Export Credit Agencies - Corruption and Transparency

Export Credit Agencies and Corruption

Following the Convention on Combating Bribery of Foreign Public officials in International Business Transactions from 1997 the Members of the OECD Working Party on Export Credits and Credit Guarantees agreed an “Action Statement on Bribery and Officially supported export credits”. The latest version of this action statement dates from 2006. This Action statement demands from the ECAs to take appropriate measures to deter bribery in international business transactions, e.g. through:

1. Informing exporters and, where appropriate, applicants, requesting support about the legal consequences of bribery in international business transactions (…)
   
   
2. Requiring exporters and, where appropriate, applicants, to provide an undertaking/declaration that neither they, nor anyone acting on their behalf, such as agents, have been engaged or will engage in bribery in the transaction.
   
   
3. Verifying and noting whether exporters and, where appropriate, applicants are listed on the publicly available debarment lists of the following international financial institutions: World Bank Group, African Development Bank, European Bank for reconstruction and Development and the Inter-American Development Bank.”

Further, the exporters should disclose whether they or anyone acting on their behalf are currently under charge in a national court, or have been convicted for bribery in the past five years.

If bribery has been proven after credit, cover or other support has been approved, the ECAs may deny payment, or ask for refund of sums provided.

• “Action Statement on Bribery and Officially supported export credits”, OECD 2006
  

Export Credit Agencies and Transparency

Aarhus Convention

(This section draws from „Accessing environmental information in and from the European Community – A practical guide to your right to know“ Fern November 2007)

Projects financed/guaranteed by European ECAs offer a special entry point for transparency: the Aarhus Convention applies to them. This Convention from 1998 is formally known as the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters. It is an international legal agreement concluded between countries. Most European countries are parties, as is the European Union. As of September 2008, the Convention has been ratified by 41 countries (see UNECE website for signatories). Its significance lies in the fact that it marks a definitive step forward in the field of environmental governance as it seeks to protect the right of ‘every person of present and future generations to live in an environment adequate to his or her health and well-being’ (Article 1, Aarhus Convention). To do so, it sets minimum standards empowering members of the public and non-governmental organisations to hold public authorities to account by providing tools to access information, participate in decision-making and obtain redress in matters relating to the environment.

For transparency the first pillar the “Access to Information” is most important:  Public authorities of the countries that have ratified this convention are now required to share information related to the environment with the public. In the European Union it has been transposed into the “EU directive on public access to environmental information”. The transposition of this directive into national law of the EU member states had to be finished by mid February 2005.

Though ECAs are different in different countries, all of them fall under one or another definition of "Public authority" in the directive, since the broad definition of "public authority" includes

1. government or other public administration, including public advisory bodies
2. any natural or legal person performing public administrative functions under national law, including specific duties, activities or services in relation to the environment; and 
3. any natural or legal person having public responsibilities or functions, or providing public services, relating to the environment under the control of a body or person falling within a) or b).

All export credit agencies carry out some transactions on their government’s behalf, with its support and under its control. That the activities of ECAs are in relation to the environment is obviously acknowledged by the existence of the OECD Common Approaches. DG Environment confirmed this view in a letter of July 2005: “… Export Credit Agencies, whether or not belonging to the public administration, qualify as public authorities within the meaning of Directive 2003/4/EC and are obliged to observe the rules laid down in that directive.”

Transparency in emerging countries

Regulations out of the family of Freedom of Information Acts have been used successfully to obtain information from ECAs in European and North American countries. Although they might not seem to apply for export credit agencies in the first place, repeatedly requesting information turned out fruitful. In order to obtain information from ECAs from emerging countries it might therefore be useful to look into freedom of information legislation in their home countries. (Information on these is provided on freedominfo.org.)

China: Open Government Information Regulations

As of May 2008 new regulation are effective in China, which intend to be a turning point away from the deeply ingrained culture of government secrecy toward making Chinese government operations and information more transparent. Without having the status of a law, the regulations provide the legal basis for China’s first nationwide government information disclosure system. Vice Minister Zhang Qiong of the State Council's Office of Legislative Affairs explained, in introducing the OGI Regulations at a press conference, that they are in fact aimed at safeguarding "the public's right to know, the right to participate and the right to supervise" and are intended to "help curb corruption at its source, largely reducing its occurrence." However, the regulations have many restrictions: for example that disclosure may not harm "state security, public security, economic security or social stability." Specific exemptions from disclosure are foreseen for information that involves state secrets, commercial secrets and individual privacy. (Source: freedominfo.org).

South Africa

The Parliament approved the Promotion of Access to Information Act (PAIA) in February 2000, the Act went into effect in March 2001. It is intended to "Foster a culture of transparency and accountability in public and private bodies by giving effect to the right of access to information" and "Actively promote a society in which the people of South Africa have effective access to information to enable them to fully exercise and protect all of their rights."

Under the Act, any person can demand records from government bodies without showing a reason. State bodies currently have 30 days to respond (reduced from 60 days before March 2003 and 90 days before March 2002).

There are a number of mandatory and discretionary exemptions for records (including personal privacy, commercial information, confidential information, safety of persons and property, law-enforcement proceedings, legal privilege, defence, security and international relations, economic interests, and the internal operations of public bodies). Most of the exemptions require some demonstration that the release of the information would cause harm and they must be balanced against a public-interest test. (Source: freedominfo.org)

India

India enacted the "Right to Information Act" in 2005. It relates to public institutions. It ensures the right of any citizen of India to request access to information and the corresponding duty of the government to meet the request, except the exempted information. The exemptions include information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence. Further exempted is information, which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court. (Sources: Right To Information and freedominfo.org)

Brazil

In Brazil, the Article 5, XXXIII, of the Constitution sets that "everyone shall have the right to receive information of his own interest or of public interest from public entities, which shall be given within the time prescribed by law". Also, article 22 of the Federal law nº 8.159/1991 grants the right to "full access to public documents". There is not, however, any law specifying the manner and the timetable for the information to be given by the State. (Source: Wikipedia)


Extractive Industries Transparency Initiative and Export Credit Agencies

Following the discussions about the resource curse, that countries rich in natural resources but with weak governance structures leave the populations worse off despite exploiting the resources, a civil society coalition emerged: Publish What You Pay, promoting that these revenues, when properly managed, should serve as a basis for poverty reduction, economic growth and development rather than exacerbating corruption, conflict and social divisiveness.

The idea has been taken up by the Extractive Industries Transparency Initiative (EITI), which includes governments, resource companies and NGOs. EITI supports improved governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining.

Only two ECAs refer to EITI, with the US Oversea’s Private Investment Corporation (OPIC) being more about securing investments than promoting export.

ECGD's "policy" is awareness raising. Para 10.4 of its ECGD Case Impact Analysis Process - May 2004 states:
"The UK Government seeks to raise awareness of the “Extractive Industries Transparency Initiative” by all companies in the extractive industries sector. For cases in this sector where ECGD is in direct contact with project sponsors (normally Overseas Investment Insurance and Project Finance cases), ECGD will ensure that sponsors are aware of the Initiative and will encourage adherence, particularly in countries which have already or are about to sign up to the Initiative."

OPIC has a "Transparency Initiative" wherein they endorse the principles of EITI and encourage OPIC project sponsors to voluntarily agree to EITI guidelines.

In 2008 OPIC is being reauthorized by Congress. The bill that is being about to be accepted includes a requirement that OPIC condition, with limited exception, financing and insurance for significant extractive projects on investor and the host government commitment to implement EITI principles and criteria and that the host government have in place a functioning system for accurate accounting, independent audits. Also, the bill requires that associated foreign investment contracts (Host Government Agreements, etc) be publicly disclosed, allowing for redactions of business confidential information.