Citigroup's Involvement In Wood Products and Paper

originally compiled by George Draffan

for the Rainforest Action Network

Rainforest Action Network Citigroup campaign

Contents

Part 1: Overview of Citigroup
History and Global Presence
Part 2: Citigroup Involvement in Forest Destruction
Citigroup's Involvement in Wood Products, Oil, and Mining
Preying on Debtors: Forests as Loan Payments
Old Growth Forests as Collateral: The Case of Maxxam
Oil and Gas and Mining
Institutional Shareholding in Wood and Paper Operations
The Santa Fe Pulp Mill
Real Estate and Construction
Interlocks with Other Corporations
Taxpayer Subsidy of Citibank

Part 3: Citigroup Project Details, Listed by Location

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Citigroup
corporate website

 
 

 

Part 1: Overview of Citigroup

Citigroup headquarters

399 Park Ave, New York NY 10043

telephone 212-559-1000

toll free: 800-285-3000

fax 212-793-3946

website http://www.citigroup.com

 

History and Global Presence

Founded in 1812 by the first commissioner of the U.S. Treasury. Operating in London by 1902 and Buenos Aires by 1914; had a hundred foreign offices by 1939. James Rockefeller became president of the bank in 1952. By the 1990s Citibank was the largest U.S. bank and a leading issuer of credit cards, and proudly pointed out in its advertisements that a large percentage of Americans owe money to its VISA, MasterCard, Carte Blanche, and Diners Club accounts. By the early 1990s, Citibank was operating in 90 countries and its $232 billion in assets were spread from the U.S. (57 percent), Europe, the Middle East, and Africa (21 percent), Asia and the Pacific (13 percent), and Latin America (7 percent). Citibank is a major force in international finance; its loan exposure in foreign countries, especially in the Third World, became a problem in the 1980s, and has sought new ways to make money without the risk of catastrophic loan defaults.

"Citibank, which has seen its Latin American earnings pitch and yaw through the years, thinks it has finally figured out a way to make stable, relatively risk-free profits in the region. Riding a wave of free-market policy changes in the region, the New York-based unit of Citicorp has, with little notice, become Latin America's largest administrator of private pension-fund accounts. In the past five years, it has set up pension-fund companies in Argentina, Chile, Colombia, Mexico, Peru and Uruguay that as of June managed a total of about $7.1 billion in assets for 2.8 million clients. "This isn't a traditional core business of Citibank's, but it will be," says Ricardo Zabala, the Chilean in charge of the business. While small at present, 'It's like a taxi meter, turning over incrementally moment by moment . . . in a few years, it could be vast.'... In Latin America, at least, Citibank has long been the dominant U.S. commercial bank, outlasting scores of other lenders that flocked to the region in the 1970s only to flee during the 1980s debt crisis... Citibank not only is adept at managing the big numbers of clients that characterize the pension-fund game, it benefits from its generally high-income banking-client base in Latin America. 'Basically, we try to do as much cross-selling as the law permits,' says Mr. Zabala. Under Latin American private pension-fund schemes, clients are charged fees based on a percentage of their income rather than assets under management. The key to profits in the pension-fund business 'is going after the people who make the most money,' says Morgan Stanley, Dean Witter, Discover & Co. analyst Rafael Bello. 'That's where Citibank has an advantage over the others.'"

Other new financial instruments, such as ADRs, (American Depositary Receipts, which represent an interest in underlying shares in a foreign corporation to facilitate trading in the United States), have proliferated as globalization continues to seek new investors and new investment opportunities -- such as the privatization of public forests (see Argentina and Brazil entries in Part 3).

"Once a novelty that appealed only to adventurous investors, depositary receipts have gone mainstream as more and more portfolio managers and individual investors use them routinely to buy stakes in a burgeoning number of companies around the world... Initially the preserve of broker-dealers looking for arbitrage opportunities, demands for alternative sources of capital produced by large-scale government privatizations catapulted the American depositary receipt (ADR) market into a new role in the international marketplace in the mid-1980s... The significance of the emerging markets to the ADR/GDR boom cannot be overestimated. Citibank reported that in a major shift, programs from the emerging markets outdistanced those from the developed markets (57% versus 43%) in 1997 as companies such as Taiwan Semiconductor, Hungary's Matav, Russia's LUKoil, Singapore's Asia Pulp & Paper, and Hongkong's China Telecom came to market with substantial offerings."

 

In 1998, a new Citigroup with $668 billion in assets was formed from the merger of Citicorp and Travelers Group. The new Citigroup maintains 176 U.S. offices and 283 offices in 100 other countries, and claims that 250 of the Fortune 500 companies use its services. "At the heart of this domination is Citibank's global network: its impressive grass-roots presence everywhere from Vietnam to the Ivory Coast. It has had a branch network in Asia for 97 years, Latin America for 83. It claims to operate in more than 70 emerging market countries, and in that regard is peerless."

Citigroup had over 1,2000 subsidiaries at the end of 1998, ranging from banking (Citibank), brokerage services (Salomon Smith Barney), mutual funds (Primerica), property and casualty insurance (Travelers Property Casualty), investment companies (Sterling LLC, Commercial Credit), and retirement investments (Travelers Life & Annuity).

Citigroup owns non-financial operations as well, such as real estate and telecommunications and computer companies. In 1997, by National Semiconductor sold computer-chip industry pioneer Fairchild Semiconductor to a group which included Fairchild managers and Citicorp's investment unit Sterling LLC. Citigroup also a series of companies devoted to natural resources-based extraction, manufacturing, and commodities trading:

Celulosa Argentina S.A. (Argentina)

Citicorp Petrolease, Inc. (Delaware)

Citicorp Venture Capital Ltd. (NY)

Citicorp Ventures Philippines, Inc.

Donat Investments S.A. (Bahamas)

Genesis Crude Oil, L.P. (Delaware)

Genesis Energy, L.L.C. (Delaware)

Genesis Energy, L.P. (Delaware)

Phibro (Asia) Pte Ltd (Singapore)

Phibro Commodities (England)

Phibro Energy Clearing, Inc. (Delaware)

Phibro Energy Production G.P. Inc (Delaware)

Phibro Energy Production (Delaware)

Phibro Futures and Metals Ltd (England)

Phibro GmbH (Switzerland)

Phibro Holdings Limited (England)

Phibro Inc. (Delaware)

Phibro Resources Corp. (Delaware)

Tissucel S.A. (Argentina)

Turavent Oil AG (Switzerland)

 

Citicorp was one of the five corporations used as case studies in Richard J. Barnet and John Cavanagh's 1994 book Global Dreams: Imperial Corporations and the New World Order.

 


Part 2: Citigroup Involvement in Forest Destruction

Banks create and maintain financial relationships. Citigroup and its subsidiaries are involved in dozens of economic projects affecting forests, and the involvement takes many forms, including direct financing, underwriting of stock and bond sales, debt-for-nature and debt-equity swaps, direct shareholding, beneficial shareholding, interlocking directorships, and many others. Citigroup has at least two formal corporate divisions and several subsidiaries which focus on natural resource extractions: its Forest Products Division and its Energy/Mining Division. Citigroup subsidiaries invest directly in corporations operating in the these industries, loan money to them, and underwrite corporate or government financial instruments such as stocks, bonds, and notes. These arrangements are sometimes revealed in industry publications, news accounts, or news releases by the parties involved, and form the bulk of the evidence presented in Part 3 below.

 

Citigroup's Involvement in Wood Products, Oil, and Mining

Citibank's Forest Products Division (based in Helsinki, Finland, with offices in New York, Stockholm, Toronto and in other countries with strong pulp and paper industries) and Energy/Mining Division (based in New York, with offices in London, Houston) offers financial services (in other words, debt) to corporations around the world.

Citibank's head of global structured finance in the U.S. and its head of global forest products for Citibank in Finland wrote an article urging their clients not to get left behind in the wave of industry mergers, but to compete successfully in globalization, which provides endless opportunities for growth and expansion. Paper companies should "develop a global presence and scale that allows businesses to market a range of products in various geographic regions. As a group's cost of capital comes down, the company will find it easier to extend its competitive advantage and improve financial performance. This will attract a broader and deeper investor base, which will drive the cost of capital lower still, starting the process all over again." "In this world, only the strong will survive, but the question is how to become one of the rich and strong." Part of successful competition in this environment is the need to "develop low cost operations and economies of scale [and to] develop and manage an efficient combination of raw material base and manufacturing facilities." "Companies are going to have to convince the marketplace that they are responsible corporate citizens, otherwise projects will become that much harder." The authors note that "Citibank pioneered asset-backed securitization 15 years ago" and encourage potential clients to choose Citibank financing. (See the section below on Maxxam for the results of Citibank's pioneering use of forests as assets).

Many examples of Citibank financing of wood products, oil, and mining projects are detailed in Part 3. A few examples will be introduced here to suggest the variety and complexity of the financial arrangements.

An example of financial services involving forests is Citibank's recent syndication of a $275 million loan to Rayonier Timberlands for its acquisition of 980,000 acres in the Southeastern U.S. from Smurfit-Stone Container Corporation. Rayonier owns more than two million acres of land in the U.S. and in New Zealand.

Hedging has been created to help corporations and their investors to avoid the traditional cyclical swings associated with the paper industry's overcapacity.

"U.S. pulp and paper producers and consumers, buffeted in recent years by extreme price volatility, are taking advantage of hedging tools being offered by a small number of companies. Enron Capital & Trade Resources... International Forest Products Corp., and Citibank... are offering customized swap agreements which allow buyers and sellers of pulp and paper products to offset some of their price risk. Enron and Citibank have been marketing their contracts for about two years, but there has been a surge of interest in recent weeks. The typical hedging contract is based on a standard swap contract, as issued by the International Swap Dealers Association. For example, a paper consumer contracts to pay the arranging company Enron, International Forest Products, or Citibank -- a set price for a particular paper product. The contract is purely financial, with no paper changing hands. Payments are then exchanged quarterly. If the market price, based on an agreed price index, exceeds the set price, the arranger pays the paper consumer the difference, whereas if the market price is below the set price, the consumer pays the arranger the difference. The most popular term for swap agreements in pulp and paper is five years; Times Mirror agreed to an agreement of that length. "We wanted to make sure that the period of the contract is long enough that we will roll through at least one or two cycles," Mr. Schoch said."

 

A more traditional financial relationship is for Citigroup subsidiaries to own stock in various corporations. According to documents filed with the U.S. Securities & Exchange Commission, Citigroup Investments holds shares in 3,148 corporations, some of which have been condemned for their environmental practices, including Abitibi Consolidated, Alcan Aluminum, Alcoa, Amcor, Anglo American, Anglogold, Arch Coal, Ashanti Goldfields, Ashland, Asia Pulp & Paper, Atlantic Richfield, Battle Mountain Gold, Boise Cascade, Bowater, Champion International, Chevron, Chiquita, Conoco, Delta & Pine Land, Domtar, Du Pont, Echo Bay Mines, Enron, Fletcher Challenge Forests, Fluor, Georgia Pacific, Gold Fields Ltd, Gulf Canada Resources, Gulf Indonesia Resources, Hancock Holding, Hecla Mining, Home Depot, Homebase, International Paper, Kaiser Aluminum, Kerr Mcgee, Louisiana Pacific, Maxxam, Newmont Mining, Phelps Dodge, Placer Dome, Pope & Talbot, Potlatch, Rayonier, Royal Dutch Petroleum, Smurfit Stone Container, Total Fina, Union Carbide, Waste Management, Westvaco, Weyerhaeuser, Willamette Industries.

Some of this stock is actually directly by Citigroup, and some of it is owned "beneficially" for other shareholders.

 

Preying on Debtors: Forests as Loan Payments

A more troubling use of financing involves debt-equity swaps, especially when the assets turn out to be natural resources. Citibank has acquired interests in pulp mills in Argentina, Bolivia, Brazil, and Chile by agreeing to restructure loans those countries had with Citibank in exchange for shares in publicly-owned pulp and paper companies.

A case in point is Chile. With mounting debt and a government amenable to selling off real assets, Chile accelerated the drain of its forest and other resources to consumers (and its profits to investors) overseas:

"Between 1980 and 1988, copper production increased by 35.7%, fishmeal production by 88.6%, fresh fish by 371%, and fruit production by 231%. With the new generation of forests reaching maturity, private sector investments already made or announced for the period 1987-1992 amount to $1.77 billion, the vast majority going into pulp plants, sawmills, and the infrastructures needed to support them. Pulp-producing plants are attracting the most important investments, including two of Chile's largest debt conversions to date. The modernization of an existing pulp plant by Scott Paper, Shell, and Citibank involved debt swaps worth $350 million. Copper dominates the mining sector, but gold exports have doubled in value since 1980, amounting to over $250 million in 1988."

So by 1988, debt-equity swaps in Chile totaled more than $1 billion. Chile's $277 million three-way Santa Fe pulp mill deal with Shell, Scott Paper, and Citibank was the then-largest debt swap, and Chile's central bank gave the transaction high priority. Citibank has made other debt-equity "investments," acquiring silver and gold mines, timber, a pulp plant, and a board factory. Details of the Santa Fe pulp mill deal appear below, and other transactions appear in Part 3 below, sorted by country.

 

Old Growth Forests as Collateral: The Case of Maxxam

Another case of leveraging debt into deforestation occurred when Citibank invented a new form of collateral for backing loans. In March 1993, it was announced that Scotia Pacific Holding Company would be offering $385 million of notes, and Pacific Lumber would be offering $235 million in notes to be sold through underwriters led by Salomon Brothers and Donaldson, Lufkin & Jenrette. What was unusual about the deal was not only that Scotia Pacific Holding was a new corporations specifically created to facilitate the sale, and that Scotia was a subsidiary of Maxxam's Pacific Lumber Company - but that redwood trees, or "prime California timber" as the Wall Street Journal called them, were being used as collateral.

"The Sierra Club, the Audubon Society and the Wilderness Society will deliver a warning today to the Securities and Exchange change Commission that a proposed restructuring of Pacific Lumber Co. could greatly raise the cost of saving California's last big private stand of old-growth redwoods. The SEC is reviewing a plan by Houston-based Maxxam Inc., parent of Pacific Lumber, to split the company. Pacific Lumber would spawn a new subsidiary, Scotia Pacific Holding Co. Pacific Lumber would retain 11,000 acres of old-growth redwood stands, including the 3,000-acre Headwaters Forest, southeast of Eureka in Humboldt County, long proposed by environmentalists for preservation. Nearly 200,000 acres of second growth redwoods would be owned by Scotia Pacific.... The move is part of Pacific Lumber's refinancing of junk bond debt that Texas financier Charles Hurwitz incurred when he took over the venerable Northern California timber firm in 1985... Maxxam executives describe the new arrangement as a "normal" business structure and decline to detail reasons for the split while it is under SEC review, which is to be completed in February. But environmentalists say it could also be a ploy to enable the company to leverage a higher price in government attempts to acquire the Headwaters Forest for preservation. The new structure would leave a smaller Pacific Lumber with a much larger share of its value attributable to its old-growth trees. Several industry observers see a more obvious motive to the split: It could allow Pacific Lumber to refinance its debt at a lower cost than under one company. In the company's restructuring, $510 million in junk bonds at 12% to 12.5% interest would be paid off by new bonds expected to be issued at substantially lower interest. Pacific Lumber would offer $215 million in new bonds. But the new subsidiary, Scotia Pacific, would do the lion's share of the refinancing, offering $364 million in new bonds at an even lower expected rate. Scotia Pacific could do this because it will be isolated from the environmental disputes surrounding the old-growth trees and will use its vast holdings of cuttable trees as collateral. The Pacific Lumber bonds will be unsecured."

The sale went through and $600 million was raised to refinance Pacific Lumber's heavy debt load. Pacific Lumber was acquired in 1986 by Texas financier Charles Hurwitz, chairman of Maxxam, in an $800 million hostile takeover financed largely by junk bonds.

Within a few months, Citibank was pushing the idea of using unusual assets as collateral:

"Mark Hallock, vice-president and head of private placements at Salomon Brothers, [was saying] that people [were] securitizing anything, including trade receivables, royalties, patents, or any stream of cashflow that can be put into a special-purpose corporation or trust. Once limited to auto loans, credit-card, and mortgage receivables, the securitization market has become so exotic that receivables from sources as diverse as mobile homes, office equipment, Burger Kings, and even trees are now used as collateral in securizations standard enough to be launched on the public markets. Arguably the most unusual public deal this year was Salomon Brother's securitization for forest group Scotia Pacific, based on the rates of tree felling in its forests."

The refinancing of high-interest junk bonds worked well enough for Scotia Pacific and Salomon Brothers (by then Salomon Smith Barney, a subsidiary of Citicorp) to try again a few years later:

An unusual deal of $860 million from Scotia Pacific Holding Co. aims to refinance outstanding bonds more cheaply by turning the future harvest of its timberlands into payments to investors. Essentially, noteholders receive payments based on the harvest over the next 30 years from Scotia Pacific's timberlands, less the company's operating expenses, said Ron Kurtz, director of financial analysis at Maxxam Inc., Houston, parent company of Scotia Pacific. "This structuring of debt generally produces higher ratings from the agencies than straight corporate debt and allows us to take advantage of investment grade ratings which results in a lower cost of borrowing," said Mr. Kurtz. The deal, the second to use a technique pioneered by a Maxxam unit in 1993, is expected to come to market this week as a private placement under the Securities and Exchange Commission's Rule 144a via Salomon Smith Barney."

 

In fact, "was slightly restructured to address investor demand for shorter-dated classes that carry higher credit ratings. For example, the $243.6 million of notes with a 12.35-year average life were priced to yield 1.70 percentage points more than the 10-year Treasury note, a bigger size and lower yield than discussed during marketing" -- in effect, the cutting rate was being sped up to satisfy investors, rather than being left to foresters.

Other investment firms took notice.

"While analysts don't expect timber to become a staple of the asset- backed securities market, the deal's success speaks to the growing potential for similar transactions. 'The potential is there,' said Rich Gugliada, managing director at Standard & Poor's Corp., which rated the transaction along with Moody's Investors Service. 'We continue to see proposals for natural resource [deals].' A person close to the transaction said it was oversubscribed, attracting a broad base of investors that included insurance companies and money managers. Demand was especially healthy for the five-year senior tranche. The deal is backed by revenues that Scotia collects from selling trees to its parent company, Pacific Lumber Co., which finishes the wood so it can be used to manufacture various products. About 80% of the timber owned by Scotia comes from redwood trees... Unlike its 1993 transaction, this time Scotia was not encumbered by environmental concerns, which along with subordination helped the company achieve A1/A ratings on its senior tranche and A3/A ratings on its second tranche, compared with a BBB rating on the 1993 deal. 'It ended up being much more cost effective,' Gugliada said... Interestingly enough, the timber market has attracted a considerable amount of attention lately, as the overall scarcity of the product has increased its value. The source said there are a number of real estate investment trusts with timber properties, while the companies that own timberlands are exploring new methods of financing-like securitization-to fund their business. 'Trees continue to get cut down faster than they can grow,' Gugliada said. 'Lumber has had a virtually unprecedented appreciation over the years.' Going forward, market players expect to see more transactions tied to natural resources, many of them coming from outside the U.S. Already a number of deals backed by future exports of oil and gas have been sold to investors, while project finance deals are starting to make their way into the securitization market. Earlier this year, for example, Credit Suisse First Boston sold the first-ever collateralized loan obligation backed by project finance loans."

In March 1999, Maxxam's use of the redwoods as collateral ran afoul of its desire to be bought out by the taxpayers, and the company offered to exchange three classes of timber collateralized notes for other notes. Maxxam said the offer was extended so it "could apprise noteholders of its decision on whether to accept a $380 million purchase offer from the U.S. and California governments for its Headwaters timber holdings in California."

 

Oil and Gas and Mining

Of course, oil and gas and mining operations affect forests, too. In 1997, Citibank managed an offering of bonds by the Brazilian state-owned Petroleo Brasileiro SA (Petrobras), with the proceeds to be used to further develop the Campos offshore oil fields which account for 70 percent of Brazil's crude oil production. But Citicorp Venture Capital is also a direct investor in Brazilian oil and gas operations. In January 2000, Petrobras sold twelve onshore oil fields to Petroconcavo, a consortium of Perbras (an oil-sector service firm), Petrosantander (a firm linked to Banco Santander), and CVC/Opportunity (a private equity joint venture between Citicorp Venture Capital and Rio de Janeiro-based Banco Opportunity).

Citigroup subsidiaries such as Mincorp LLC are also directly involved in mining operations. In 1998, IMC Global sold its soda ash and boron chemicals business to Mincorp LLC, a holding company of Citicorp Venture Capital. The deal was valued at $520 million. IMC will retain a 40% stake in Mincorp, which will include Rhone-Poulenc (RP) subsidiary Novacarb (Nancy, France). Mincorp will become the world's third-largest soda ash producer, with operations in the U.S., western Europe, and Australia. Mincorp will probably remain headquartered in Overland Park, Kansas.

Another way Citigroup is involved in mining is through its subsidiary Phibro, which is dedicated to oil, metals and natural gas commodities trading. Phibro was acquired as part of Citi's merger with Traveler's Group, which had earlier acquired Salomon Brothers, which owned Phibro. With Citigroup's "increasing emphasis on its customer-oriented businesses," it announced in December 1999 that it was considering the sale of Phibro, which trades oil, metals and natural gas commodities, mostly in proprietary trading. Phibro was also "see[ing] some competition from JP Morgan, another bank trying to divest a commodities group. JP said last year it had decided to seek a buyer for its global energy trading unit because 'continued leadership in energy trading would require greater access to physical energy markets and further investment.' Unlike Citigroup, JP said it would hold on to its metals trading and that it planned to 'strengthen' it."

 

Institutional Shareholding in Wood and Paper Operations

Yet another form of Citigroup involvement in projects affecting forests is when its subsidiaries are institutional shareholders in other corporations which have wood products or mining operations. Here again, there are various forms of shareholding. Citigroup or one if its subsidiaries may own stock of another corporation, in which case the profits go to Citigroup. Citigroup subsidiary shows up as an institutional shareholder of a major timber corporation, but Citigroup may not be the actual owner of this stock, rather it might be holding the stock "beneficially" for a third party, the actual owner. For example, in the shareholder filings for Weyerhaeuser corporation, the Citigroup Investments is listed as an institutional shareholder, but the holding may be in name only -- Citigroup may be holding the stock for members of the Weyerhaeuser family, who actually receive the profits. So the individual investors are hidden from view by Citigroup's beneficial holding.

In some cases, banks or venture capital firms may provide short-term financing for new projects. The debt is eventually retired, or the bank may sells its interest, but may still be involved as a creditor or underwriter of the new owner's interest. The Santa Fe pulp mill in Nacimiento, Chile provides an example of the complex relationships in the world of global finance.

 

The Santa Fe Pulp Mill

Santa Fe Forestal y Industria, Chile's eucalyptus market pulp producer in Nacimiento, was acquired in 1988 by a joint venture of Shell with Shell Scott Paper and Citibank, as a result of the Latin American debt crisis and Citibank's willingness to accept real assets in exchange.

"Chile's trade and development policy in the 1980s has sought both to encourage growth in areas where it can compete in world markets and to remove distortions from the domestic economy. A climate and soil that are ideal for fruit production, along with extensive mineral resources, make Chile highly suited to be a commodities producer. Between 1980 and 1988, copper production increased by 35.7%, fishmeal production by 88.6%, fresh fish by 371%, and fruit production by 231%. With the new generation of forests reaching maturity, private sector investments already made or announced for the period 1987-1992 amount to $1.77 billion, the vast majority going into pulp plants, sawmills, and the infrastructures needed to support them. Pulp-producing plants are attracting the most important investments, including 2 of Chile's largest debt conversions to date. The modernization of an existing pulp plant by Scott Paper, Shell, and Citibank involved debt swaps worth $350 million. Copper dominates the mining sector, but gold exports have doubled in value since 1980, amounting to over $250 million in 1988."

"Chile has been ruled by a military dictatorship led by Gen. Augusto Pinochet since 1973. While it is less repressive than it was in the 1970s, Chile is still a police state, and democracy is hardly around the corner. The only ballot in prospect will ask voters this year if they want Gen. Pinochet as president for the next 10 years. For Latin America, which has generally stumbled through years of stagnation or low growth since it became mired in foreign debt in 1982, Chile's economic record is enviable. It has led to debates on whether economic success in the region is readily compatible with democracy. [Hernan Buchi, Chile's finance minister] probably deserves most credit for Chile's recovery. He has been finance minister since 1985, pushing free-market policies, fostering foreign and domestic investment and encouraging exports of paper and pulp, fruit and fish. Mr. Buchi joined the government in 1975 as an adviser to the minister of the economy, and served successively as undersecretary for economic affairs, undersecretary for health, minister of planning and superintendent of banks before becoming finance minister. Chilean officials give him much of the credit for setting up and supporting the debt-reduction program, which has cut Chile's foreign bank debt by $4.2 billion to $10 billion. This has mainly been achieved by swapping foreign bank debts for local currency, which Chileans, multinationals and foreign banks use for equity investments. A further $400 million of debt swaps are in the pipeline, Mr. Buchi says. The largest recent investment made by foreign companies and banks through debt-equity swaps was a pulp mill and forestry investment made by Royal Dutch/Shell Group, Scott Paper Co. and Citicorp, Mr. Buchi says. It involves a swap of old debt to raise about $280 million of equity capital, and $145 million of new debt. Such transactions have helped keep investment at healthy levels.

"Citicorp has turned some of its Chilean loans into pulp. It wasn't an act of despair. Rather, it was one of several approaches big U.S. banks are taking to whittle down their exposure to huge Third World loans that may never be repaid. In one approach -- albeit not the most important -- banks are swapping some of their loans for equity, or investments in businesses in countries that owe them money.

"In Citicorp's case, its debt-for-equity swap earlier this year left it with a 20% interest in a pulp mill being built in Nacimiento, a hillside town a few hundred miles south of Santiago, Chile's capital. Enthusiasts say debt-for-equity swaps benefit hard-pressed Latin American borrowers by reducing their interest payments, which now total more than $30 billion a year. Such swaps also boost flagging investment in debtor nations and allow banks to make investments that could gain in value. The volume of debt-for-equity swaps has surged and will probably total more than $8 billion in 1988, up from an estimated $5 billion to $6 billion last year -- though that doesn't come close to absorbing all the loans banks would like to unload. Commercial banks have lent a total of $238 billion just to Latin America's four largest debtors -- Brazil, Mexico, Argentina and Venezuela -- and they are eager to get those loans off their balance sheets.

"So, in addition to debt-equity swaps, banks are using other means to improve their loan portfolios. These include outright loan sales in the secondary market -- where trading may well top $20 billion this year -- and new securities called "exit bonds," which allow banks to exchange loans for tradable securities. Chile is the main testing ground for debt-for-equity swaps. Since 1984, it has reduced its foreign bank credits by $4.2 billion, mainly by exchanging debt for equity investments or for local currency, says the country's youthful finance minister, Hernan Buchi. He adds that the Citicorp transaction, done jointly with Royal Dutch/Shell Group and Scott Paper Co., is the largest debt-equity transaction in Chile so far this year.

"Citicorp has either completed or lined up minority investments in gold-mining, pulp, forestry and wood businesses equal to about 20% of its approximately $500 million in loans and investments in Chile, says the bank's senior officer in Santiago, Edward Dreyfuss. Citicorp and other bank investors stress they are passive, minority investors and that they intend eventually to sell their stakes, possibly to their investment partners.

"But other debt-troubled countries have been slower to embrace Chile's debt-for-equity approach. The Philippines, and more recently Brazil and Argentina, have begun debt-equity programs. Mexico, however, suspended a similar program, partly because of concern it could be inflationary. Debtor nations also worry that debt-equity swaps allows major companies to fall into foreign hands. Moreover, the U.S. Federal Reserve Board allows banks to take only passive minority stakes in foreign non-financial businesses, and only a few banks have the local offices and knowledge needed to make such investments. So banks are desperately seeking other ways to reduce their large, shaky Third World loans.

"A recent Salomon Brothers Inc. study showed that 12 of the largest U.S. banks cut their loans to debt-troubled countries by $5.53 billion, to a total of $46.8 billion in the year ended June 30. Most of this reduction was achieved by selling loans into the secondary market -- where loans can be traded by speculators -- rather than through debt-equity swaps. Much of the demand in the secondary-loan market comes from multinational companies and domestic investors. They can buy dollar credits to exchange for local currency at bargain rates at the debtor country's central bank. With that local currency they then make their own local investments.

"U.S. banks are eager to sell at a discount simply because investors back home are leery of banks with large loans to heavily indebted developing countries. Such credits are frequently rescheduled and in some cases, such as Peru and Bolivia, interest hasn't been paid for years. Until they convince investors that these countries' economies, and thus their borrowings, are on a healthier path, or reduce their Third World debts substantially, many big U.S. banks will have limited access to the U.S. equity market to raise the capital they need for acquisitions and other purposes. Some banks are resigned to selling their loans at knock-down prices into the secondary market, where Argentine loans this summer sold for as little as 29 cents on the dollar; few Latin debts command prices of more than 50 cents on the dollar. But many big banks can't afford such huge discounts. Typically, big U.S. banks have loan-loss provisions totaling between 25 cents and 35 cents for each dollar of Third World debt -- not enough to sell at average prices of 40% of face value. Even worse, if the banks all rushed to sell at once, prices would fall further.

"Citicorp and some other banks maintain they can get better value by selling and swapping the loans without using the secondary market, which they characterize as a last resort and an illiquid and sporadic bazaar. In the year to June 30, Citicorp says it cut its loans to debt-troubled countries by $2 billion to $12.6 billion at an average discount of 18%. The $12.6 billion total includes equity investments as well as loans. In Chile it has typically converted debt at about 87 cents worth of local currency for each $1 of debt, say officials at the bank's Chilean headquarters. More recently, efforts are being made to offer banks even better conversion rates.

"The most promising of these are the "exit bonds" valued at up to $5 billion that Brazil recently offered to its bank creditors, and the agreement which Chile recently negotiated with its bank creditors to allow it to use up to $500 million of its export earnings to buy back foreign debt. Exit bonds are tradable and exchangeable for other investments and allow banks to reduce their loans to a Third World borrower. A new form of exit bond recently offered allows each creditor bank to exchange up to $15 million of its medium-term loans to the Brazilian government. These Brazilian bearer bonds, which mature in 25 years and carry a fixed interest rate of 6%, may be exchanged for Brazilian Treasury securities or for equity investments and are exempt from Brazilian taxes. The Brazilian Treasury securities also will be hedged against foreign currencies to remove exchange risks. So while banks were recently gathering a new $5.2 billion bank loan for Brazil, they were simultaneously seeking to reduce their Brazilian loans by as much as $5 billion in exit bonds, and converting additional amounts into equity investments in the country's monthly debt auctions. Thus, Brazil's bank credits won't necessarily increase much this year. And many smaller lending banks -- who dislike making these loans anyway -- now have a way to avoid the periodic loans that banks are forced to make to debt-troubled countries."

Before its acquisition by Shell, Scott, and Citicorp, Santa Fe was a half-finished long-fiber pulp and linerboard mill. By 1992, Santa Fe was a $460 million export pulp mills involved in genetically engineered eucalyptus trees for two plantations in Chile. "The plantations that receive the trees will eventually provide the Santa Fe pulping plant with all the raw materials it needs to generate an anticipated $100 million a year profit. With an initial investment of $28 million in the industry, Santa Fe vice president Nick Whalley admits that 'the short term profitability is not good but we project substantial financial returns two to three years from now.'"

In 1995, ABN AMRO Bank and ING Capital launched the syndication of a $120 million five-year term loan for Santa Fe, still 60% owned by Royal Dutch Shell, 20% by Citicorp and 20% by Chilean forest-products firm Cia. Manufacturera de Papeles & Cartones SA (CMPC). By October 1997, CMPC bought out Citibank and Shell. But CMPC still owed $500 million for its acquisition, and CEI Citicorp Holdings was still involved.

In fact, the "acquisition" was actually a trade. "CMPC struck a deal with the mill's other owners, Shell and Citicorp, that resulted in CMPC taking full control of Santa Fe. As part of the deal, CMPC sold its 20% stake in forest products company, Monte Aguila, to Shell and entered into a long term wood supply contract for the mill."

During 1998, CMPC sold its 50% stake in sanitary products producer Prosan to Procter & Gamble for $390 million, sold its stakes in AFP Summa and Seguros El Roble, raised $250 million of cash in the capital markets, and raised an additional $250 million via a five-year syndicated loan to repay the $500 million bridge loan the company had outstanding since its Santa Fe and Pacifico acquisitions.

"CEI Citicorp Holdings SA, Citicorp's local investment arm, until recently held its own grab bag of privatized assets, ranging from a pulp mill to a gas distributor. But it has shed most of them to concentrate on the telecommunications business. In March, it took indirect control of Telefonica de Argentina by buying shares held by the family that owns yet another conglomerate called Perez Companc SA. Perez Companc is perhaps the best example of how Argentine conglomerates are changing as the country completes its transition from a closed, state-run system to a more open, free-wheeling economy. In the late 1980s, Perez built roads, owned a retailer, ran a shipping line and made chocolate, cement and telephones. Then, when President Carlos Menem liberalized the economy, Perez bet big on the privatization of the energy and telecommunications sectors. Now, it's selling off holdings and ploughing the profits into oil and gas-related businesses, not only at home but in the South American countries of Bolivia, Brazil and Venezuela."

Citibank was still selling Chile:

"Another reason why [investment] funds are renewing their interest in Chile is that it will boast the strongest upturn in gross domestic product of any Latin American economy this year, according to estimates by Citigroup Inc.'s Salomon Smith Barney brokerage unit, which forecasts that Chilean GDP will expand 5.1% this year, following a decline of about 1% last year. "There is no doubt at all that some of the buying going on in Chile is due to the fact that there is going to be very strong economic recovery this year," says Geoffrey Dennis, the firm's Latin America stock strategist... Well-performing Chilean companies that aren't listed on U.S. exchanges may be more easily purchased by foreign investors if Chile removes its remaining capital controls. [They include Copec (Pulp and energy conglomerate, Falabella (department store), CMPC (forestry and), Entel Communications , Almacenes Paris (department store)."

 

 

Real Estate and Construction

Another indirect way Citigroup is involved in the consumption of forest products is through real estate and construction activities. The Citicorp Real Estate and other subsidiaries are directly involved in those industries, as well as in financing projects such as a $200 million partnership with U.S. OPIC for construction in Central America and the Caribbean. In 1999, OPIC and Citibank signed a ten-year, $200 million deal under which OPIC will guaranty one half of each loan made by Citibank under the Central America and Caribbean Facility for projects in the region. Citibank, which has over 1,000 employees in Central America and the Caribbean and branches in 11 countries, will carry out credit underwriting, administration and monitoring of the loans. The program was developed before Hurricane Mitch, but is now being touted as a way to "encourage private sector investment in rebuilding the economies of the countries that were devastated by hurricanes and natural disasters" - and the sponsors note that it will generate over $200 million in purchases of goods and services from U.S. corporations.

Another example of Citigroup involvement in construction is a 1998 agreement in which Asahi Chemical and Citibank will jointly offer new housing loans in Japan. Asahi Chemical, which has a home construction business, aims to stimulate housing demand using Citibank housing loans. Japanese corporations are huge consumers of wood products, and have been responsible for widespread deforestation in Asia and elsewhere.

 

 

Interlocks with Other Corporations

Another way Citibank is involved in forest destruction is through interlocking directorships. Citibank officers and directors also serve as directors of timber, mining, and oil and gas corporations.

Interlocked with

through Citigroup director

Alcoa

Alain J.P. Belda

Alcoa

Franklin A. Thomas

Alliant Foodservice

Andrall E. Pearson

American Express Company

Gerald R. Ford

American Petroleum Institute

Kenneth T. Derr

Apple Computer

Edgar S. Woolard

Ariad Pharmaceuticals

John M. Deutch

AT&T

C. Michael Armstrong

AT&T

Kenneth T. Derr

AT&T

Sanford I. Weill

Automatic Data Processing

Ann Dibble Jordan

BCT Telus Communications

Michael T. Masin

Business Council

Edgar S. Woolard

Business Roundtable

Sanford I. Weill

Capricorn Holdings, LLC

Dudley C. Mecum

Chase Bank of Texas

Gerald R. Ford

CMS Energy

John M. Deutch

Colgate-Palmolive

Reuben Mark

Compania Nacional Telefonos de Venezuela

Michael T. Masin

Conoco

Franklin A. Thomas

Cooper Industries

Alain J.P. Belda

Council on Foreign Relations

C. Michael Armstrong

Cummins Engine

Franklin A. Thomas

Cummins Engine

John M. Deutch

D Pont

Sanford I. Weill

DBT-OnLine

Andrall E. Pearson

Du Pont

Alain J.P. Belda

Du Pont

Edgar S. Woolard

Dyncorp

Dudley C. Mecum

Estee Lauder

Richard D. Parsons

First Manhattan Co.

Arthur Zankel

Ford Foundation

Franklin A. Thomas

Ford Motor

Robert E. Rubin

GTE

Michael T. Masin

Johns Hopkins University

C. Michael Armstrong

Johnson & Johnson

Ann Dibble Jordan

Kimberly-Clark

Paul J. Collins

Kinko's

Andrall E. Pearson

Lucent Technologies

Franklin A. Thomas

Lyondell Companies

Dudley C. Mecum

MIT

John M. Deutch

Mead

Heidi G. Miller

Municipal Assistance Corp - City of New York

Kenneth J. Bialkin

National Association of Securities Dealers

Gerald R. Ford

Pearson PLC

Reuben Mark

Pepsico

Franklin A. Thomas

Philip Morris

Richard D. Parsons

Potlatch

Kenneth T. Derr

Puerto Rican Telephone Company

Michael T. Masin

Raytheon

John M. Deutch

Schlumberger, Ltd.

John M. Deutch

Skadden, Arps, Slate, Meagher & Flom

Kenneth J. Bialkin

Skidmore College

Arthur Zankel

TAP

Arthur Zankel

TAP

Dudley C. Mecum

TAP

Sanford I. Weill

Thyssen-Bornemisza Group

C. Michael Armstrong

Time Warner

Reuben Mark

Time Warner

Richard D. Parsons

Tricon Global Restaurants

Andrall E. Pearson

U.S. CIA Director 1995-96

John M. Deutch

U.S. Dept of Defense 1994

John M. Deutch

U.S. Dept of Energy 1979-80

John M. Deutch

U.S. Dept of Treasury 1995-1999

Robert E. Rubin

U.S. President 1974-1977

Gerald R. Ford

U.S. President's Export Council

C. Michael Armstrong

United Technologies

Sanford I. Weill

Vicorp Restaurants

Arthur Zankel

W.M. Keck Foundation

Michael T. Masin

White Mountains Insurance Group

Arthur Zankel

Yale School of Management

C. Michael Armstrong

Zankel Capital Advisors, LLC

Arthur Zankel

 

 

Taxpayer Subsidy of Citibank

Citicorp financing of projects is actually subsidized by the taxpayer through federal or multilateral agencies such as the World Bank or the U.S. Overseas Private Investment Corporation (a "corporation" controlled by the U.S. Department of State), which provide political risk insurance to banks such as Citibank and/or to the operating timber or mining companies. Most national governments now have several agencies which provide financial assistance and insurance to corporations. Multilateral banks are also involved. For example, in the mid-1990s, the World Bank's MIGA has facilitated over US$1 billion in foreign direct investment in 18 developing member countries. MIGA country membership stood at 128 (19 industrialized and 109 developing countries), and an additional 24 countries were in the process of fulfilling membership requirements. MIGA was formed in 1988 "to encourage foreign investment in developing countries by providing political risk insurance against the risks of Currency Transfer, Expropriation, and War and Civil Disturbance and by extending investment marketing services to host countries to help them promote their own private investment opportunities more effectively."

Citibank has made heavy use of OPIC, as a way to protect its own risky loans:

"OPIC began operating in 1971 with a $106 million appropriation from Congress, entrusted with a mission to encourage American investment in fledgling market economies in 140 countries. No support could be given to violators of worker rights, tramplers of rain forests or endangerers of endangered species. OPIC's tools were loan guarantees, a small amount of direct loans and insurance against wars, terrorism, expropriation and other international foul play. The agency quickly became the darling of major corporations wanting to build pipelines in Indonesia and electric plants in the Dominican Republic. Citibank, with institutions in some of the globe's rougher jurisdictions, became the largest purchaser of political risk insurance."

 

In 1994, Citibank received $338 million in OPIC assistance. One example of OPIC's support of Citigroup is the Central America and Caribbean Facility noted above, but Citigroup and its subsidiaries are involved in dozens of projects receiving financial support and political risk insurance from MIGA, OPIC, and other government agencies. According to more recent annual reports, MIGA and OPIC have provided assistance and/or insurance to Citigroup projects in the following countries with substantial natural forests:

 

Agency

Year

Type of Project

Country

$ value of assistance

MIGA

1999

financial

Venezuela

58,000,000

OPIC

1999

financial

Peru

62,000,000

OPIC

1999

telecommunications

Colombia

8,000,000

OPIC

1999

banking

Colombia

59,000,000

OPIC

1999

leasing services

Brazil

55,000,000

OPIC

1999

telecommunications

Brazil

150,000,000

OPIC

1999

financial

Argentina

55,000,000

OPIC

1998

financial

Brazil

55,000,000

OPIC

1998

printing facilities

Colombia

8,000,000

OPIC

1998

financial services

Peru

113,000,000

OPIC

1998

power generation

Thailand

185,716,750

OPIC

1998

financial services

Russian Fed

135,000,000

MIGA

1997

financial services

Russian Fed

20,000,000

MIGA

1997

banking

Colombia

23,000,000

MIGA

1997

banking

Venezuela

18,000,000

MIGA

1997

banking

Peru

14,000,000

MIGA

1997

mining

Argentina

12,000,000

OPIC

1997

financial services

Guatemala

43,000,000

OPIC

1997

financial services

Thailand

50,000,000

OPIC

1997

financial services

Russian Fed

100,000,000

OPIC

1996

financial services

Bolivia

12,830,000

OPIC

1996

Satellite television

Brazil

70,000,000

OPIC

1996

Truck/transport equip leasing

Brazil

26,000,000

OPIC

1996

restaurants

Costa Rica

8,500,000

OPIC

1996

financial

Guatemala

29,875,000

OPIC

1996

financial

Honduras

5,900,000

OPIC

1996

financial services

Peru

32,500,000

OPIC

1996

cement plant

Peru

34,114,000

OPIC

1996

leasing company

Peru

18,675,000

OPIC

1996

petroleum refining

Russia

25,000,000

OPIC

1996

financial services

Russia

11,500,000

OPIC

1991

banking

Indonesia

?

OPIC

1991

pulp and paper

Argentina and Brazil

?

OPIC

1991

nickel mine

Colombia

?

OPIC

1991

vehicle leasing

Thailand

?

OPIC

1991

polyethylene production

Venezuela

?

 

In addition, any number of MIGA or OPIC guarantees to other corporations could involve loan or other financial assistance from Citigroup subsidiaries, but not show up in the agency reports as assistance to Citigroup.

Citibank's solicitation of corporate clients seems at odds with an offer to its credit card customers:

"Dear Citibank Cardmember, Imagine astonishing someone with a gift that could benefit not just one person but a whole community, a forest, a country, yes, even the planet earth! Citibank and Mother Earth Unlimited invite you to join them in giving a gift of life, a TREE. Diminishing forest cover in the Philippines has proceeded at an alarming rate. Forests are responsible for flood and landslide protection, for nurturing flora and fauna, for providing community livelihood. Your gift can help ease these problems and more. And it's all for just P600 a tree (includes costs for 3-year nursery, plantation and maintenance operations, protection, infrastructure plus all operating costs). Simply complete this form indicating the special person's name and address, and a tree will be planted in his/her name and nursed in a 6-hectare eco-park project in Calauan, Laguna. These trees will later be replanted at the foothills of the Markina Mountains to specifically benefit Metro Manila. And that's not all, you even get to choose what kind of tree you'd like to give! We'll tag each tree with the name of the person to whom it was given, and send you special cards so you can let the recipient/s know you've planted one for them! How's that for a different kind of gift, a real gift of life. Signed, Raul Contreras and Maripi Jalandoni, Mother Earth Unlimited, and Citibank, N.A., President, Customer Franchise Director."

But when Citicorp's financial relationships, Citicorp comes down on the side of the timber industry: In 1989,

"in a much-publicized brouhaha, eight advertisers including Citicorp, Ford Motor Co. and Exxon Corp. pulled about $250,000 of ads from TBS for Audubon's Ancient Forests: Rage Over Trees under pressure from the logging industry. The program was critical of loggers in the Northwest's older forests. Stroh Brewery Co., an advertiser and the primary underwriter of Audubon specials, also withdrew its funding... [In 1990, National Audubon Society Productions] got a $3 million commitment from General Electric, already a big supporter of Audubon's classroom projects... GE says Audubon will have complete editorial control over the specials. Though GE and Audubon differ on such issues as commercial nuclear power -- GE is in the business, which Audubon opposes -- a GE spokeswoman says the two 'don't have to agree on everything.' Turner, whose chairman, Ted Turner, is a big booster of environmental causes, also has agreed to provide a chunk of the programming budget for specials and feature films."

 

Part 3: Citigroup Project Details, Listed by Location

Projects in which Citigroup or its subsidiaries have been involved are detailed below. Information in each entry is current as of the dates cited in that entry, but Citibank involvement is not necessarily current beyond those dates. In most entries the original material is directly quoted. In many cases the full text of the original article is given; in other entries a summary is given.

Africa: banking dominance: Banking in Africa is "dominated by a few institutions - among them UK groups Standard Chartered and Barclays, and South Africa's Standard Bank Investment Corporation, Absa and First National and Citibank from the US. 'The fact that there are only a few competent players has reduced the level of interbank competition,' notes Sikhakhane. 'Locally owned banks are hamstrung by lack of skills and capital - so multinational companies and wealthy individuals prefer to deal with sophisticated foreign banks.'"

Africa: gold mining loan: "AngloGold Ltd, of South Africa, has signed a US$ 350 million term-facility loan for the debt component of the US$ 500 million funding requirement for its purchase of the gold assets of Minorco SA, its Luxembourg-based stablemate in the Anglo American group (Mining Journal, February 12, p. 107). The loan was arranged and underwritten by Bayerische Hypound Vereinsbank, Citibank, Deutsche Bank (London), Dresdner Bank Luxembourg, HSBC Investment Bank, SG Investment Banking and Sumitomo Bank, and syndicated among a larger number of banks. AngloGold notes that the loan is the second-largest corporate borrowing for a South African-based company."

Argentina: Brazil: natural gas loan: "Bankers at Credit Suisse First Boston and Citigroup's Citibank unit who arranged funding for a $675 million oil and gas project backed by blue-chip companies that included Argentina's YPF SA and subsidiaries of Brazil's Petroleo Brasieiro SA, or Petrobras, and Dow Chemical Corp., Midland, Mich... Last year, as Brazil headed for a devaluation, commercial lenders were loath to add more of that country's risk to their balance sheet. To seal the deal, the arrangers reduced the amount they asked from banks, offered stronger guarantees to make lenders feel more comfortable, and kicked in more cash of their own. Then, they raised the rest of the money through a private placement of notes with U.S. institutional investors. "The way to get deals done is to draw on alternative sources of financing," says Sanjay Khettry, head of Latin American project finance at Citibank... The upshot: Smaller projects without big-name backers are often dead in the water. Deeper-pocketed project sponsors are being obliged to put more of their own cash up front. And political risk insurance is de rigueur. Official lenders are playing a bigger role too. The Inter-American Development Bank reckons it will fund $620 million in private infrastructure projects this year, up from $261 million two years ago, says bank official Antonio Vives. The Overseas Private Investment Corp., or OPIC, a U.S. agency that provides financing for U.S. companies abroad, has seen a "dramatic" increase in requests over the past two years, among them many first-time applicants looking for funding in the oil and gas sector, says spokesman Larry Spinelli. Project sponsors are also turning to local credit markets and even to the nascent euro-financing market, which has developed since the introduction of Europe's unified currency early this year. Citibank's Mr. Khettry says toll-road projects in Brazil, Colombia and Chile have recently won backing from local pension and insurance funds. Steven Greenwald, a managing director in the project-finance group at Credit Suisse First Boston, predicts that European institutional investors may begin investing in Latin infrastructure deals, now that they no longer have to be concerned about how their own currencies will move against one another."

Argentina: mining: World Bank insurance: 1997 MIGA guarantee to Citibank for mining in Argentina.

Argentina: natural gas: Citicorp loan: "Citibank and Credit Suisse First Boston expect to underwrite $ 200 million of senior-secured private placement notes, due to mature in 2013, for the Mega liquefied petroleum gas project in Argentina. Duff & Phelps has assigned triple-B-minus ratings to the private placement and to the $ 485-million bank loan. The owners -- Dow Chemical (28%), Petrobras (34%), and YPF (38%) -- will jointly contribute $ 140 million in cash. The project will produce propane, butane, natural gas, and ethane. The ethane will be sold to Petroquimica Bahia Blanca, which is 90%-owned by Dow. The rest will be exported to Petrobras."

Argentina: natural gas: Citicorp sells privatized natural gas company: "Pacific Enterprises International (PEI), Los Angeles, agreed to buy a 12.5% interest in each of two Argentine gas utility holding companies. This will be the first non-U.S. investment in a local gas distribution company (LDC) for Pacific Enterprises, parent of Southern California Gas Co. PEI will pay $ 48.5 million to Citicorp Equity Investments SA for half of its 25% stake in Sodigas Pampeana SA and Sodigas Sur SA, which operate LDCs in Central and South Argentina, respectively. The two LDCs, privatized in 1992, serve about 1.1 million customers with 625 MMcfd of gas."

Argentina: oil and gas privatization: loan: In 1999, the Spanish oil corporation Repsol acquired Argentina's state-owned oil company YPF. Repsol's financing included a $9 billion loan arranged by a syndicate of banks that included Citibank and a bond issue managed by Citigroup subsidiary Salomon Smith Barney.

Argentina: pulp: privatization in debt-equity swap, 1989: "Argentine officials are resisting demands from foreign creditor banks for further payments to chip away at the country's more than $1.5 billion in bank interest arrears. There are other pressures from banks, too. Citicorp, through negotiations in Buenos Aires, is pressing the Argentine central bank to allow it to swap some of its Argentine government debt to acquire a big holding in Celulosa S.A., the country's second-largest pulp and paper producer, U.S. bankers and Argentine officials say. Citicorp apparently wants to swap some of its foreign-currency debt at face value for local currency to make the investment in Celulosa. Meantime, in the small secondary market, Argentine bank debt sells at less than 20 cents for each dollar face value. A Citicorp spokeswoman declined to comment on the negotiations beyond saying, 'Citibank is interested in pursuing debt-equity opportunities in Argentina, among them Celulosa.'" "Citicorp, J.P. Morgan & Co. and Bankers Trust New York Corp. are better positioned than competitors to sell, swap and manage their billions of dollars of Latin credits in the more flexible deal-oriented environment envisioned by the Treasury. Meanwhile, Manufacturers Hanover Corp., Chase Manhattan New York Corp. and other big banks are racing to match this trio's debt-management capabilities. Many foreign banks, particularly Japanese institutions, lag far behind. Citicorp, because of its huge businesses in Latin America, is almost certainly the best-placed of all bank creditors to take advantage of the new strategy. It is the largest private bank in Mexico, the biggest nongovernment financial institution in Brazil and among the most important financial concerns in Argentina, Chile and most other Latin American countries. No other international bank even has a sizable presence in Mexico City. For example, through its Buenos Aires office Citicorp is trying to persuade the Argentine government to agree to a debt-equity swap of several hundred million dollars. Among other things, that would allow Citicorp to take over Celulosa S.A., a major pulp company, according to bankers and Argentine officials. A Citicorp spokeswoman declined to comment. Recently, through swapping $100 million of debt, Citicorp acquired 15% of Fomento Economico Mexicano S.A., a big beer brewer and industrial conglomerate." "Despite the country's blackening economic prospects, Citicorp, one of the biggest holders of Argentine debt, isn't deterred. The New York-based bank, which has close ties to the country's new president, Carlos Saul Menem, is snapping up some of Argentina's bigger assets. It just agreed to acquire, along with a group of unidentified investors, one of the country's biggest paper and pulp companies, Celulosa Argentina S.A., and is negotiating to take over a bank. And under a plan it recently submitted to Mr. Rapanelli, Citicorp soon may even administer Argentina's railways. Citicorp understands the emerging power structure well. Its chairman, John Reed, just visited Buneos Aires. On Nov. 16, during his stay, Citicorp's local unit announced the agreement to acquire Celulosa. That week, Mr. Reed also met with Mr. Menem for more than three hours before flying to Sao Paulo, Brazil, for a meeting with Mr. Born. The Citicorp unit and a group of unidentified investors are taking over Celulosa using $300 million of Citicorp's own Argentine loans and $300 million of pledged funds. In a release Citicorp said that under the agreement it was exchanging "about $300 million of external debt for the same amount of internal debt," implying that it was making the swap at the face value of the debt it exchanged. That looks like an unusually good deal. Argentina hasn't paid interest on its foreign bank debt in more than 18 months and now has arrears of about $5 billion. In the secondary loan market the cash price for Argentine government obligations has recently hovered below 20 cents for each $1 face value of debt. For now at least, Citicorp seems to have avoided that discount of more than 80%. The big U.S. bank is eager to acquire large chunks of Argentine assets in exchange for some of its approximately $1 billion of the country's foreign debt. It is currently negotiating to acquire the 55-branch Banco International de Buenos Aires by exchanging more of its Argentine loans. Such a swap may also involve taking over another paper company, Papel del Tucuman S.A. Both companies belong to the big conglomerate run by Argentine magnate Carlos Bulgheroni. Citicorp's proposed bank takeover would require permission from Mr. Menem's government. Meantime, Chile last week said that it would buy back bank debt with a face value of $139.8 million for $81.4 million in cash, effectively cutting its foreign bank debt by $58.4 million." Argentina: pulp: Celulosa sale sought by Citicorp, 1992: Citicorp Capital Investors sponsored an investors' consortium to buy La Celulosa, the largest producer of pulp and paper products, from the government. Argentina: pulp: Celulosa losses ands tax evasion, 1995: "Argentine pulp and paper maker Celulosa Argentina SA reported that its net loss widened to 50.5 million Argentine pesos ($50.5 million) in the nine-month period ended Feb 1995 from 46.6 million pesos the same period a year earlier." "Hundreds of Argentine enterprises, including publicly listed companies such as pulp and paper giant Celulosa Argentina SA and steelmaker Acindar Industrias Argentina SA, allegedly used false invoices to reduce both the income tax and value-added tax they owed." Argentina: pulp: Celulosa sell-off, 1997-1998: "Argentine paper and pulp maker Celulosa Argentina SA said it will sell its tissue and board manufacturing assets to Kimberly-Clark Corp. (K-C) and Brazil's Industrias Klabin de Papel e Celulose SA for $19.9 million, according to AP-Dow Jones. Celulosa said in a filing with the Buenos Aires Stock Exchange that it will also receive capital injections worth $65.8 million from its main shareholders. Celulosa was scheduled to have transferred the assets to KCK Tissue SA-K-C's and Klabin's recently formed joint venture in Argentina-on Sept. 15, the statement said." "The pulp and paper industry in Argentina is mainly small-scale, under-capitalized, weak and fragmented. But restructuring is continuing and the number of foreign-owned firms coming to the country continues to grow. Of these firms, Chilean giant, CMPC, has bought a series of mills in the past four years and it has now started planting trees independently of the government's incentive scheme. Another Chilean company, Arauco, has also entered the market paying $470 million for Argentina's only market pulp mill, Alto Parana. The latest foreign giant to enter the country is Brazil's largest pulp and paper producer, Klabin. After winning a series of tough and costly legal actions involving accusations of dumping, the company decided to set up manufacturing and converting operations in Argentina - its first overseas venture... It has also formed a joint venture with Kimberly Clark to manufacture tissue and other products at a mill in Pilar, 60 km from Buenos Aires. Similar to CMPC, Klabin is importing pulp and other raw materials from Brazil, rather than making them in Argentina... There have also been other arrivals recently including: the Inland Container company which has bought a 50% controlling share in an integrated box plant owned by Massuh; Smurfit which has now taken over Coronel Suarez; Stone Corporation which is now running the integrated box company, Cartonex, previously part of the Celulose Argentina group; and Union Camp which is now running Zucamor's old mill... For the established companies in Argentina, the process of consolidation and rationalization has continued over the past few years. Argentina's largest pulp and paper company, Celulosa Argentina, has now disposed of virtually all of its non-core operations, although the rump of the company is still owned by Citicorp. There is speculation that the time may soon be ripe for the rest of Celulosa to be sold as well... For the established companies in Argentina, the process of consolidation and rationalization has continued over the past few years. Argentina's largest pulp and paper company, Celulosa Argentina, has now disposed of virtually all of its non-core operations, although the rump of the company is still owned by Citicorp. There is speculation that the time may soon be ripe for the rest of Celulosa to be sold as well. The recent sales included tissue, packaging and board mills, and a printing works. Some have been sold to CMPC and others to Klabin and the proceeds from these sales have allowed Celulosa to pay off most of its debts so that it is now close to good financial health. The sales have also allowed Celulosa to invest and it is making improvements to the quality of its products and emissions standards among other things. Celulosa Argentina used to own the half-built Puerto Piray mill, located in the Missiones province. The mill was originally sized to make 220,000 tons/yr of market pulp, but after 12 years it is still not completed and nobody seems interested in finishing the job. It now seems likely that the equipment at the site will be sold on." Celulosa Argentina has sold off its Puerto Piray mill in Misiones, Argentina. The pulp mill is now in the hands of Celulosa Campana. Argentina: pulp: Celulosa labor problems, 1999: "Staff are back at work at Celulosa Argentina's Capitan Bermudez mill. The printing/writing paper plant is gearing up for action after a lengthy shutdown during the first quarter. Celulosa Argentina sent its staff on vacation in early February when the mill hit financial difficulties and unsold stocks built up at the plant. The situation then deteriorated as protests kept the mill shut. The main bone of contention was the company's proposals to cut the workforce. But union and company representatives finally managed to hammer out a deal at the end of March, which allowed the mill to restart and provided for cost cutting measures to be implemented. The company aims to cut 40% of maintenance costs and reduce salaries and related items by 31%. Under the deal, some 27% of workforce, or 135 people, are being shown the door. But their payoff is 20% above the normal severance package, according to the company. The remaining staff will take a salary cut of 13%." Argentina: pulp: sell-off continues, 1999: "Kimberly-Clark and Klabin Tissue had already merged operations in Argentina and then bought Tissuecel from Celulosa Argentina in Buenos Aires. Renamed KCK, the group also acquired Cartulinas Argentinas. Celulosa Argentina has decided to concentrate on white printing and writing papers. To this end, in 1996 it sold its corrugating medium plant, Cartonex Bernal, to Stone Container."

Asia and Latin America: Citibank exposure: "The [Citibank] division heads of North Asia and Southeast Asia and senior Citibank executives in Thailand, Indonesia, South Korea and the Philippines, have all moved to Asia in recent years from long stints in Latin America... Citibank executives note that they have weathered Asian monsoons before; the bank has been operating in Asia for 95 years. But in Latin America, acting on former Chairman Walter Wriston's observation that people and companies go bankrupt but countries don't, Citibank took the billions of dollars that Middle East oil producers were depositing with the bank in the late 1970s and lent them to Latin American governments -- which later defaulted. It wasn't until 1987 that Citibank started to end the cycle ... In Indonesia, country manager Colin Woolcock, who had worked with Mr. Contreras in Venezuela 10 years earlier, confirmed his fears. "The bankers were falling all over each other to hand out money" to corporations, Mr. Woolcock recalls. Mr. Contreras won't say how much he cut the bank's exposure [in Asia], but other Citibank executives and competitors, who asked not to be named, say Citibank must have cut its lending exposure in Thailand and Indonesia by about half. In Indonesia, Mr. Woolcock was taking another look at how the bank was measuring the risk of lending to the country's sprawling, family-owned and opaque conglomerates. In both Asia and Latin America, such conglomerates routinely commingle funds, passing them as needed from one subsidiary to another. That makes lending to one division dangerous if you can't see the health of the whole, and that is why in Latin America bankers insisted on seeing the entire group's cash flow. But in Indonesia, "The bankers down here had grown so greedy that we had forgotten to do our basic homework," Mr. Woolcock says... Citibank seems to have learned that lesson: Though it has the most assets of any U.S. bank in Asia, it has minimized its exposure to cross-border credit risks, largely by developing a vast retail business in the region, serving 5.9 million clients spread through 101 branches in Asia outside Japan last year."

Asia: Citibank loans and Asian economic crisis: "Amid worries that the economic troubles in Asia and other emerging markets would damage earnings, shares of Merrill Lynch & Co. and Morgan Stanley, Dean Witter, Discover & Co. plunged about 12% each. Stocks have since recovered, as have traders' hopes for most big US financial firms that have big overseas businesses. Most U.S. financial institutions are likely to emerge relatively unscathed from the market's tantrum. In contrast to their position during the 1980s developing-country lending crisis, US banks now have stronger balance sheets to weather storms. It appears that Citicorp, the US bank with the most exposure in Asia, could suffer big loan losses, but it may end up gaining market share... Analyst George M. Salem of Gerard Klauer Mattison & Co. figures Citi derives 20% to 25% of its net income from Asia, with an additional 25% from Latin America. Citi is also the only American bank that has a major business outside the U.S. making auto loans and mortgages and selling credit cards. As of Sept. 30, Salem estimates Citi had $60 billion in loans to Asian borrowers, with $35 billion of that in consumer lending. Asia's troubles will spell roughly $300 million in Asian loan losses for Citi next year, estimates Salem, adding: 'Citicorp is losing one of its principal engines of high growth.' Still, Salem hasn't reduced his 1997 and 1998 earnings estimates of $8.40 and $9.30 a share, respectively. Indeed, some analysts still rate the New York-based behemoth a strong buy. Morgan Stanley analyst Arthur P. Soter believes Citi can take advantage of Asian competitors' weakness to attract new depositors and even buy rivals. Citi spokesman John M. Morris adds that the bank, in the past, has picked up market share in turbulent times."

Australia: copper mining: The small Australian copper producer Mount Lyell Mining Co. has decided to appoint an administrator, following the withdrawal of the financial support of its bankers, Citibank. Mount Lyell issued a statement noting that 'current operating costs and commodity prices have rendered it not possible for the company to continue to trade without further financial support from its bankers... Citibank have advised that the support will not be forthcoming'... Mount Lyell Mining produced copper from the Mt Lyell mine in Tasmania.... Mount Lyell Mining was formerly called Gold Mines of Australia Ltd (GMA), but closed its Reedy and Youanmi gold mines in Western Australia in 1997 and offered them for sale. The company's name was changed in early 1998. The restructuring focused the company's efforts onto the Mt Lyell copper mine, acquired from the Tasmanian Government in 1995 after Renison Goldfields Consolidated (now RGC Ltd) closed the mine in 1994 and handed back the leases. Central to GMA's plans was an agreement with Glencore to buy the Mt Lyell concentrates (Mining Journal, August 18, 1995, p.111). Glencore took a 19% equity interest in GMA in 1996, and agreed to underwrite a A$ 21.6 million issue of convertible notes planned for late 1997 to fund expansion and exploration work at the mine. Glencore later withdrew its support for the issue, and alternative financing arrangements were secured, including a A$ 25 million working capital loan from Citibank."

Australia: nickel mining: "Resolute Ltd has finalised a funding package for the Bulong nickel project, located 30 km from Kalgoorlie in Western Australia, through Citibank. According to Resolute, Citibank has fully underwritten the A$ 120 million of project finance and provided a facility for cost overruns. The offer follows completion of due diligence by Citibank's independent consultants Behre Dolbear. Resolute expects to begin commissioning of the mine in April 1998... [It is] the largest undeveloped nickel resource in Australia. The company has delineated sufficient mineable reserves for a 26-year mine life, with the potential to increase this to over 40 years."

Australia: wood chipping: In the mid-1990s, Citicorp Nominees Pty Ltd was one of the top 20 shareholders of Australian corporation Amcor, which has been targeted for a boycott to stop the woodchipping of Australia's last remaining native forests (holding 9,196,145 shares, 1.50 % of the total). AMCOR is one of Australia's largest companies and for more than 120 years has been the nations major paper maker. For most of its life the company was known as APM. AMCOR had become one of the leading packaging companies in the world with a diversified group of some sixty businesses. Throughout the world AMCOR has 180 plants that manufacture packaging. These packaging businesses generate almost two thirds of AMCOR'S total sales. In 1998, Citigroup was still a shareholder.

Bolivia: debt for nature swap: "The first debt-for-nature exchange occurred in 1987, when Conservation International purchased $650,000 worth of Bolivian bank debt for $100,000 from Citibank. In return, the Bolivian government agreed to establish a $250,000 fund to operate a biosphere reserve in Northeastern Bolivia." (Salomon Brothers, before becoming Citigroup subsidiary Salomon Smith Barney, arranged another debt for nature swap in Costa Rica).

Brazil: Citibank owns 25% of the Valepar conglomerate which bought the state-owned CVRD (mining, aluminum, pulp and paper): Serra dos Carajas in Brazil's northeastern Amazon holds enough iron ore reserves to continue its current 35 million-ton annual production for 5 more centuries. This mining bonanza was developed by a Brazilian state entity - Cia Vale do Rio Doce (CVRD). Last May, control of CVRD was auctioned off to a private consortium for $3.1 billion. The government, which now owns 29% of the voting shares, plans to sell its remaining shares in January through a global public offering. The privatization proceeded despite sometimes raucous opposition. However, after the success of the CVRD deal, the ideological debate on privatization may be over... At dawn the jungle surges to life. As the sun burns off a veil of evening mist, the rain forest unfurls in sever; al shades of green out to the mountainous horizon. Rainbow-colored macaws flutter clumsily, squawking as they strain to reach the treetops. Monkeys shriek, first in scattered voices, then rising in unison to a stadium-like roar. Loudest of all, though, are the sounds of the infernal machines: excavators as large as cathedrals; trucks with wheels that dwarf the tallest man; freight trains so lengthy and overladen that it takes three locomotives linked together to budge them. This is Serra dos Carajas in Brazil's northeastern Amazon, location of the greatest iron deposits in history. Accounting for 17 percent of the world's ferrous ore exports, Carajas holds enough reserves to continue its current 35 million-ton annual production for five more centuries. And that's not all. The region yields 750,000 tons of manganese and 4.5 tons of gold every year. Soon it will produce copper, bauxite and other metals s well Large swaths of Carajas's 1 million acres of ruin forest are being cut down to make way for eucalyptus plantations that will feed paper and pulp mills. And the Carajas railroad, 550 miles long, carries one fourth of all rail freight in Brazil, as well as 500,000 passengers a year. Here is El Dorado, the mythical land of riches sought by the 16th-century Portuguese conquerors and their descendants. And this mining bonanza was developed not by foreign multinationals or even domestic entrepreneurs but by a Brazilian state entity - Cia. Vale do Rio Doce... Then last May, despite sometimes raucous opposition, control of CVRD was auctioned off to a private consortium for $3.1 billion. The government, which owned 71 percent of the voting shares in the company and now has 29 percent, plans to sell its remaining shares in January through a global public offering that will attract mostly foreign investors, who are expected to pay a further $2 billion. (Even before the auction $5 billion in nonvoting CVRD shares, about half of the company's worth as of early this year, had been trading since 1986 on the Brazilian stock market and as American depositary receipts on Wall Street.)... By the end of 1999, some $90 billion of state-owned companies will have been sold off to the private sector in less than six years. These privatizations are keeping the trade-and-budget-deficit-ridden Brazilian economy from falling into a 1994-style Mexican crisis. "Let's imagine that the fiscal deficit doesn't improve in the next two years," says Pio Borges. "Let's imagine that the trade deficit doesn't get better. Even if everything else goes wrong in Brazil, there will still be about $20 billion a year from privatizations in 1997 and 1998. And we can assume that half of this money will come from foreign investors."... [CVRD was acquired by Benjamin] Steinbruch's Valepar consortium... [Steinbruch's ] CSN held a 39 percent share [of Valepar]. The rest was split among the pension funds (25 percent); a coalition of Opportunity (a Brazilian investment company), Citibank and Banco Bradesco, Brazil's largest private-sector bank (24 percent); and Charlotte, North Carolina-based NationsBank Corp. (12 percent).... "Because CVRD was considered one of the flagships of the nation, the government needed to stage an auction that looked as transparent as possible to the general public," says Mauricio Reveco, a mining and steel analyst at [Citigroup subsidiary] Salomon Brothers. Steinbruch himself hinted that a sealed bid would have brought the government more revenue when he said after the auction that he was prepared to pay $1 billion more than he did to gain control of CVRD... [It is unknown] what effect the privatization of CVRD will have on competition among the country's major steel companies. CVRD is heavily invested in most of them... At the same time, Steinbruch is also under pressure from the international financial community to unveil a strategic plan for CVRD that will make its shares more enticing for the upcoming global public offering. Some of Steinbruch's partners in Valepar would like to see CVRD spin off some of its 30-plus subsidiaries. "We have to become more efficient - that's a no-brainer," says Daniel Dantas, partner in Opportunity, the Brazilian investment company that holds a significant stake in Valepar. "Whatever business CVRD is capable of running well it should keep. Those it can't run well it should divest or seek partners for joint ventures."... . The new CVRD is divided into four business segments: minerals, aluminum, pulp and paper... "Our core business is and will remain mining. [CVRD's mines account for 25 percent of the world's iron ore exports.] But we intend to transform CVRD into Brazil's first truly multinational company. That means investing abroad in mining and inviting foreign partners to join us in mining projects here in Brazil. Our models are RTZ and BHP Like them, we want to preserve our market share at home and expand it abroad." Although for the most part the Brazilian business community and media have lionized Steinbruch as the new emperor of entrepreneurs, concerns are already being voiced that he might be overextended. Besides being chairman of the board at CSN, Light Servicos and now CVRD, he is a board member at Petroleo Brasileiro, the state-owned oil and gas company. But Steinbruch shows no inclination to slow down and consolidate. Barely two months after the CVRD auction, he bought control of a newly privatized railway company, Ferrovias Centro Atlantica. "We are in a new era when infrastructure businesses, which until now have been run as state monopolies, are suddenly up for sale," says Steinbruch. "We should take advantage of the moment to buy ports, railways, energy and gas companies as they become available, because these kinds of opportunities won't come again."

Brazil: gas and oil: privatization: "State oil company Petrobras signed a deal... with local firm Petroconcavo for the sale of 12 low-producing onshore fields for an undisclosed sum... Petroconcavo is a consortium of Perbras, an oil-sector service firm; Petrosantander, a firm linked to Banco Santander; and CVC/Opportunity, a private equity joint venture between Citicorp Venture Capital and Rio de Janeiro-based Banco Opportunity. Under terms of the deal, Petroconcavo must invest $30-mil in the 12 fields, including a minimum $4-mil during the first 30 months of the contract. Petrobras plans to sell a total 106 low-volume producing onshore fields this year. The 106 fields account for less than 1% (under 10,000 b/d) of the 1.1-mil b/d of oil Petrobras produces. and less than 2% of its 35.39-mil cm/d of gas production. The 106 fields cost Petrobras $10-mil/yr to operate. Petrobras has no plans to sell its more productive onshore fields that account for about 30% of its overall oil production."

Brazil: oil and gas loan: Petroleo Brasileiro SA (Petrobras) will issue a 20-year, $ 200 million bond with Citibank as lead manager and a 10-year, $150 million LIRA bond with Chase Manhattan as lead manager. Proceeds will be used to further develop fields in the Campos basin off Rio de Janeiro state and to roll over outstanding debt... The Campos basin accounts for 70% of Brazil's 900,000 b/d of crude oil production."

Brazil: pulp: loans: In 1993, Citibank was lead manager on a $70m eight-year Eurobond for Brazilian pulp and paper company Susano, and another pulp and paper company, Cenibra, a subsidiary of iron ore giant CVRD, is planning to issue a $250m deal in the Euromarket to be jointly lead managed by Citibank and LTCB. The Brazilian pulp and paper company Bahia Sul Celulose launched Brazil's first convertible bond in 1994, led by Citibank and co-lead Goldman Sachs.

Chad Cameroon: natural gas pipeline: For background, see Rainforest Action Network, Oil Pipeline Threatens African Rainforest, Action Alert 145: July/August 1999, Updated March 2000. Business news coverage: "World Bank officials are taking a balanced view of the prospects for what could emerge as sub-Saharan Africa's biggest ever privately-financed project, an estimated $3.5 billion, 30-year oil field and pipeline development in Chad. Approval of the bank's board is required for potential loan financing worth $115 million for equity stakes in the project requested by the governments of Chad and Cameroon... A decision could be taken in summer 1998, but only if the bank is satisfied with a series of environmental and other analyses under preparation by the project sponsors, the USs Exxon, Royal Dutch/Shell, France's Elf Aquitaine and the governments of Chad and Cameroon... The sponsors have been talking to the International Finance Corporation, from whom an A-loan/B-loan facility is anticipated for the pipeline, and export credit agencies. It has been suggested that the Export-Import Bank of the US and France's Coface will take a substantial involvement. ABN AMRO and Credit Agricole Indosuez have been selected as the arrangers for the financing. Citibank is advising the developing consortium. Among governmental advisors, Chad has retained Credit Suisse First Boston, France's Mignard and Canada's Stikeman & Elliott." "The consortium plans to invest $3.5 billion to develop oil fields in southern Chad that are estimated to contain approximately 900 million barrels of recoverable oil reserves. The companies intend to pipe the oil through neighboring Cameroon to the Atlantic coast -- a 600-mile journey that traverses biodiverse forests and politically volatile lands. At the coast, the companies will load the crude on to tankers bound for Europe." "[In late 1999 the] $3 billion oil development in the Republic of Chad hung in the balance... after two international oil giants suddenly quit the scheme. The project had promised to double annual income for one of the world's poorest nations, and was backed by the World Bank despite opposition from some environmental and human rights groups. Work on the Doba Basin development in southern Chad and a pipeline to carry crude from the landlocked country to a port in neighbouring Cameroon was to have begun in 2000. It was launched by partners Exxon Corp, Royal Dutch/Shell Group, and Elf Aquitaine in 1996. But the Chadian government confirmed late on Tuesday that Shell and Elf had withdrawn from the venture."

Chemicals business: In January 2000, Citigroup's Salomon Smith Barney unit agreed to acquire the investment banking arm of Schroders for $2 billion. "Schroders says it will concentrate on asset management. Salomon says the deal will expand its presence in Europe. The impact on Schroders' chemicals practice is not clear. There is significant overlap with Salomon's chemicals group."

Chile: banking: privatization: "Furthermore, no one can deny the fact that a substantial amount of long-term capital inflows have not gone into greenfield projects, but to take control of Chilean assets through debt-conversion programs in the 1980s and privatization of few remaining state enterprises in the 1990s. According to a recent report of ECLAC, nearly 40 per cent of FDI in 1997 went into mergers and acquisitions in Chile. The foreign companies are increasing their presence in the domestic market, particularly financial services, through mergers and acquisitions. Some recent examples include the purchase of Banco Osorno by Banco Santander, which resulted in Chile's largest bank; acquisitions of Banco de Santiago and Cruz Blanca Seguros de Vida; the sale of a 40 per cent share in Seguros La Construccion to U.K. firm, Royal and Sun Alliance for $ 122 million; and the sale of a 50 per cent share of Inversiones Previsionales to Citicorp for $80 million."

Chile: CDB loan: In May 1999, several US investment banks underwrote $500 million in bonds for the CDB. These banks include Citigroup, Merrill Lynch, Chase Manhattan, JP Morgan, Credit Suisse First Boston, Goldman Sachs and Morgan Stanley.

Citibank chairman Rubin is former U.S. Treasury Secretary: "Former Treasury secretary Robert E. Rubin started work at Citigroup at the end of October 1999. "So for the two months of last year, what did the board of Citigroup, the nation's largest financial services company, decide his services were worth? A package worth as much as $21.3 million, including cash, stock and options" Reed is co-chairman of Citigroup with Sanford I. Weill and John Reed. 'It's a big number, but I guess they wanted him,' said David Berry, director of research at Keefe, Bruyette & Woods Inc. 'It's nice work if you can get it.'... The board has promised him at least $30 million in cash and bonuses through 2001, plus stock options that could put his total package for the two years at more than $50 million... Reed, who last week announced he would retire in April after 34 years at Citigroup, and Weill, who will step down within two years, were each given $13 million in cash and stock for 1999. Reed will receive an additional $2.72 million in retirement compensation." While he was Secretary of the Treasury, Rubin earned $151,800 per year.

Citibank executive builds Amazon art collection: Rubin isn't the only Citigroup executive with refined taste. Lawrence Small, during his thirty years as the head of Citibank operations in Brazil, built a private collection of Amazonian tribal art. When he was recently hired as the secretary of the Smithsonian Institution, he had architects remodel his new apartment to show off his collection in tasteful manner. "'I asked [architects] for a design that would be totally complementary to the art but not some imitation of the Amazonian world--not the Rain Forest Cafe,' Small says. "Scarcely a Saturday goes by that he doesn't stroll over to the converted apartment to fiddle and fuss for several hours with the installation of his wondrous assortment of feathery headdresses, masks, ceremonial costumes, baskets, arrows, earrings and so on."

Congo: banking, war, timber: "Sadness of banker overwhelmed by economy from hell: US-trained Jean-Claude Masangu [governor of Congo's central bank] threw his all into Congo's finances but to no avail, he tells William Wallis... Mr Masangu, US-educated and a former director of the Kinshasa branch of Citibank, talks wistfully of what might have been... [In 1998] the war which broke out... again split [the Congo], with the Rwandan, Ugandan and Burundian armies backing rebels occupying the east, and Zimbabwean, Angolan, and Namibian troops propping up President Kabila... Inflation is now officially 240 per cent a year. Unofficially it may be more than twice that. Businesses in the capital, Kinshasa, are collapsing in droves, cut off by the occupation of the eastern half of the country from an established pattern of trade which saw minerals, diamonds, gold and other resources coming down river while banknotes and imported goods went up... In its search for hard currency to buy weapons and pay the foreign armies it depends on for survival, the Kabila government has used desperate moves. These have included a tax squeeze on companies still operating, the ban on the use of dollars in local transactions, the seizure of privately owned timber stocks for export, and the arrest in March of dozens of unlicensed moneychangers who congregate in downtown Kinshasa on a road dubbed Wall Street. Last month there were still a few dollars in the coffers and Zimbabwean troops received their pay packets in local currency. It is, as state radio frequently reminds its audience, a war economy."

Cote d'Ivoire: The "solid" presence of foreign banks such as Citigroup was invoked (by the World Bank) as a good influence on the Cote d'Ivoire's National Protected Areas Management Program being financed by IDA, SCAC, AFD, FFEM, the World Wide Fund for Nature, and Conservation International.

Ecuador: debt: Citicorp advises: "Ecuadorean finance officials insist that the country will make the payment on the so-called Brady bond on time and that they have no intention of unilaterally declaring a moratorium on foreign debt payments. But investors and international financial experts familiar with the country's finances are convinced that Ecuador will have trouble doing so... The country's finance officials rushed to Washington last week to meet with officials at the IMF, the U.S. Treasury and the State Department among others. They consulted with New York law firm Cleary, Gotlieb, Steen & Hamilton, which has advised Ecuador on debt matters in the past... Ecuador's $6 billion in Brady bonds were issued under guidelines formulated by former U.S. Treasury Secretary Nicholas Brady to help Latin America escape the 1980s debt crisis... If Ecuador fails to make the payment... it will become the first country to ever default on Brady bonds. Ecuador's $6 billion in Brady bonds were issued under guidelines formulated by former U.S. Treasury Secretary Nicholas Brady to help Latin America escape the 1980s debt crisis... Growing skepticism this month over Ecuador's ability to work out an IMF accord forced the country to sharply accelerate closely held plans to negotiate an orderly debt restructuring during the next six months, according to people familiar with the country's financial problems. The country's finance officials rushed to Washington last week to meet with officials at the IMF, the U.S. Treasury and the State Department among others. They consulted with New York law firm Cleary, Gotlieb, Steen & Hamilton, which has advised Ecuador on debt matters in the past... Meanwhile, Ecuadorean officials have asked several New York investment banks, including Citigroup Inc. unit Salomon Smith Barney and Merrill Lynch & Co. to quickly assemble proposals for an exchange of Brady bonds for new bonds with longer maturities and reduced interest payments over the first year or two. But even with the 30-day grace period, Ecuador will be hard-pressed to orchestrate a quick exchange... The Interamerican Development Bank and the World Bank, among other multilateral lenders, are ready to lend Ecuador more than $1 billion, but only if President Jamil Mahuad can convince Ecuador's Congress to approve tough economic measures demanded by the IMF, such as raising taxes and eliminating certain government subsidies."

Finland: merger with Asian pulp: The global alliance between UPM-Kymmene and APRIL (Asia Pacific Resources International Holdings) was further solidified as the two international partners finalized a $250-million loan for their Chinese joint venture, Asia Pacific Forest Product, in Suzhou near Shanghai. A group of international banks, led by Chase Manhattan and Citicorp International, provided the seven-year loan that completes the financing for AP Suzhou and replaces $175 million in previous loans. UPM and APRIL hold equal 49 percent stakes in the venture, which operates a 30,000 tonne a year converting plant and is about to start up a fine paper mill with an annual capacity of 350,000 tonnes.

Finland: pulp merger advised by Citigroup: "Finnish paper giant Stora Enso Oyj reached across the Atlantic to scoop up Wisconsin-based Consolidated Papers Inc. in a planned stock-and-cash deal valued at about $3.86 billion, or $42.37 a share, signaling that a globalization of the forest-products industry is gathering pace. The paper industry, which has undergone a flurry of regional consolidation in North America and Europe during the past 18 months, still is catching its breath from Thursday's groundbreaking agreement by Finland's UPM-Kymmene Corp. to buy Champion International Corp., Stamford, Conn., for $5.65 billion... . The deal would keep Stora among the top five forest-products companies in terms of revenue and among the top two in terms of production capacity. The global leader, International Paper of Purchase, N.Y., had 1999 sales of $24.6 billion and has 17.7 million tons of capacity and about 100,000 employees... Stora Enso was advised by Citigroup Inc.'s Salomon Smith Barney Inc.; Consolidated Papers was advised by Goldman Sachs Group Inc."

Georgia: pulp: "Stone Savannah River Pulp & Paper Corp., a Chicago-based affiliate of Stone Container Corp., said it accepted a $355 million commitment for a senior bank credit facility to be underwritten by Citibank. Stone Savannah said the funds would be used in connection with recently announced capital improvements and expansion of a Fort Wentworth, Ga., mill it is acquiring from Stone Container."

India: banking: Citibank established a consumer bank in India in 1987; it now has $1.7 billion in deposits and had 1991 profits of $46 million.

Indonesia: oil refinery loan: U.S. Ex-Im Bank subsidy: In 1995 the Ex-Im Bank approved a $296 million loan for U.S. equipment exports to upgrade the Cilacap oil refinery which is owned and operated by Pertamina (Perusahaan Pertambangan Minyak Dan Gas Bumi Negara), the Indonesian national oil company. The Cilacap oil refinery is located on the south coast of Java. The loan applicant was Citicorp International Ltd (Hong Kong). The engineer contractor is Fluor Daniel (Irvine CA).

Indonesia: pulp: loan: In March 2000, a $400 million loan for PT Indah Kiat Pulp & Paper, the largest pulp and paper producer in Indonesia (and the first Indonesian firm to come to the syndicated loan market since the Asian financial crisis erupted in mid-1997) was being arranged by BA Asia, Citibank, Bank Danamon Indonesia, Credit Industriel et Commercial and Fuji Bank, and eight other banks. Indah Kiat is part of Asia Pulp & Paper, the largest pulp and paper company in non-Japan Asia, which is part of the Sinar Mas.

Latin America: bank presence: "Citibank, once the indomitable leader of foreign banks in Latin America, doesn't look so big any more thanks to the new emphasis on retail banking. It ranks just sixth among foreign banks in Latin America by number of branches, with less than 200... Foreign banks now control more than half of all bank assets in Venezuela, compared with less than a fifth three years ago."

Latin America: U.S. OPIC insurance: "Working together, OPIC and Citibank, N.A., have structured an innovative solution for medium- and long-term financing needs in Central America and the Caribbean-a region comprised of mostly small economies. A $200 million credit facility, backed with $100 million in OPIC financing and $150 million in OPIC insurance, will be able to make loans to projects in more than twenty eligible nations. This new project will help small- and medium-sized businesses gain access to long-term financing for many years to come."

Mexico: forestry financing: Citibank and CitiCorp Venture Capital are listed as U.S. banks that specialize in Mexico.

Mexico: loan to industrial group: Mexican industrial group Desc secured a $ 120 million, two-year loan with an interest premium of 3.75% over Libor. The loan was arranged by Citibank, J. P. Morgan, Chase Manhattan, Credit Suisse First Boston, Banco Bilbao Vizcaya, ING Bank, Banque Nationale de Paris, Banco Inbursa, Comerica Bank, GE Capital, and First Chicago.

Mexico: money laundering: "U.S. and Mexican authorities are investigating whether Mexico's largest drug cartel used accounts at Citibank to launder narcotics profits, according to people familiar with the investigation. These people say Manuel de Jesus Bitar Tafich, who is under house arrest in Mexico on suspicion of laundering money and handling investments for Mexico's so-called Juarez Cartel, maintained one or more accounts at Citibank's Chile branch.U.S. officials have subpoened information relating to the alleged accounts from Citibank, a unit of Citicorp, knowledgeable people say... The U.S. Justice Department has been investigating Citibank for more than a year to determine if it violated moneylaundering laws when it opened accounts and transferred $80 million out of Mexico for Raul Salinas de Gortari, the brother of Mexico's former president. Mr. Salinas, who is in prison facing corruption and murder charges, has denied any wrongdoing. Citibank has also denied wrongdoing." "Citibank has frozen $26 million in the New York bank account of a Chilean businessman whose foreign-exchange house is suspected by Mexican authorities of laundering money for Mexico's largest cocaine cartel, say people familiar with the situation. The account, belonging to Alejandro Ventura Cohen, was frozen at the request of the Mexican attorney general's office and the US DEA." "A Chilean businessman suspected of laundering money for Mexico's biggest cocaine cartel says he unwittingly accepted $400,000 of the cartel's money after a Citibank official provided a letter corroborating an apparent alias being used by the cartel's leader. Jaime Ventura Cohen, principal owner of a foreign currency-exchange business in Santiago, Chile, acknowledged in an interview that he cashed travelers checks for a close associate of Amado Carrillo Fuentes, one of the world's most-notorious cocaine kingpins, who authorities say was trying to establish a new operations base in Chile earlier this year. But Mr. Ventura Cohen added that he had no reason to believe the money belonged to anyone other than one Juan Antonio Arriagada, who had been described to him as a Mexican businessman. (A Mexican official says Mr. Carrillo Fuentes was known to be using a false passport under the name Juan Antonio Arriaga, and believes Arriagada is simply a misspelling of that known alias.) One reason he was fooled, says Mr. Ventura Cohen, is that Citibank's chief private banker in Mexico City, responding to an inquiry from Mr. Ventura Cohen's brother about the new client, provided a memo describing Mr. Arriagada as "a known cattleman and cotton grower" from Gomez Palacio, a town in the northern Mexican state of Durango. The memo said Mr. Arriagada wasn't a Citibank client, but named two Mexican banks with which he purportedly did business. A spokesman at Citibank, a unit of Citicorp, declined to comment... Last week, the U.S. government filed a request to seize some $26 million in Citibank accounts belonging to Jaime Ventura Cohen and his brother Alejandro Ventura Cohe." "Although US officials have not confirmed the agent is missing, the Mexican press is reporting the DEA agent - one of four officials assigned to the US Consulate in Jurez - had a car equipped with a tracking device that led investigators to a shed on one of the ranches being searched. So far, 65 FBI forensics experts and 600 Mexican policemen have exhumed six bodies from the sandy soil of four Jurez ranches connected with the Jurez cartel. This week-old search, plus another investigation in Buenos Aires into a Jurez cartel money-laundering "cell," are providing a new glimpse inside the cartel's operations... [An] Interpol-Mexico investigation detected at least $25 million that was sent from Mexico to banks in New York and Los Angeles, before being wired on to Argentina and the Cayman Islands. The US end of the cartel's laundering scheme involved Citibank, which is already under investigation in the US for its role in the holding and transferring of millions of dollars for Raul Salinas de Gortari, brother of former Mexican president Carlos Salinas de Gortari. Raul Salinas is in prison for planning the murder of a political rival. According to Interpol's Mr. Ponce, the investigation revealed that the Jurez cartel's Argentina laundering operations depended on a network of Argentine businessmen and public officials, including at least two high-level government officials from the 1980s." "The biggest drug-money-laundering case in U.S. history has led investigators to secretly search for late Mexican drug baron Amado Carrillo Fuentes' close associates and their hidden fortunes in an unexpected place: Argentina. Law-enforcement agents involved in the investigation told The Miami Herald last month that they had identified $25 million in suspected drug assets of Carrillo Fuentes' Juarez Cartel. They said much of the money had been sent to Argentina through U.S. banks since August 1997, and was used for the purchase of luxury apartments and ranches in Buenos Aires. Following leads from Operation Casablanca, the $157 million U.S. drug-money-laundering investigation unveiled last year, U.S. and Mexican investigators traced millions of suspected drug cartel deposits to an account in Citibank New York, held by a firm known as Mercado Abierto Casa de Cambio S.A. of Argentina."

Monsanto pesticide loan: "Chase Securities, Citibank, and Credit Lyonnais have provided $1 billion in credit for Scotts... to finance the $300-million acquisition of Monsanto's consumer lawn and garden business and Roundup herbicide marketing rights... Syndication banks include ABN Amro, Bank of Nova Scotia, BankAmerica, and BNP."

Monsanto seed loan: "Citibank has closed syndication of a $ 2-billion loan to Monsanto for general corporate purposes. Citibank V.P. Jim Simpson says the loan was heavily oversubscribed. In addition, Goldman Sachs and Salomon Smith Barney have floated a $ 500-million equity-linked issue for Monsanto as part of Monsanto's effort to raise $ 4 billion to cover its pending acquisitions of the seed businesses of Dekalb Genetics and Cargill."

Nigeria: World Bank loan to Citibank: The project involves an IFC loan of up to US$40 million to Citibank Nigeria to be on-lent to private Nigerian enterprises for rehabilitation, trade finance, working capital and new investment projects. The project constitutes IFC's first term finance facility in Nigeria in almost 10 years. Citibank Nigeria was incorporated in 1984 as a joint venture between Citibank N.A. (40%) and private Nigerian investors (60%) under the name Nigeria International Bank Ltd (NIB). However, following 12 years of successful operations and strong profitability, Citibank N.A. in 1996 increased its stake to 75% thereby assuming majority ownership of the Bank and changing its name from NIB to Citibank Nigeria. As at the end of 1998, the Bank had ten branches throughout Nigeria."

Norway: wood products: loan: $250m facility for Norske Skogindustrier AS. The financing, which was recently mandated to Citibank International plc, Christiania Bank and Union Bank of Switzerland --one of the borrower's two traditional lead groups -- is for general funding purposes. The forest products company last used the three bank line-up for its $135m March 1993 facility.

Panama: debt restructuring: insider trading: "In 1987, the first suggestions of insider trading in the secondary market appeared in print. An article in The American Banker, on the day after Citicorp's announcement of its $3 billion addition to loan loss reserves on account of its LDC debt exposure, stated that 'Wall Street brokers wondered aloud if Citicorp's foreign debt traders were tipped off in advance to Mr. Reed's market-moving announcement. If so, they likely took a short position in Brazilian debt to take advantage of what is expected to be decline in the value of those credits.'... Interestingly, while market participants differ on insider trading abuses by some banks, there was general agreement that certain banks had effective internal controls. Citicorp and Bank of America head the list of banks cited often as having had effective internal regulation... In May 1993, a trader at Citicorp was accused of using inside information from the debt restructuring negotiations for Panama to sell his holdings of Panamanian debt before a major fall in its price. Citicorp chaired the creditors' committee in the negotiations. An internal investigation found no evidence of impropriety, and this appears to have been a case of trading based on clever deductions from public, not inside information. Indeed, the publicity given to these allegations against Citicorp suggests the competitiveness of the market may lead to disclosure of many instances of insider trading and thus may support arguments for self-regulation of the market... It is widely rumored that Citicorp, in particular, was subject to a rigorous investigation in the early 1990s that led to a major internal review and improved the implementation of Chinese walls and other procedures...

Papua New Guinea: gold mining loan: "A $300M debt finance package for development of the Lihir gold mine has been underwritten by a group of five banks led by the Union Bank of Switzerland. The other four banks are ABN-AMRO Bank NV, AIDC Ltd., the Australian government controlled development financier, Citibank, and Dresdner Australia Ltd. The funding package remains contingent on the provision of political risk insurance, $250M of which is expected to be provided by Australia's Export Finance and Insurance Corp. and the balance by the World Bank and Canadian government institutions."

Papua New Guinea: oil drilling loan: "Oil Search Ltd... has concluded negotiations with a number of international banks to underwrite its share of project finance for the Gobe oil development in PNG. Up to US$ 98.5-mil, or about 90% of Oil Search's funding requirements for the project, has been provided by UBS Australia Ltd and Citibank Ltd, which are providing US$ 58.5-mil and US$ 40-mil respectively. Political risk insurance cover for the loan will be provided by the US agency OPIC, Oil Search said. Applications for production licenses for the Gobe and SE Gobe oil fields were made in early April. The fields are expected to come onstream in late 1997 at around 50,000 b/d. The US$ 370-mil Gobe development straddles licenses PPL161, in which Oil Search holds 35%, and PPL56, in which it holds 20%."

Peru: copper mining: World Bank insurance: "The partners in the Antamina copper-zinc project in Peru, Rio Algom Ltd, Noranda Inc. and Teck Corp., have signed commitment letters with a syndicate of eight banks for US$ 600 million in project financing. The deal is subject to certain conditions, including future conditions in financial markets. The syndicate comprises ABN-AMRO Bank, Australia and New Zealand Banking Group, Bank of Montreal, Barclays Bank, Canadian Imperial Bank of Commerce, Citibank, Deutsche Bank and The Bank of Nova Scotia. The sum represents about 50% of the project financing, and the balance of this component of the overall funding is currently the subject of negotiation with a group of international import-export credit agencies. The rest of the total capital requirement of the project will be met by equity funding from the partners. Rio Algom and Noranda each hold a 37.5% interest, and Teck has 25%. This week, the partners also revealed that the expected total cost of the project has increased to US$ 2.35 billion from US$ 2.2 billion, as a result of a decision to transport the concentrates produced by the operation by pipeline for the 300 km journey to the port of Huarmey, rather than by truck. The capital increase will be offset by a reduction in the forecast cash operating costs to US$ 0.35/lb of copper, from the US$ 0.40/lb that was previously envisaged. Furthermore, the pipeline, which will skirt the southern edge of the Huascaran National Park, should offer environmental and safety advantages. Antamina is expected to produce 600 Mlb/y (272,000 t/y) of copper and 360 Mlb/y (163,000 t/y) of zinc over a 20-year life (Mining Journal, Sept 18, p. 213). The management contract for the engineering, procurement and construction of the project has been awarded to Bechtel of San Francisco, which conducted the feasibility study. Individual contracts for roads, camp construction and mining equipment totalling some US$ 250 million have already been placed." "The projects insured by MIGA in fiscal 1999, grouped by region, are: Rio Algom Limited, Noranda Inc., Teck Corporation, Citibank, N.A. (Compañía Minera Antamina S.A.). MIGA insured both equity and debt investments in one of the largest new mining projects in Peru, the Antamina copper-zinc mine in the Cordillera Blanca range of the Andes. MIGA issued $67.5 million of coverage for equity investments by three Canadian mining companies, Rio Algom Limited, Noranda Inc. and Teck Corporation, and senior loans by Citibank N.A., leading a consortium of commercial banks. The equity investments are covered against the risk of transfer restriction and the loans are covered against the risks of transfer restriction, expropriation and war and civil disturbance. The $2 billion investment will have far-reaching impacts on the local economy. It is expected to significantly increase Peruvian mining exports. The development of the mine will significantly improve the infrastructure of this Andean region. A modern port facility will be built on unproductive land close to the town of Huarmey. The Antamina deposit is located in a rural Andean region, at an elevation of about 4,300 meters. The construction of roads will better link Peru's highlands to the port, which should foster local commerce and attract future investments. The project will pay substantial annual taxes to the government and will have a major impact on Peru's trade balance. The project involves the purchase of significant amounts of local goods and services, which will provide a boost for many domestic companies. Antamina will employ about 6,000 Peruvian nationals during construction and operation. The workers will be given many benefits, including a mortgage subsidy program for staff housing in the nearby town of Huaraz. It is estimated that for each person hired directly or indirectly by Antamina, five new jobs will be created. In order to assist families and others in surrounding communities, Compañía Minera Antamina will implement a Community Development Plan that includes support for educational, economic, and cultural activities."

Rayonier timberland loan: "Lead arranger, book manager and administrative agent Credit Suisse First Boston, along with syndication agents Citibank and Morgan Stanley Dean Witter, launched into the market on Sept. 28 a $275 million credit facility for Rayonier Timberlands Inc. to support the company's recent acquisition activities. The facility is split between a $75 million five-year revolver and a $200 million five-year term loan. Pricing for both tranches is based on a gird tied to the borrower's bank debt ratings, currently rated BBB-minus by Standard & Poor's and Baa3 by Moody's Investors Service. Initial pricing on both tranches is set at Libor plus 125 basis points, in addition to a commitment fee of 32.5 basis points. Proceeds from the deal will be used to finance Rayonier's $725 million purchase of 980,000 acres of timberland from Chicago-based Smurfit-Stone Container Corp. Stamford, Conn.-based Rayonier is a global supplier of specialty pulps, timber and wood products. The recent purchase of land in the Southeast U.S. will bring the total amount of timberland the company owns or manages to 2.5 million acres worldwide, according to Rayonier's press release."

Slovakia: pulp: Electric utility Slovenske Elektrarne (via Salomon Smith Barney) steelmaker VSZ (Chase Manhattan and ING Barings) and pulp and paper producer SCP (Citibank and ING Barings) are hoping to tap the Eurodollar bond sector.

Subsidies to Citibank from export credit agencies: "Citibank is the largest arranger of export credit financing. Through its global Structured Trade Finance ("SFT") network, Citibank has close direct contacts with all major export credit agencies and has been successful in negotiating corporate, sovereign and limited recourse export credit financing on behalf of its clients worldwide. With a presence in 100 countries worldwide, Citicorp is a known local bank to each of the key constituents in a typical export credit financing: export credit agencies, exporter, sponsors, multilateral Agency and investors. From 1994 to 1998, Citicorp arranged globally over US$ 10 billion single or multi-sourced financings using support from US-Eximbank, MITI OPIC, Japan Eximbank, NCM, ECGD, COFACE, SACE, FGB, EKN, EFIC, DEFC of Denmark, Hermes and Ducroire of Belgium, among other ECAs. Citibank is the leading arranger of transactions guaranteed by U.S. Exim for the last 5 years. Citibank is also the largest foreign bank arranger of J-EXIM, MITI, SACE, NCM, and FGB export credits. Citibank has advised on, arranged bank financing or led managed bond issues for over 108 transactions in 41 countries across 6 continents, far more than any other financial institution. We are the most global financial institution in project finance. Closed 13 project bond transactions totaling over US$ 4.2 billion in 8 countries on 4 continents. Acted as Financial Advisor on 42 projects in 24 countries across 5 continents. Lead arranged 70 bank loans in 32 countries across 6 continents totaling US$ 30 billion of financing raised. For the last 6 years, we led managed more projects, future export receivable and structured bond issues for emerging market issuers than any other financial institution. We have also pierced the "sovereign ceiling" (obtained ratings for bond issuers above the host country's bond rating) more than any other rating advisor. Closed 13 project bond transactions totaling over US$ 4.2 billion in 8 countries on 4 continents. Acted as Financial Advisor on 42 projects in 24 countries across 5 continents. Lead arranged 70 bank loans in 32 countries across 6 continents totaling US$ 30 billion of financing raised. For the last 6 years, we led managed more projects, future export receivable and structured bond issues for emerging market issuers than any other financial institution. We have also pierced the "sovereign ceiling" (obtained ratings for bond issuers above the host country's bond rating) more than any other rating advisor."

Thailand: natural gas: U.S. OPIC insurance: "Acting in cooperation with the Japanese Ministry of International Trade and Industry, OPIC's innovative approach is helping U.S. companies build the 700-megawatt Tri-Energy power plant in Thailand. OPIC underwrote nine political risk insurance contracts worth $185.7 million including policies that, for the first time, cover interest rate swaps. Edison Mission Energy of California and Texaco Inc., of New York are the U.S. equity investors in the project. New York-based Citibank, N.A., and North Carolina-based NationsBank, N.A., provided financing to this project that will play a critical role in U.S.-Thai efforts to bolster the local economy while maximizing the use of clean-burning natural gas."

Trinidad and Tobago: natural gas: loan: "ABN Amro Bank, BZW (the investment banking arm of Barclays Bank plc) and Citibank recently reported that they successfully arranged and syndicated a $600 million debt financing plan to fund the construction of the Atlantic LNG project, a liquefied natural gas complex located in Trinidad and Tobago. The financing is the first LNG project financing in the Americas, and is the largest and longest project financing to date in the Caribbean. The Export-Import Bank of the United States and the Overseas Private Investment Corp. (OPIC) are providing political risk coverage for a portion of the financing. The Atlantic LNG project entails the construction, startup and operation of a three million ton per year LNG plant. Pursuant to long-term contracts, gas will be supplied by Amoco's local subsidiary and the LNG will be sold to Cabot LNG, based in Boston, and Enagas, based in Madrid, Spain."

Venezuela: oil: "DuPont's Conoco oil unit and Venezuela's PDVSA said June 30 they completed a $ 1.5-bil project financing for their Petrozuata heavy-oil venture in the Orinoco Basin. The $ 1- bil offering of up to 25-year bonds and $ 450-mil bank credit pact was managed by CS First Boston and Citibank... The project will cost a total $ 2.2-bil, financed 60% with debt and 40% with equity from the partners. It is the first of five major heavy-oil projects under consideration in Venezuela. Drilling of 500 horizontal wells over 35 years and building of a 210-km pipeline from the Zuata field to Jose on the Venezuelan coast is slated to begin in August with first oil production a year later. The 102,000 b/d processing plant at Jose to turn the heavy oil into API 20 syncrude is scheduled to be in operation in 2001. Two contracts to start building the upgrading plant were announced June 30. Petrozuata general manager Warren Hairford said a $ 400-mil contract had been signed with the Contrina consortium for processing units, offsites and utilities. Contrina comprises Technip from France and US-based Parsons and Brown and Root along with Dit Harris. A second contract for $ 100-mil was let to Covenco to deal with solids and marine handling. That consortium is made up of Weeks Marine, Koch and DSD-SGI... Conoco will take 63,000 b/d of the output for its Lake Charles, Louisiana, refinery and sell the rest to PDVSA's Maraven refining unit. The project, under study by Conoco since 1992, would boost Conoco's reserve base by 35% and raise its daily production 9%... Separately, the 50-50 joint-venture named June 30 two Venezuelan firms to a $ 45-mil contract to supply 36-in pipe for the crude line, Industria Mecanics Orion and Soldadura y Tuberiss de Oriente. A third local firm, Atlantia Internacional, will provide pipe coating." "The Petrozuata extra-heavy oil JV of Conoco and PDVSA's Maraven unit has closed financing for the $ 2.2 billion upgrading project planned in the Orinoco heavy oil belt. In... the largest single financing package for any project in Latin America to date, Petrozuata obtained $ 1.45 billion in project financing, including a $ 1 billion bond issue led by Credit Suisse First Boston and Citicorp Securities... The deal -- the largest project financing ever for Conoco -- was completed in about 6 months vs. 12-18 months generally and was oversubscribed to the tune of $9 billion by interested potential sponsors... Oil will be shipped from the field area, south of Pariaguan in Anzoategui state, to Jose via a planned 200-km pipeline... Petrozuata has awarded a $ 500 million lump-sum engineering, procurement, and construction contract to the Contrina JV for design and construction of the processing, utility, and offsite facilities for the Jose complex. Contrina consists of Halliburton unit Brown & Root, Parsons Process Group, France's Technip, and Proyecta and Dit-Harris, both Caracas-based. From Jose, 63,000 b/d will be shipped to Conoco's Lake Charles, La., refinery, and Maraven will buy 39,000 b/d from Conoco for processing at its Cardon refinery. Separately, Maraven is reported to be talking with Coastal about a similar project at a cost of about $ 1.9 billion [in which] oil would be shipped to Coastal's Corpus Christi, Tex., refinery for further reprocessing. Maraven is reported to be considering the possibility of securing a stake in the Coastal complex, as well."

Vietnam: Citibank opens offices: In 1993 and 1994, Citibank opened offices in Hanoi and Ho Chi Minh City, Vietnam. "Vietnam's Development Path & Implications for Natural Resource Degradation" are discussed in a November 1996 paper.

Vietnam: coal mining: "The coal industry in Vietnam is looking to expand. Citibank has provided the Vietnam Coal Corp. (Vinacoal) coal with a medium-term loan of $ 30M... Coal consumption has been steadily rising along with the development of a market-oriented economy... Coal is one of the key products in Vietnam's industrialization process, and the government is encouraging the expansion of foreign investment in the sector... Annual outputs at open-cast mines at Coc, Cao Son, and Deo Nai have increased substantially... Strip-mining has accounted for nearly two-thirds of the industry's total output... In addition, the transportation facilities necessary for efficient functioning of the coal mines are being given additional funding. Approximately 200 km of railroad track in the mining regions will be upgraded. By the end of this year, a new railway track running through the 1,840 m of mountain tunnels surrounding the mining areas will be completed, thus providing greater accessibility... Vinacoal has attracted greater foreign investment. Foreign companies can now choose between foreign joint ventures, build-operate-transfer (BOT), and 100% foreign-invested ventures... The U.S. developer Oxbow opted for a BOT venture in the development of a coal-fired power plant in Quang Ninh... Construction of the factory is expected to begin in 1998, with power generation to commence by the end of 2000. A pre-feasibility study for another BOT venture by a U.S. company has been approved. This study is for the construction of a power plant near the Na Duong coal mine in the northern border province of Lang Son, which has the capacity to produce 100MW of electricity."

Vietnam: political risk insurance for Citibank: "The Multilateral Investment Guarantee Agency (MIGA) issued its first Contract of Guarantee in Viet Nam to Citibank, N.A. (Citibank). It was also the 50th contract issued in fiscal year 1995 (ending June 30, 1995). Citibank invested US$15.0 million to open a branch bank, Citibank, N.A. (Viet Nam), in Hanoi. The branch will focus its banking services on trade finance, structured trade, foreign exchange services, project advisory, and cash management. MIGA's guarantee of US$13.5 million will cover Citibank's investment against the risks of Expropriation, Transfer Restriction, and War and Civil Disturbance. Since Viet Nam joined MIGA in October 1994, MIGA has received more than 30 applications for coverage of potential foreign investments in the country totaling hundreds of millions of dollars. MIGA is actively underwriting a number of other prospective investments in Viet Nam and expects to issue additional coverage in the country this calendar year.

Zambia: copper mining privatization: In 1998, Zambia agreed to sell its Nkana and Mufulira copper mining operations to Canada's First Quantum Minerals and Swiss trader Glencore International AG for $43 million. "The buyers would hold a 90 percent stake in a new company that will purchase the Mufulira division and Nkana mine, concentrator and cobalt plant from Zambia Consolidated Copper Mines (ZCCM). ZCCM would retain a five percent free and five percent repayable carried interest in the new company, which will invest $154 million in the operations during the first three years. A further $340 million investment would be subject to further evaluation of the assets. The government also hoped to conclude the sale of the Konkola, Nchanga and Nampundwe mines to mining giant Anglo American Plc. The two deals would conclude Zambia's effort to privatise its money-losing copper mines, which have seen annual output fall to about 250,000 tonnes from a peak of over 700,000 in the early 1970s. Kalumba said he hoped Western donors would resume financial assistance to the southern African country following the conclusion on the mine deals. Most lenders have withheld balance of payments support until the mines privatisation programme was completed. The Netherlands said earlier this week that it would free $10 million support because it believed the process was largely done." By the end of the year, however, with copper production 10 percent below the previous year's level, a report by Citibank Zambia attributed the decline to "insufficient investment in the mines coupled with the delayed privatisation of the remaining and major assets of ZCCM".