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Commission on Africa: Improving ECA anti-bribery measures

From "Chapter 4 - Getting Systems Right - Governance and Capacity -Building" of the Africa Commission Report

The full report is available at http://www.commissionforafrica.org

The Report acknowledges that ECAs "tend to function in highly non-transparent ways" there is "still substantial scope for improvement" on common environmental standards and promoting best practice

RECOMMENDATIONS:
- Developed countries should encourage their ECAs to be more transparent, and to require higher standards of transparency
- Developed countries should also fully implement the Action Statement on Bribery and Officially Supported Export Credits
- If bribery is to be seriously confronted, members of the OECD should adopt and implement this Best Practices paper as well.
- The ECG should publish figures on the number of applications turned down on the grounds of bribery

FULL TEXT

*4.5.2 Export Credit Agencies*

94. Export Credit Agencies (ECAs) are government-backed bodies which provide loans, guarantees, credits and insurance to private companies registered in their territories who invest or engage in trade with developing countries ­ particularly those marked by high political and financial risk. Collectively, ECAs are now the largest source of public finance for private sector projects in the world (78). They play a crucial role in supporting foreign direct investment into developing countries. Like IFIs, ECAs tend to become involved at the early stages of large-scale projects; and many projects would not go ahead without their support.

95. ECAs are therefore in a strong position to demand high standards of governance from projects in which they become involved. However, in the past they have had a poor record of using their unique position to encourage better governance; generally, they were not required to ensure that the projects they financed met minimum developmental, environmental or social standards (79). ECAs themselves also tend to function in highly non-transparent ways (80). Some progress has been made in establishing common standards and promoting best practice, such as the OECD Common Approaches on Environment and Officially Supported Export Credits (81), but there is still substantial scope for improvement. ECAs are competitive organisations; thus any measures to improve governance in the sector will have to apply equally to all of them, or else it will merely serve to create a competitive advantage for those who do not comply with higher standards.

Recommendation: Developed countries should encourage their ECAs to be more transparent, and to require higher standards of transparency in their support for projects in developing countries. Developed countries should also fully implement the Action Statement on Bribery and Officially Supported Export Credits (82) agreed by the OECD(83). The Action Statement requires the implementation of measures to deter bribery. These include inviting exporters applying for export credits to declare that neither they, nor their agents, will engage in bribery. It also requires credit applications to be refused where bribery is established and appropriate action to be taken if bribery comes to light later.

96. Following on from the OECD’s Action Statement, a subsequent Best Practices Paper sets out even higher standards for officially supported export credits. If bribery is to be seriously confronted, members of the OECD should adopt and implement this paper as well. In addition, we would like to see the OECD Working Party on Export Credits and Credit Guarantees (84) publish figures on the number of applications turned down on grounds of bribery so that the international community can determine whether these voluntary measures are working sufficiently well.

Notes: Chapter 4

78 Publish What You Pay, accessed via http://www.publishwhatyoupay.org/english/objectives/ ecas.shtml
79 There are exceptions; for example, the Danish Export Credit Agency EKF has signed up to the Equator Principles - see note 72.
80 See www.thecornerhouse.org.uk. For more NGO views of ECAs, see also www.eca-watch.org,
www.environmentaldefense.org
81 Adopted by the OECD Council in December 2003, the Recommendation sets out common approaches for identifying and evaluating the environmental impact of projects they support, including the impact of involuntary resettlement, indigenous peoples and cultural property. For more detail, see http://www.oecd.org/dataoecd/26/33/21684464.pdf
82 Agreed in November 2000 by the members of the OECD Working Party on Export Credits and Credit Guarantees, OECD 2000.
83 For a definition, refer to the Glossary.
84 For more detail on the Working Party’s activities, see
http://www.oecd.org/department/0,2688,en_2649_34177_1_1_1_1_1,00.html