Pulp Fiction – Credit Suisse and the destruction of the Indonesian rainforest

Zurich, 31.05.2002 - The development organisation Berne Declaration and ACTARES (Shareholders for a Sustainable Development) demand that Credit Suisse, at its Annual General Meeting today, accepts the consequences of its financial contribution to the destruction of the rainforest in Indonesia.

The Indonesian pulp and paper corporation Asia Pulp and Paper (APP) is responsible for the destruction of large parts of the Indonesian rainforest, one of the world’s richest in the diversity of its species, and for the expulsion of its inhabitants. Credit Suisse plays a special role among the over 300 Indonesian and international banks that finance APP. On the one hand, Credit Suisse First Boston (CSFB), with over one quarter of a billion dollars, is the largest known bondholder of APP. On the other hand, last year CSFB took on the role of a financial advisor in the refinancing of this overly-indebted corporation.

The financial difficulties of APP – the corporation is over 13 billion dollars in debt – are closely related to ist socially and ecologically unsustainable operations. The banks’ willingness to finance APP permitted it to construct over-sized production facilities. The corporation’s commercial advantage was the cheap lumber it derives from the clear cutting of massive tracts of rainforest in Indonesia. However, because APP and other firms have flooded the market with cheap products, the price for pulp and paper has fallen and as a result APP cannot repay its debts.

A representative of ACTARES, together with The Berne Declatarion, will be posing critical questions about Credit Suisse and its relationship with APP at the general meeting of Credit Suisse today. Both organisations demand that CSFB uses ist role as financial advisor to ensure that socially and ecologically sustainable practices are adopted by APP. The capacity of pulp factories must be reduced and the remaining highly valuable rainforest stands must be protected from future logging.

The Berne Declaration and ACTARES demand further consequences. Credit Suisse must establish new rules for investments in forest- related sectors and bring in qualified personal in order to ensure that it no longer participates in the financing of environmentally destructive business practices.