International Rivers Network
April 5, 2006

IRN writes urging that, in light of recent evidence of human rights abuses at Three Gorges dam, Morgan Stanley should not commit to future bond underwriting or financial support for China Development Bank

Philip J. Purcell
Chief Executive Officer
Morgan Stanley & Co. Inc.
1585 Broadway, 40th Floor
New York, NY 10036

Dear Mr. Purcell,

In light of recent evidence of human rights abuses at Three Gorges Dam, we are writing once more to urge Morgan Stanley to commit to no future bond underwriting or financial support for China Development Bank, a major financier of Three Gorges Dam. According to recent reports (see enclosed articles) five people have been detained by police for organizing petitions on Three Gorges resettlement problems. Articles 19 and 21 of the United Nations Human Rights Declaration list the freedoms of expression and peaceful association as inherent inalienable human rights. The reports clearly demonstrate how project authorities suppress freedom of expression and association of those involved in the resettlement process. The China Development Bank (CDB) lists the Three Gorges Project Development Corporation as its top loan commitment. China International Capital Corporation (CICC) has, since 1995, been the financial advisor to the Three Gorges Project Development Corporation on overseas capital raising. Since Morgan Stanley is a 35% holder in CICC, and since Morgan Stanley was a participating underwriter of $830 million in CDB bonds in 1997 and 1999, we call on Morgan Stanley to refrain from being involved in purchasing and underwriting CDB bonds while funding from those bonds are leading to construction of Three Gorges Dam. We also recommend that Morgan Stanley communicate to Chinese authorities and to CDB representatives that it will not assist in fundraising for Three Gorges Dam. In February 2001, Bloomberg News reported CDB’s plans to auction 185 billion yuan (22 billion USD) denominated bonds. Most recently, on March 12, 2001, CDB announced the auction of 12 billion yuan in bonds. Given the concern of CICC’s financial advising on capital raising for Three Gorges Dam, has either CICC or Morgan Stanley been involved in purchasing CDB bonds? While US investment banks cannot buy RMB denominated bonds, please clarify whether Morgan Stanley through its joint venture China International Corporation, have been able to buy such bonds. We ask you to commit to no future direct or indirect financing for Three Gorges and China Development Bank, immediately. Thank you for your attention to this matter, and we look forward to your reply.

Sincerely,

Doris Shen
Three Gorges Campaign
International Rivers Network