Implementation of the ECG's Action Statement of December 2000 on Export
Credit Support: Comments on Best Practices Proposals

Presentation to the ECG
by Michael H. Wiehen
Member of the Advisory Council, Transparency International
November 4, 2003

I would like to thank the Working Party on Export Credits and Credit
Guarantees of the OECD for once again inviting Transparency International to
present its comments and suggestions to this Group.

We very much welcome the proposals contained in the document of October 14,
2003 entitled "Best Practices to Deter and Combat Bribery in Officially
Supported Export Credits". I would like to commend specifically the
excellent quality of the staff work. The Best Practices proposals reflect to
a large extent the proposals we had introduced at the April meeting and
will, once adopted, go a long way to strengthen the contribution the ECAs
can make in the global fight against corruption.

Building the Group's recommendations on what is already practice in some
ECAs is a very good approach. It reminds me of the old Chinese proverb that
says: "The people who say something cannot be done should get out of the way
of the people already doing it". That so many innovative and constructive
practices have been introduced and proven their usefulness clearly
demonstrates the ability of ECAs to build up effective hurdles against
corruption - provided the will is there.

We support the recommendations included in the Best Practices proposal, but
would suggest a few changes and additions.

We would then also come back to one of our April recommendations which has
not been addressed at all by the official proposal, and that is the general
disclosure policy of ECAs.

Regarding Best Practices Proposal #4 on Agents' Commissions:
(i) This item should be clarified by requiring explicitly that the amount of
the commission must be listed separately, on all applications. I assume that
is already implied in the present text, because you could not apply a
threshold unless you have the quantitative information. Still, it deserves
to be said explicitly.
(ii) We would also recommend strongly that the relevant details on agents'
commissions be required on all applications, not just in cases where the
commission exceeds the threshold of 5%. Considering that middlemen and
agents very often have been used as the instruments of bribery, the ECA
should know in every case the amount paid, the services rendered or the
purpose of the commission, the name of the agent and perhaps even the place
of payment. On very large contracts, even a commission below 5% may indicate
grounds for enhanced due diligence.
(iii) We repeat that it would be preferable to have those details listed in
the application, but they should be available at the latest before the
decision on support is made.
(iv) In cases where the commission exceeds the threshold, enhanced due
diligence should apply - as is proposed in Proposal #6.
(v) You could summarize the objective of these changes by adding at the end
of the first sentence of #4 the words ".so that Members may be satisfied
that commissions represent reasonable compensation for legitimate services".
(A redraft of #4 is attached)

Proposal # 6 on Debarment:
(i) On the question of debarment on the ground of prior corrupt activity, we
would support the proposal that any such information should lead to enhanced
due diligence rather than automatic debarment.
(ii) However, we would recommend that the information disclosure requirement
be extended to the parent company and any subsidiaries of the applicant. The
beginning of the sentence would thus read "Members should require applicants
to advise whether they, or their parent company or any subsidiaries, have
ever been.".
(iii) In this context, I am sure it will interest the members of this Group
that quite recently the European Commission has determined that both for its
development assistance operations and its general operations, debarment of
companies and individuals that have been involved in corrupt activities is
possible regardless of whether the persons concerned have been convicted of
these acts under a final court verdict or not.

Proposal # 10 on Suspending Support:
On the issue of Suspending Support in cases where there is "sufficient
evidence" of bribery, we would strongly support proposal # 10. We do not
share the caution mentioned in the "comment" section that some members may
be unable to take these actions absent a legal decision. Considering the
very broadly-supported prohibition of bribery of foreign officials through
the OECD Convention it would appear far-fetched to argue that only a final
legal conviction can be the basis for even suspending the processing of an
application for export support.

We would also welcome it if, as is suggested in paragraph 6 under "Other
Measures", members would make adherence to the OECD Guidelines for
Multinational Enterprises a prerequisite for official support. We would also
support a strong encouragement by the ECAs for applicants to have a Code of
Conduct.

Finally, we would urge the Group to add to these proposals what is already
excellent practice in several ECAs, namely the disclosure, by the ECA, of
the name of applicants, the amount applied for, and the country into which
the goods or services will flow. This information should definitely be
publicly available after the support has been approved, but we would argue
strongly for making this disclosure already at the time of application. The
internet offers an easy technical solution for such a practice.

Regarding Next Steps, we would strongly support the proposal to strengthen
the Action Statement by adding at least the first three proposals. In fact -
why not incorporate the Best Practices paper, once it has been agreed, into
the Action Statement in full? Short of that we would urge you to formally
adopt the Best Practices statement and to make it public.

And the most important step after that of course is to mainstream the
anti-corruption work and to apply the new rules fully and systematically -
so that the business community and the world at large knows that the ECAs
are indeed determined and prepared to join the global fight against
corruption.

Thank you.