September 15, 1999	atimes.com

China Three Gorges dam tests 'green' banking club By Abid Aslam CHICAGO - Leaders of an international movement for environmentally-sound banking have been bombarded with questions about their involvement in China's Three Gorges dam project. Environmental, health and human rights activists, who have protested against the construction of the dam for more than a decade, had pointed queries at a conference in Chicago last week which struck at the heart of a UN agency's effort to bring together global banking and environmentalism. Linda Descano, who chaired the steering committee of the Financial Institutions Initiative organized by the United Nations Environment Program (UNEP), found herself forced to answer charges that her company - Salomon Smith Barney - was raising money for the Chinese dam, under construction since 1994. Salomon, a subsidiary of Citigroup, was one of only five US firms to sign on to UNEP's ''Statement by Financial Institutions on the Environment and Sustainable Development'' - the declaration of broad principles outlined after the 1992 Earth Summit. Descano said her company decided to join the group because UNEP's declaration was ''sufficiently aspirational'' as to pose no threat. By contrast, most US banks had not signed on for fear of being taken to court over charges of failing to live up to the UNEP principles. There was no history of such lawsuits, she said, and the fear of litigation was ''not necessarily rational or based on any precedent''. Descano, who held the post of Director of Social Awareness Investment at the firm, declared: ''We are not involved in the Three Gorges dam. There is a perception that anyone who does business with 'China Inc' is responsible for Three Gorges, but the bonds we're handling are to raise general-purpose capital for the China Development Bank. None of the money has been earmarked for the dam.'' China Development Bank, formerly the China State Development Bank, was a leading government fund-raiser for the project, she acknowledged, but Salomon had received assurances from it that Three Gorges would receive no capital from a $500 million May 1999 bond issue for which Descano's firm was a lead manager and bookrunner. Activists remained sceptical, however. Doris Shen of the International Rivers Network challenged the firm to make public the promises it had received from the Chinese bank. ''Enough concern has been raised about the project to make it worth Salomon Smith Barney's while to say they have received assurances'', but those assurances would be worthless so long as they remained secret, Shen insisted. Apart from ensuring the Chinese bank's accountability, ''this is a litmus test of whether [UNEP signatory] companies have any real environmental and social guidelines or policies,'' she added. Descano sought to deflect the challenge, arguing that activists were playing politics with business deals. ''The NGOs are trying to engage in a war with China and involve anyone else. That's not constructive,'' Descano said. ''They're frustrated with governments' decisions and are looking for new weapons. We're not an appropriate weapon.'' Executives nevertheless admit to political considerations in their bid to tap existing and potential markets in the world's most populous country. ''The [Three Gorges] project's got big problems but China's an even bigger market. None of us can really afford to opt out of it,'' said one US investment banker. ''But to stay in, we have to maintain a relationship with the government [in Beijing]. We can't be naive about how projects get financed and the political pressures involved.'' The controversy highlights weaknesses in the Financial Institutions Initiative, both corporate and environmental. Analysts note that other UNEP signatories or affiliates also were involved, including Barclays Capital, Credit Suisse First Boston, Deutsche Bank of London, and HSBC Markets. Once they sign on to the agency's statement of principles, banks and investment houses essentially are left to monitor themselves with no independent oversight. The initiative's steering committee is dominated by the firms themselves, meaning that NGOs and other ''stakeholders'' have no seats. Operating largely as a club, the body also lacks an effective mechanism to question - let alone discipline - members who fall foul of the UNEP declaration. The UNEP initiative is ''a unique and important step forward'', acknowledged Julie Tanner of the non-governmental US National Wildlife Federation. ''But to have full credibility, it has to monitor its members,'' she stressed. Mike Kelly, coordinator of the UN agency's drive and a former banker, acknowledges those complaints and says that, in cases such as Three Gorges, UNEP tries to be a ''facilitator of dialogue'' between the warring sides. For their part, bankers caution that if the initiative ''had teeth'' with which to enforce standards of behavior, few firms would sign on. Chinese Premier Zhu Rongji has acknowledged that the Three Gorges project is plagued by corruption, shoddy environmental assessments, and poor construction. These problems, along with parliamentary fears of a crack-down against project critics, have surfaced in both local and international press. But the venture has long been a dream of Chinese leaders and won energetic backing from former premier Li Peng while still in office, and the country's powerful water ministry. Potential epidemics of disease stemming from the dam's 400-mile reservoir moved a leading British medical journal, The Lancet, to dub Three Gorges ''the Chernobyl of hydro-power''. The World Bank walked away from the project years ago amid warnings from Chinese and international experts that the dam, designed to help control floods while generating electricity, carried serious environmental, social and human-rights risks - and likely would not prove to be economically viable. ''It was a textbook-case disaster in the making,'' admitted one World Bank staffer. Private financiers then stepped in and project backers included Bank of America. The bank, although not among the 161 firms signing on to the UNEP declaration, was the first in the United States to subscribe to environmental principles established by the Coalition for Environmentally Responsible Economies and took prominent part in the UN agency's meeting. (Inter Press Service)

Front | China | Southeast Asia | Japan | Koreas | India/Pakistan | Central Asia/Russia | Oceania Business Briefs | Global Economy | Asian Crisis | Media/IT | Editorials | Letters | Search/Archive Cheap Holiday Packages to Rome Italy

back to the top ©1999 Asia Times Online Co., Ltd.

China Chinese Sex News | Asian Sex Gazette