOR IMMEDIATE RELEASE
MAY 31, 2001

FRIENDS OF THE EARTH
(510) 848-1155 ext 315
Michelle Chan-Fishel

INTERNATIONAL RIVERS NETWORK
(510) 543-3317
Doris Shen


China Sidesteps US Markets for Potential Three Gorges Dam Financing
Activists Caution Proceeds from China Sovereign Bonds Could Fund Dam

Major investment banks, including Goldman Sachs, JPMorgan Chase, Morgan 
Stanley Dean Witter, Deutsche Bank, BNP Paribas and Barclays Capital, are 
currently pricing approximately US$1.75 billion in bonds for the People's 
Republic of China. Activists warn that these bonds may directly or 
indirectly fund the Three Gorges Dam project in China. Although the bonds 
will be sold in Hong Kong and Luxembourg, sales were intended for the US, 
according to the Financial Times (May 16, 2001). However, the Financial 
Times reports, China decided to sidestep the US market due to pressure from 
activists, including those who diminished the initial public offering of 
PetroChina last year.

The Financial Times also asserted that analysts believe China may have 
avoided selling bonds in the US because of more stringent US securities 
disclosure requirements - especially in light of outgoing Securities 
Exchange Commissioner Laura Unger's decision to require more reporting of 
human rights related issues.

"The SEC and investors are increasingly expecting foreign issuers to come 
to the US markets with US levels transparency," said Michelle Chan-Fishel, 
Green Investments Program Coordinator at Friends of the Earth (FoE). "Three 
Gorges Development Corporation has a long history of avoiding 
accountability and transparency; they ducked World Bank funding and 
disguised Three Gorges fundraising as general obligation bonds for the 
China Development Bank and the People's Republic of China."

The preliminary prospectus for this bond offering specifically mentions 
Three Gorges Dam. However, the document only discloses the bonds' use of 
proceeds as supporting "general governmental purposes."

Following a 1998 US$1billion China sovereign bond issue underwritten by 
Goldman Sachs and Credit Suisse First Boston, IRN was notified that $300 
million in proceeds from that issue went to fund the Three Gorges Dam, 
recognized as one of the most environmentally and socially destructive 
projects in the world. The project is partly built, and the Three Gorges 
Project Development Corporation claims it will be completed by 2009.

In March 2001, five villagers from Yunyang County, an area slated for 
submergence by the Three Gorges Dam, were arrested and remain in detention 
after peacefully organizing petitions detailing inadequate compensation and 
mismanagement of resettlement funds. The men are being charged with 
disturbing public order, leaking state secrets, and "maintaining
illicit relations with a foreign country." The last charge refers to their 
contacts with international press in Hong Kong. Articles 19 and 21 of the 
United Nations Human Rights Declaration list the freedoms of expression and 
peaceful association as inherent and inalienable human rights. The project 
plans to forcibly displace close to two million people, the largest forced 
displacement ever for a single project.

"Construction of the ill-conceived Three Gorges Dam is proving to be 
socially destructive and economically unviable. Concerned shareholders and 
customers of Morgan Stanley, JPMorgan Chase and Goldman Sachs should demand 
transparency and accounting for the use of proceeds from such bond 
underwritings," said Doris Shen, Three Gorges Campaign Coordinator at 
International Rivers Network (IRN). An activist web site, 
www.floodwallstreet.org is mobilizing letters of protest to US investment 
banks and calling for a boycott of Morgan Stanley's Discover Card services.

###

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