Information in: Español - Français - Deutsch - Português - Russian - Japanese - Svenska - Italiano - Suomi

OECD Anti-Bribery Negotiations Update: Delays, weak policies and incoherence mar ECA efforts to tackle corruption

(ECA Watch, Paris, 23 February 2006) The OECD's working group on ECAs is due to meet March 2-3 and again in the April 2006 ECG Plenary meetings, to take up negotiations on an enhanced Action Statment on Bribery and ECAs. As noted in our November 2005 "What's New", the G8 countries, in July 2005, committed to strengthening anti-bribery requirements for companies applying for export credits and credit guarantees. However OECD ECAs were not able to reach a consensus in their October 2005 negotiations in Paris.

Sue Hawley of ECA Watch member the Corner House in the UK, has prepared a summary of recommendations made by the OECD Working Group on Bribery with respect to ECAs in their Phase 2 reviews of OECD Members' efforts to implement the OECD Anti-Bribery Convention.

ECA Watch has sent this report to the Secretary-General of the OECD, since there appears to be considerable potential for policy incoherence in the OECD’s anti-bribery work. The OECD’s Export Credit Secretariat (ECG) is in the process of facilitating the negotiation of an enhanced Action Statement on Bribery and Officially Supported Export Credits. However, we are concerned that the valuable work being done by the Working Group on Bribery in its Phase 2 reviews, and particularly the comments and recommendations made by the Working Group and Phase 2 peer review examiners, are not adequately reflected in the proposals under discussion for an enhanced Action Statement on export credits and bribery.

On Wednesday February 15, 2006 the Financial Times published an article stating that, based on internal OECD documents, Germany and Japan have been blocking approval of an OECD Action Statement on Bribery and Official Export Credits. "Export credit agencies' graft crackdown stalls"

A chronology of OECD negotiations on bribery and ECAs

In October of 2003, the OECD Export Credit Secretariat produced a discussion document on Best Practices to Deter Bribery. Unfortunately, we understand this valuable paper may no longer be referenced in the OECD facilitated negotiations, and that much weaker policies are favoured by some Members.

In July of 2005, the Commission for Africa and the G8 Summit highlighted a need to "strengthen anti-bribery requirements for those applying for export credits and credit guarantees".

In November 2006, the OECD ECG Secretariat produced a useful summary of proposals put forward by OECD member countries at the October 10-11, 2005 meetings of the Working Party on Export Credits and Credit Guarantees. As noted by the Financial Times, Germany and Japan have expressed reservations about several important recommendations in this summary.

ECA Watch has learned that these differences amongst OECD members have both delayed and jeopardized the approval of a new, enhanced Action Statement on Bribery and ECAs. A summary of these differences was provided in the February 15, 2006 Financial Times article linked above and were outlined in our November 2005 What's New monthly bulletin, in which ECA Watch campaigners from various countries gleaned information about OECD Member positions.

ECA Watch members presented their own recommendations for anti-bribery policies at an October 3, 2006 OECD consultation in Paris. Our new summary of OECD Phase 2 Anti-Corruption Reviews builds on these recommendations and urges Member countries to move past their differences and truly enhance the Action Statement for ECAs.

ECA Watch's summary of Phase 2 Anti-Corruption Convention reports with respect to ECAs

The OECD Anti-Bribery Convention Phase 2 Reviews study the structures put in place to enforce the laws and rules implementing the Convention, and assess their application in practice. This work is carried out by the OECD Directorate for Financial and Enterprise Affairs through their Working Group on Bribery.

Dr. Hawley's analysis for ECA Watch of the recommendations from the Financial Directorate's Working Group on Bribery provides a compendium of references to export credit agencies in these country Reviews, and finds, amongst other weaknesses, that there is little evidence of due diligence by ECAs that would enable them to detect potential bribery on projects they are to support.

In the same week that Dr. Hawley completed her report, the Working Group on Bribery published their Phase 2 Review on Austria. Since it was published after the ECA Watch Phase 2 Analysis was completed, this material was not included in her report, but will be included in an updated edition shortly. ECA Watch notes that the OECD lead examiners' recommend that Austria:

• Ensure that "export credit will be refused" where there are "reasonable grounds" for suspecting a bribery offence;
• Adopt criteria for assessing bribery risks and undertaking "reinforced due diligence";
• Ensure that export credit agency staff are "aware of specific fact patterns that suggest risks of foreign bribery; and
• Establish procedures for ensuring that export credit agency staff report "credible evidence" of bribery to prosecution authorities

This new Review makes recommendations consistent with other country reviews, and makes it ever clearer that the current Action Statement on Bribery and ECAs is inadequate.

In our covering letter conveying these findings to the OECD, ECA Watch notes that the OECD's own Anti-Bribery Working Group peer review process has identified many changes necessary to ensure that export credit agencies are able to enforce state responsibilities under the Convention. These recommendations do not appear to have been adequately reflected in the proposals under discussion for an enhanced Action Statement by the ECG.

The loss of government revenues represented by millions of dollars in bribery payments, the increase in national debt burdens, the erosion of public confidence and deterioration of government legitimacy, and the environmental and social damages to affected communities and peoples from bribery distorted decisions, are the direct result of corruption. They deserve far greater attention than the delays and prevarications evident in the current ECG facilitated negotiations.

Cornerhouse protests ECGD delays in changes to anti-bribery measures

(Cornerhouse, Dorset, 1 Feb. 2006) ECA Watch member The Corner House, has written the ECGD to express disappointment at delays in responding to the public consultation on ECGD anti-bribery measures. Lack of an ECGD response, due in September 2005 in keeping with Cabinet Office guidelines, has prevented them from taking an effective role in the OECD negotiations for a new Action Statement on Bribery and ECAs.

How Multinational Investors Evade Developed Country Laws on Bribery

(Theodore H. Moran, Washington, February 2006) How effective are G-8 and OECD efforts to combat bribery and corrupt payments when multinational companies bid on concessions in the developing world? Have the rich countries done what is necessary to restrain multinational investors from paying off local officials? This paper argues that the answer is no. Multinational corporations from the US, Europe, and Japan have devised sophisticated payment mechanisms, as documented and described here, to evade home country anti-corruption laws.