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DAM-L Activists Warn Investors about Banks of the Yangtze (fwd)
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Date: Mon, 4 Jun 2001 13:21:52 -0700 (PDT)
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Subject: Activists Warn Investors about Banks of the Yangtze
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ENVIRONMENT-FINANCE: Activists Warn Investors about Banks of the Yangtze
By Danielle Knight
WASHINGTON, May 31 (IPS) - Continuing with their effort to block
financing of China's Three Gorges Dam, environmentalists are warning
investors that bonds to be sold soon will indirectly finance the mammoth
hydropower project that critics say will be a social and environmental
disaster.
Major investment banks, including, Goldman Sachs, JPMorgan, Morgan Stanley
Dean Witter, Deutsche Bank, BNP Paribas and Barclays Capital, are currently
pricing approximately 1.75 billion dollars in bonds for the People's
Republic of China.
The banks maintain that the use of proceeds from the bonds is not slated for
the dam but will support ''general governmental purposes''. But environmental
groups charge that the bonds indirectly fund the dam, the largest hydropower
project in the world, through the China Development Bank and other
state-run institutions.
They point out that the preliminary prospectus of the bonds specifically
mentioned the Three Gorges Dam.
''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,'' says Doris Shen, who co-ordinates a
Three Gorges Dam campaign at International Rivers Network (IRN), a
California-based advocacy group.
Proponents say the dam is essential to control floods and provide
electricity. Critics counter that it will generate only questionable
economic results but
definite environmental and human rights problems.
The controversial project is expected to be completed in the year 2009 at a
cost of 203.9 billion yuan (24.6 billion dollars). The 185-metre-high and
23-km-long
dam will power 26 generators with a capacity to produce 700 megawatts of power
each.
At the same time, its reservoir will submerge an area of 632 square
kilometres, affecting 365 townships in 21 cities, districts or counties in
Sichuan and
Hubei provinces, displacing more than one million people. It will also put 657
factories, hundreds of archaeological relics, and 28,400 hectares of
farmland and
orchards under water.
Already, many locals are being forced to move from the Yangtze's fertile
banks to what, in most cases, will be less fertile land on slopes.
In March, five villagers from Yunyang Country, an area scheduled to be
submerged by the reservoir created by the dam, were arrested after organising
petitions detailing inadequate compensation and mismanagement of
resettlement funds.
The five men remain in detention and have been charged with disturbing public
order, leaking state secrets and ''maintaining illicit relations with a foreign
country''.
''Construction of the ill-conceived Three Gorges Dam is proving to be
socially destructive and economically unviable,'' says Shen.
Activists say completion of the dam is not guaranteed, despite the Chinese
government's insistence that it is. As costs for completing the dam
increase, the
demand for foreign assistance is growing, they argue. In 1992, the official
cost of the dam was 11 billion dollars, but now some estimates for
completing the
dam now exceed 75 billion dollars.
The dam's future, ''rests squarely in the hands of international bankers and
investors'', says Dai Qing, a vocal Chinese environmental activist who
opposes the project. ''Only if they continue to lend to this project can
this disaster
continue,'' she says.
The World Bank, the US Export-Import Bank and the Asian Development Bank
have all refused to finance the Three Gorges project. But environmentalists
are accusing investment banks of stepping into the gap, through the
underwriting
and pricing of Chinese bonds.
The Financial Times reported in mid-May that sales of the bonds were
intended for the United States as well, but following pressure from
activists including
those who diminished the initial public offering of China's state-run
energy company,
PetroChina, last year, China decided to side-step the US market.
China may have also avoided selling the bonds in the United States because
of new, more stringent securities disclosure requirements, according to
Michelle
Chan-Fishel with Friends of the Earth. Outgoing Securities and Exchange
Commissioner
Laura Unger, for example, required more reporting of human rights related
issues.
''The Securities and Exchange Commission and investors are increasingly
expecting foreign issuers to come to the US markets with US levels of
transparency,''
says Chan-Fishel.
She says the Three Gorges Development Corporation, which is constructing the
dam, has a history of ''avoiding accountability and transparency''.
The state-run corporation ''disguised Three Gorges fundraising as general
obligation bonds for the China Development Bank and the People's Republic
of China'',
she says.
Activists like Chan-Fishel are encouraging people in the United States to
directly question the banks about the Chinese bonds if they have a bank account
credit card, retirement account, or own shares in one of the financial
institutions
underwriting the bonds.
Since last April, International Rivers Network has called on people to cut
up their Discover Cards, a credit card service provided by Morgan Stanley Dean
Witter, one of the banks underwriting the Chinese bonds.
''It's time for customers to understand clearly how their money and business
can be used as leverage to hold the company accountable,'' says IRN's Shen.
(END/IPS/EN/IF/dk/da/01)
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