Morgan Stanley Dean Witter, one of the world's top investment banks with more than eight billion dollars in reported revenues last quarter alone, is expected to unveil an environmental policy in the next month or so.
The flavour, details, and motivation behind the policy remain under tight wraps. Morgan Stanley spokespersons, having announced only that a policy was in the works, declined repeated requests for information and comment. The secrecy appears to have heightened anticipation among the New York-based international financier's critics.
"We'll see if Morgan Stanley turns these words into significant action," says Doris Shen, corporate finance campaign coordinator at International Rivers Network (IRN), a US-based advocacy group.
Shen and others have attacked Morgan Stanley for financing or helping to arrange funds for major infrastructure and energy projects in Asia that non-governmental organisations (NGOs) have said will destroy local environments and fuel human rights abuses. These include China's Three Gorges Dam and the Gormo-Lhasa Railway project in Tibet.
Environmentalists and Tibetan groups are calling on the bank to adopt guidelines akin to those suggested by the World Commission on Dams and the exiled Tibetan government in India.
According to a report released by environmentalists and Tibet advocates at Morgan Stanley's annual meeting in March, the investment bank is involved indirectly in financing of projects that violate several of these recommended guidelines.
'Rogue traders'
In 2000, the World Commission on Dams released a report recommending that no dam be built without the clear agreement of affected people on issues such as compensation and resettlement. Based on case studies, which included hydropower projects in China and India, the commission recommended that dam proponents commit to the strict prohibition of coercion and violence against communities affected by dams.
The Tibetan government in exile's investment guidelines similarly required that all development projects be implemented only after conducting a thorough needs assessment of the Tibetan people through field visits and interviews. All development initiatives, it said, should be preceded by cultural, social and environmental impact assessments.
The advocacy groups' report, "Rogue traders: A report on Morgan Stanley's financing of socially and environmentally controversial projects in Asia", criticises the bank's involvement in underwriting US$2.89 billion for the initial public offering of PetroChina Co Ltd, China's state energy company, on the New York Stock Exchange. It also condemns the bank's underwriting of a US$500 million bond issue for the People's Republic of China in May 2001.
'No say'
PetroChina is constructing an oil and gas pipeline from the Tsidam Basin in Tibet (or Qinghai province, in Chinese) to the Chinese province of Lanzhou.
Such oil and gas exploitation on the Tibetan plateau, according to the Free Tibet Campaign and Students for a Free Tibet, will serve to consolidate Chinese control and occupation of Tibet.
"Local Tibetans have no say in the project despite the significant environmental degradation it will cause," says the report.
Tibetan groups have become even more angered at Morgan Stanley's underwriting of Chinese bonds since December last year, when China confirmed that proceeds from state bonds were to be used on the Gormo-Lhasa railway. Activists say the railway threatens to degrade Tibet's fragile high-altitude ecosystem and will facilitate an influx of Han Chinese settlers and the increased militarisation of Tibet.
"Morgan Stanley needs to adopt social guidelines as well as environmental policies to ensure that affected people will be at the table," says John Hocevar, executive director of Students for a Free Tibet, based in New York.
The report also criticises Morgan Stanley for helping Asia Pulp and Paper (APP), Indonesia's biggest pulp and paper producer, and its subsidiaries raise US$2 billion during the 1990s. The investment also holds equity in APP, say the activists.
Conservation organisations have long argued that that pulp and paper facilities in Indonesia have spurred illegal logging and caused conflict with villagers and indigenous communities who live in the forest. Land disputes have led to violent clashes with security forces, says the report.
Three Gorges dam
Groups also voice concern about Morgan Stanley's involvement in the Three Gorges Dam, dubbed by environmentalists as the Chernobyl of hydropower. The dam, to be completed between 2009 and 2013, would be the world's largest and would create a gigantic reservoir in the middle of the Yangtze, China's longest river, forcing more than one million people from their homes, according to official and unofficial assessments.
The World Bank and US Export-Import Bank have shunned the project, citing social, environmental, political and financial concerns.
Environmentalists have been particularly concerned about Morgan Stanley's involvement in managing bond issues for the China Development Bank, which considers Three Gorges Dam a top loan commitment.
Morgan Stanley says it has received assurances that bond proceeds did not go to the hydropower project but IRN's Shen says the bank has ignored her repeated requests for information about the accounting and reporting measures used to ensure that bond proceeds do not support the dam.
Groups are also concerned about Morgan Stanley's involvement in the China International Capital Corporation, which is managed and 35 percent owned by Morgan Stanley. The corporation serves as the Three Gorges Project Corporation's advisor on raising overseas capital.
"We ask that Morgan Stanley refrain from raising capital for the Three Gorges Dam and its intermediaries," says Shen in a letter sent last month to Morgan Stanley's CEO Philip Purcell. The letter points out that a number of major financial institutions have taken action to steer clear of the Three Gorges project. Bank of America, for example, stated in its 1999 environmental progress report that it prohibited any financing of the project.
