Daily Sports Roundup: May 1st

Today in the Daily Sports Roundup: The Celts and Cavs meet on the hardwood, the Sprint Cup Series hits Richmond, and the Kentucky Derby runs for the roses.

Tipping off on the hardwood . . .

The second round of the NBA playoffs gets going on Saturday with Boston at Cleveland in Game 1 of their best-of-seven series. The Cavaliers advanced past the Bulls in the first round of the playoffs with a 96-94 home win on Tuesday night. LeBron James picked up 19 points and 10 rebounds for Cleveland in that contest, but a strained right elbow could end up hindering the superstar forward on Saturday afternoon. The Celtics knocked off the Heat in five games in the first round of the playoffs, finishing that series with a 96-86 home win on Tuesday night. Ray Allen led all Boston scorers by pouring in 24 points in that Game 5 win.

Meeting up on the diamond . . .

The American League schedule for Saturday has the White Sox at the Yankees, Oakland at Toronto, Texas at Seattle, Kansas City at Tampa Bay, Minnesota at Cleveland, Boston at Baltimore, and the Angels at Detroit. Scott Kazmir (2-1, 7.20 ERA) is slated to take on Jeremy Bonderman (1-1, 6.97 ERA) in that last matchup. Lefthander Kazmir picked up the victory in his last trip to the mound against the Yankees despite a shaky outing – four earned runs over 5 1-3 innings of work. Righthander Bonderman took a no-decision against the Rangers in his most recent start, surrendering four earned runs over his 5 2-3 innings of work.

Over in the National League on Saturday it’ll be Arizona at the Cubs, Cincinnati at St. Louis, Houston at Atlanta, Colorado at San Francisco, Washington at Florida, Milwaukee at San Diego, Pittsburgh at the Dodgers, and the Mets at Philadelphia. The Mets’ Mike Pelfrey (4-0, 0.69 ERA) will be sent out against the Phillies’ Roy Halladay (4-1, 1.80 ERA) in that last game. Righthander Pelfrey tossed five scoreless innings against the Braves last time out, and he hasn’t given up a run since April 9. Righthander Halladay is coming off his first loss of the season, giving up five runs over seven innings versus the Giants on Monday.

Taking a trip around the rink . . .

The NHL gets its final two second-round series underway on Saturday, with Philadelphia at Boston in an Eastern Conference semifinal, and Vancouver at Chicago in a Western Conference semifinal. The Flyers blanked the Devils 3-0 in their last game last Thursday to close out their first-round set, picking up the series win as the underdog. The Bruins also pulled off an upset in the first round, bouncing the Sabres with a 4-3 win on Monday. The Canucks managed to get past the Kings in their Western quarterfinal, while the Hawks dispatched the Predators. Chicago knocked Vancouver out of the Stanley Cup playoffs last year.

Roaring around the track . . .

The drivers of the Sprint Cup Series have a race under the lights on Saturday as they take to the track in the Crown Royal presents the Heath Calhoun 400 at Richmond International Raceway. Jimmie Johnson is listed as the 5/1 favorite to take the checkered flag at Richmond on Saturday, with Denny Hamlin (who won the Chevy Rock & Roll 400 at Richmond back in September) following him on that odds list at 6/1. Kyle Busch is the defending champion at the event, and he sits at 8/1 odds to visit Victory Lane on Saturday night. Jeff Gordon and Mark Martin round out the top tier of contenders for the race; they’re both listed at 9/1.

Rounding out the Roundup . . .

Finally, the 2010 Kentucky Derby is set for Saturday at Churchill Downs, with Lookin at Lucky set as the 7/2 favorite despite drawing the rail position. Sidney’s Candy, next on that odds list at 6/1, will start on the outside at post 20. Awesome Act (post 16) is third on the chart at 9/1 odds, with Icebox (post 2) at 10/1, and Devil May Care (post 11) at 12/1. Super Saver (post 4) is set at 14/1 odds for Saturday, with each of American Lion (post 7), Mission Impazible (post 14), and Dublin (post 17) at 16/1. Noble’s Promise (post 3) rounds out the top picks at 18/1. The biggest longshot for the Derby is Backtalk (post 18), listed at 50/1 odds.

Running over Citi: Banking Goliath Citigroup agrees to environmental screens for project financing in the developing world.(Interview)(Interview)

Multinational Monitor January 1, 2004 Ilyse Hogue is campaigns director at Rainforest Action Network (RAN). She is director of RAN’s Global Finance Campaign, which seeks to hold the corporate finance sector responsible for the ecological and social impact of its investments, especially in the developing world. After a nearly four year RAN-led campaign targeting Citigroup, the financial conglomerate in January 2004 agreed to adopt a landmark policy that RAN says “commits the world’s largest bank to take significant steps to ensure protection for endangered ecosystems and begin to confront the crisis of climate change.” Multinational Monitor: Why did you launch a campaign that targeted Citigroup?

Ilyse Hogue: In 2000, we started to look for more of a holistic solution to the series of threats to rainforest preservation–including mining, logging and fossil fuel development–as well as to climate change, which threatens not only rain-forested regions around the world but the stability of the entire global ecosystem. We began to look at global economic trends, understanding that any kind of destructive project that we were looking at had one common denominator: the finance and capital investment necessary to make it happen.

The trends were showing that over the 1990s, private finance began to dwarf public finance (such as from the World Bank, or government aid programs) in terms of development investment in the Global South. It was becoming the determining factor in what moved forward, especially because there was next to no accountability or Ilyse Hogue, protesting that Citigroup sees issues only with regard to dollars and no sense. oversight for the private financial institutions. We were seeing private banks fund projects that even the World Bank wouldn’t touch, because they were too controversial.

We felt we needed to get at the private financial sector. When we started to look at potential candidates, the name Citigroup just kept coming up. There were a lot of reasons Citigroup was attractive to us as a target. First, when attempting to change a whole sector, we think it is helpful to change the leader, because if you can get concessions out of them, they set a standard to be followed by the other players. Second was a much more pragmatic concern: everywhere we looked at destructive projects–from the Chad-Cameroon pipeline in Africa to the Camisea gas project in Peru to the OCP pipeline in Ecuador–Citigroup was involved. So changing Citi’s policies would most quickly make a difference in communities and ecosystems around the world.

MM: What do you mean when you talk about private finance? What is private finance?

Hogue: When we started the campaign, we were mostly looking at megabanks, particularly at their project finance departments. These departments tend to fund fossil fuel projects and mines. We were looking at the Citibanks, the Chase Manhattans, the Deutschebanks, Mizuho in Japan–all the big banks that were funneling cash around the globe to see where they could make the most profit. This private finance is super-fungible across borders, not necessarily susceptible to national law because of how it is coming in and coming out.

At the end of the campaign, we have a much more nuanced vision of what private finance actually means. The project finance departments of the Citibanks are a huge part of the story. But if we are really going to get at the issue of an economy that by its very nature is destructive to the web of life, we have to get a lot more sophisticated about how money moves around the globe. In looking at where we are going next, we have a lot of the other banks that are competitive with Citi in our sights, but as with Citi we are looking beyond project finance, to corporate loans in general, to revolving credit facilities, to these different mechanisms to move money to companies.

We are also looking at the insurance companies, who are increasingly investing in these kinds of projects in the Global South. When we were studying the financial structure of the OCP pipeline in Ecuador, we found John Hancock was investing its customers’ money into OCP. It was a new direction for the insurance industry, and something we feel confident many of their customers would not be happy about.

MM: The basic arrangement you are looking at is: A mining company, say, wants to start a new, major mine but doesn’t have capital on its own, so it looks to these private institutions to give it the money it needs, and then the company will pay back the bank over time?

Hogue: Yes, though the details vary. If you look at the OCP pipeline, the consortium needed money to get the pipeline built. The syndicate of banks that came in to fund the pipeline–and they rarely do this alone, because banks are very risk averse, so there are anywhere from six to l0 banks involved in any large infrastructure project–created a tiered financial structure to make sure the loan was going to be paid back. The syndicate demanded that the pipeline revenue go immediately to pay back the loan interest, before the pipeline consortium ever got the money. The syndicate also inegotiated a ship-or-pay contract, which meant the consortium had to predict how much oil would flow through the pipeline and what kind of profit that would bring, and if they came in under quota, they still had to pay at their projected quota. Ultimately there was an agreement in OCP that said if any of the companies go bankrupt or if the project collapses, the banks would own the concession rights to the blocs where the oil was to be drilled to fill the pipeline. It was very interesting to see how much power the banks can end up having over the companies doing the projects. go to website citibank sign on

The banks’ relationship with the energy independents involved in OCP is different than it is with companies with the political or economic clout of a BP, Chevron or Exxon. With the majors, the banks assess risk differently, perhaps giving a BP large corporate loans with no requirement that the oil company designate where the proceeds go.

MM: In the course of the banks and others making these kinds of loans, is there any kind of national or international regulation that constrains what they do?

Hogue: Many of the banks claim that they won’t fund projects that violate national law in the country where the project is located, but there is no enforcement mechanism, which has been a huge problem. There is nothing even like the World Bank’s ineffectual Inspection Panel that looks at how the banks are moving their money, or what they are investing in, or holding them accountable for what they are investing in.

The financial sector’s pressure for rapid repayment often leads to violation or skirting of national law. If you look at OCP, the government needed the money from the pipeline to pay back its external debt–which is going back to many of the same banks that are funding the pipeline. Eighty percent of the money coming out of the pipeline is going to pay external debt, and the government needed to know that the pipeline was going to be generating revenue on a timely schedule. The government demanded a guarantee from the consortium. So the consortium had to take out another loan, saying, “We guarantee we will get the money flowing on time, or else we will pay the government from this borrowed money.” The banks that provided the loan to offer the guarantee to the government then pressured OCP to bring the pipeline quickly. There is some indication, though it has not been independently verified, that that pressure resulted in cutting corners on social and environmental concerns, and at least on the independent external review that was being conducted, because the consortium had to ram the construction through to satisfy the stipulations of the loans.

It is very convoluted. But what comes out of looking at these projects in depth is the power of the banking sector, which has operated relatively anonymously for decades. One of the benefits of the campaign is shining light on these players, on the power they hold, and the decisions they make, and forcing them to feel accountable for the consequences of where their profits are coming from.

MM: Had there been scrutiny or pressure on the banks for these kinds of issues in the past?

Hogue: Yes. But the pressure previously placed on Citigroup and other banks was on a project-by-project basis. Communities joined by international advocacy groups would look for leverage points to stop a particular project, and would go to investors. Sometimes that was successful, and sometimes it wasn’t.

We wanted to support the project-by-project work, but at the same time really focus on getting structural policies in place within the bank, that would prevent harmful investments in the first place. We were fighting for categorical exclusions, an agreement that there are some activities that are so outdated and so barbaric they can no longer be funded. Our long-term intention is to add more activities to that list, while creating the political and economic base for other activities to fill in that void. We want to begin the ecological U-turn from prioritizing funding of fossil fuel development to creating markets for clean energy or sustainable alternatives.

MM: What happened when you first approached Citi with this vision?

Hogue: They listened very patiently. Then they said, “That’s really nice, kids. Let us explain to you how the world really works.” And then they proceeded to explain how they do business. They had no intention of acting on any of this.

The interesting thing is they never argued there were issues. They just said, “You’ve got the wrong folks.” They spent about a year trying to get me to go after SUV drivers.

The idea that a bunch of scrappy activists from around the world can join together and move one of the world’s largest corporations, like Citigroup, from where they were in 2000, when they were very patronizing, patting us on the head and sending us away, to actually publicly announcing a whole new set of commitments around the issues we brought to the table–that’s really inspirational to me.

There has got to be some reassertion of democratic control. It is not happening through our government. I don’t want to overstate, but I am really excited about the commitments and concessions that Citigroup made. I think they are going to make a big difference on the ground, and I think they have opened the door to a debate in the financial sector.

At the same time, I want to stress that we have just started down a very long road. The economic system is deeply entrenched in our culture. It is the most immovable component of what we understand about the system in which we live. The victory is exciting because it opens up a new frontier, but there’s a long way to go. Even as we celebrate the fact that Citigroup announced the most progressive environmental policy coming out of a bank to date, we are going to have disagreements and debates as we move forward. And other banks are going to be unwilling to make the same commitments. This is a really long haul for us.

MM: When Citi rebuffed you initially, how did the campaign respond?

Hogue: We ran a campaign that simultaneously hoped to demonstrate that their existing and future customers were not interested in doing business with a bank that was so out of step with the customers’ values. There was a lot of student activism, a lot of students saying, “Not only won’t I accept your credit card that I get 18 solicitations for in a single month, but I’m going to switch my student loan, and I’m not going to invest my mutual fund with you.” We realized quickly that because Citi prides itself on being a one-stop financial shop for financial services, every returned credit card–which is the way they open the door to another customer–was calculated as a lifetime of lost revenue. So organizing a mass return of credit cards was a very successful tactic, in terms of making them understand the potential long-term economic damage.

We appealed very directly to Sandy Weil, who at the time was CEO. We found that certain decision makers, who are in position to make decisions that affect millions of people around the world, are often concerned about the legacy they will leave. We made sure that he understood the responsibility inherent in his position. He’s actually told stories about different things that we did that really swayed him, because it made his children and grandchildren ask tough questions. citibanksignon.net citibank sign on

We ran shareholder campaigns. We did days of action, with nonviolent civil disobedience. We hung banners from their buildings. Media campaigns. We did a commercial in the lead up to their shareholder meeting with celebrities cutting up their cards. Any tool that was in our toolbox, that fit within the parameters of nonviolent advocacy, we used.

We won thanks to a lot of different activities on the part of a lot of different people around the world. Sometimes we would hear only three weeks after the fact about something that happened in Ecuador or Belgium. There was a lot of autonomy and personal empowerment on the campaign. The worldwide uptake and initiative was really exciting, because I think it indicated how deeply the campaign resonated with people.

MM: How did Citi respond over time? Did they make concessions along the way?

Hogue: I think they began to understand how vulnerable their corporate brand was when they became implicated in the Euron scandal–that was late 2002. We saw that as an opportunity to take the public debate over corporate responsibility and expand it beyond just the pension funds that were robbed from Enron employees, and take it to the long-term investment in communities and the environment. That was the first crack that we saw.

The first indication that there was some movement was when they decided to get out of the Camisea project in late 2002.

Over the course of the campaign, we would hear that they issued a memo on a particular day of action, instructing their employees what to do, explaining to ignore us, that it was not a valid campaign. But then the next day of action, it would be slightly different–they’d say here’s how to answer the questions about specific projects, yes we are involved with this. So in their public response to the campaign, there was a progression of admission of culpability over time.

MM: What did Citigroup finally agree to?

Hogue: They finally agreed to a number of different initiatives. They created a set of categorical exclusions–what we call no-go zones–setting aside areas that are too endangered for development, and saying publicly that they will not finance projects in those areas. The no-go zones are delineated by drawing upon existing accepted definitions of primary tropical forests and prohibiting industrial development of these endangered ecosystems.

They agreed to another tier of what they are calling high-caution zones, which require a pretty robust set of qualifications to be met prior to them committing funding to projects in those areas. These are determined by reference to the International Union for the Conservation of Nature system of ranking protected areas, and includes strict nature reserves, wilderness areas, national parks, natural monuments and habitat management areas, as well as sites that meet other specific social and environmental criteria.

They came out with the first policy on illegal logging in the financial sector. If they are invested anywhere in the logging chain, they must ensure they are not funding a project logging illegally or using illegal timber. So if they are invested in a pulp mill, they need documentation that what is coming into the pulp mill is not illegally logged. This is something that our allies, particularly in Indonesia and Brazil, where the problem of illegal logging is so devastating, are really excited about.

There are other things in there about taking leadership in the international debate about illegal logging. They are linking it to the diamond trade and it is going to have some exciting implications for Africa and conflict timber.

The fourth section talks about prioritization of investment in clean energy and renewables. They are setting aside a specific amount of money. They are hiring people who are qualified–in one case, they trained someone to become qualified–to evaluate those investments. We realized that many more sustainable endeavors were not being funded because banking is so fast paced, and in Citibank project finance is such a high-volume business. If a lending officer doesn’t already know how to evaluate a project, then they are not going to see it as something that is potentially fundable.

They are going to offer energy-efficient mortgages to their consumer base, and promote them. So people who get a mortgage can, for the same price, get a mortgage that builds in efficiency and clean energy into their home and pay it back over a longer period of time. In the end, this saves people money, by lowering their electric bills.

The last piece involves climate change. It requires them to audit their investments in greenhouse gas industries, and hopefully reduce those investments over time. This is the piece that isn’t strong enough, but is the first climate policy coming at all from the private banking sector. We’re hoping to leapfrog it quickly; we want really strong commitments on reductions over time from the next bank.

MM: What is the monitoring system to make sure they follow through?

Hogue: We are highly cognizant of the fact that when we run these corporate campaigns the concessions are voluntary. There is no regulatory mechanism to watchdog this for us.

We believe and have had positive experience so far, that the same type of passion and activism that brought Citi to the table and make concessions is going to make them follow through. Obviously we are going to be watchdogging them. We have already started to set up mechanisms with them by which we have benchmarks for policy implementation, and have regular check-in times. And we’re engaging other groups that do a lot of implementation work to work with them and help them.

There weren’t as many groups anxious to bring them to the table and force concessions as there are now interested in forcing them to stick to those concessions. There are a lot of groups interested in monitoring and implementation. Sometimes we wonder, “Where were you guys, two or three years ago?” MM: What’s next? What are you demanding of other leading banks?

Hogue: Our next step is to go after the rest of the industry. We have put 10 new financial institutions on notice, telling them that we expect them to meet or beat Citigroup’s policy.

And we are going to be pushing them to beat Citi. We think the Citi campaign was an experiment. We got a lot, but we need to get more. It must be a continuous evolution of standards upwards.

We are calling the 10 institutions “The Liquidators.” There is a liquidator list of 10. Some are names people would expect, like JP Morgan Chase; some are big players in the energy market that people may not know, like Wells Fargo; and we have the insurance industry on alert, too–John Hancock is on our list. We are going to spend some time over the next couple months seeing what the inclination of these companies is, and then come out hard and strong on the next target.

At the same time, we are working, where it is strategic, to strengthen some of the international institutions that are in their infancy with regard to private finance. There are a couple different venues where we spend time to help develop compulsory regulatory guidelines.

We’re working with European partners to do some training with our allies in more remote regions to understand the policies that are coming into place, and to figure out how we can best collaborate, using the financial sector in the North as a leverage point in their campaigns against their own governments and independent companies in the South. We have found that sometimes outside corporations can move governments toward further protection of both their environment and communities. If a Citibank is saying to the government of Chad or to an oil company, “we are prevented from investing in this project unless the concerns of the affected communities are addressed and environmental commitments are upheld,” those investment-hungry countries are more likely to accommodate these requests.

MM: Do the other banks on the target list have large-scale consumer operations that make them similarly vulnerable to your public pressure?

Hogue: They are all really different. We are always concerned about where our strengths match with our corporate targets’ weaknesses. Consumer branding is a huge piece of that. At the same time, there are some corporations out there that have to see the light–but who don’t really fit our target profile. That just means we have to get smarter and more creative in figuring out how to pressure corporations. Because ultimately, down the line, we are going to have to confront targets that don’t have a public face.

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