NGOs Warn of Environmental Money Laundering
Six large international banks are currently arranging a $1 billion bond for China Exim Bank, the world’s third largest export credit agency. China Exim Bank is financing several environmentally and socially destructive projects in countries with abysmal human rights records. International Rivers Network and Friends of the Earth/US warn that given China Exim Bank’s track record, the pending bond issue will undermine the environmental standards of private banks and result in environmental money laundering.
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BNP Paribas, Citigroup, Goldman Sachs, HSBC, Merrill Lynch and Bank of China International are currently arranging a $1 billion bond issue for China Exim Bank. China Exim Bank is financing controversial dam projects with serious environmental and human rights impacts, including Merowe in Sudan , Yeywa in Burma , Nam Mang 3 in Laos , and Lower Kafue Gorge in Zambia . China Exim Bank, the world’s third largest export credit agency, has not adopted any international environmental or human rights standards. Its environmental policy is confidential.
In the last two years, private banks have significantly strengthened their environmental standards in the area of project finance. Corporate lending activities such as bond issues have so far been exempt from this trend. The Chinese government has also strengthened its environmental legislation in recent years. This legislation does however not cover China ’s assertive international economic policy. The failure of private banks to apply social and environmental standards when arranging bonds allows institutions such as China Exim Bank to finance projects for which they could not raise capital directly.
“Until China Exim Bank has adopted international environmental and human rights standards, banks should not provide finance to this institution,” Peter Bosshard, Policy Director of International Rivers Network, says. “By arranging China Exim Bank’s bonds on the international capital market, banks will help finance projects that violate their own standards.”
And according to Michelle Chan-Fishel, Manager of the Green Investments Program Friends of the Earth/US: “It is disingenuous for the banks to claim to be meeting environmental standards when what they’re really doing is environmental money laundering through China Exim Bank to finance projects that would never meet the banks’ own environmental standards.”
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A brief background paper on the pending bond issue of China Exim Bank is available at /camps/intl/eca/IRNFoECheximpaperJul05.pdf.