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World Bank; China/Enron
38 Billion? The World Bank is at it again...Boy, they are probably the One World Government that we hear so much about...If one took a look at the board members of this bank...One might see "whose who" in international dominance and ownership...I think I'll try it!
Date: 10/10/2005 6:52:41 PM ( 19 y ) ... viewed 1528 times FINANCE
China as Enron
That title's definitely a stretch, but I'll go with it anyway. Because I just got back from a press briefing on M&A in China, where Ko-Yung Tung, a senior counselor of the law firm of Morrison & Foerster, made a startling statement in his introductory remarks. (At least it was startling to me.)
Tung mentioned that when he was a vice president and general counsel of the World Bank a few years ago and China came knocking on its door, the bank soon deemed it necessary to find a way around its absolute dollar limit of $13.5 billion in total lending to any individual nation. Tung said that finding a route around the limit took "a lot of engineering," but engineer he and his colleagues did, such that the amount of commitments to the country by the World Bank now total some $38 billion.
True, commitments aren't the same thing as actual loan exposure. And maybe that difference accounts for the additional $24.5 billion. But Tung clearly implied that the bank has found a way to lend considerably more than $13.5 billion. Unfortunately, he didn't explain how the engineering was done, and wouldn't elaborate when I buttonholed him on the dais afterward, explaining that he wasn't sure that information had been made public. Still, he did say it took "some fancy footwork," which makes me think it had to involve more than the difference between actual loans and commitments.
So that leaves me wondering if it involved the World Bank's equivalent of an SPE. And if you think the title's still a stretch, consider this statement in light of the piece that Abe de Ramos wrote for our special issue on banking and finance, wherein he describes how Western banks are buying stakes in Chinese ones now that the government has bailed them out of their bad loans. Abe (who pronounces his name "Ah-bay") writes that what China wants from the deals is for its banks to learn the risk management practices of Western banks. And we all know what that means. (Want more details? Our special banking and finance issue will be posted on CFO.com on October 15.)
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