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OECD Releases new Action Statement on Bribery and Officially Supported Export Credits

Press Advisory - Paris, 15 May 2006

The export credit agencies (ECAs) of the OECD have agreed improved common measures aimed at avoiding giving taxpayer support to export contracts that are tainted by bribery.

ECA-Watch welcomes the new agreement as a significant step towards bringing ECAs in line with new national anti-bribery laws, brought in as a result of the OECD Anti-bribery Convention, and to honouring policy commitments made at the Gleneagles G8 Summit in July 2005.

The new agreement replaces, and in many areas significantly strengthens, existing standards adopted in 2000.

It provides for much greater disclosure by exporters and applicants, who are required to inform the ECA if they are the subject of charges or past convictions in a national court (or an equivalent administrative measure) in a five-year period preceding the application, for bribing a foreign public official. They are also required to disclose information on agents’ identities, as well as the size and purpose of agents’ fees and commissions ‘upon demand’.

The agreement also significantly increases the obligations of ECAs, which must now routinely check whether an exporter or applicant appears on any of the publicly available debarment lists of the international financial institutions (IFIs), such as the World Bank. In the event that it is listed, or has disclosed violations of national anti-bribery laws, then the ECA must undertake ‘enhanced due diligence’ before proceeding with its application.

If before credit is approved there is ‘credible evidence’ of bribery, under the new measures, ECAs are required to suspend approval of the application while carrying out further investigations. Credible evidence is defined as “evidence of a quality which, after critical analysis, a court would find to be reasonable and sufficient grounds upon which to base a decision on the issue if no contrary evidence were submitted”.

While recognising the progress that has been made, ECA-Watch is disappointed that the new standards fall short of meeting internationally accepted best practice, and, in some areas, fail to meet the OECD’s own best practice standards.

ECA-Watch considers the following to be of particular concern:

• Agents and Commissions:
• Discretionary disclosure : The agreement requires exporters and applicants to disclose the identities of agents and the amount and purpose of commission/fee on demand only. For many institutions, including some ECAs, such disclosure is mandatory. Disclosure of information on agents and commission is essential to carrying out basic due diligence.
• Limited disclosures : The new agreement does not require exporters and applicants to disclose either the place of payment or the relationship between the agent and the buyer.
• Compiling a Corruption Track Record:
• Limited verification: ECAs are only required to check whether exporters/applications currently appear on the publicly available debarment lists of the main international financial institutions (IFIs).
• Limited scope of disclosures : there is no requirement for the exporter or applicant to disclose information on the corruption track record of a subsidiary, or joint venture or consortium partner.
• Sanctioning Bribery
• Internal corrective and preventative measures : The new agreement requires ECAs to take measures to verify that any exporter or applicant that has been debarred, charged or convicted for foreign bribery offences has taken adequate remedial action, prior to approving credit or other support. However it only suggests measures that ‘could’ be undertaken by ECAs: replacing individuals, adopting an appropriate anti-bribery management control system and submitting to an audit. These are discretionary and inadequately defined.
• Debarment : The new measures do not require ECAs to debar companies that have convictions for foreign bribery offences, even in cases where the exporter or applicant appears on the publicly available list of the World Bank or other IFIs, has been debarred by a national court or by an equivalent administrative mechanism, or is the subject of multiple corruption convictions by final judgment. This is at odds with current trends. Cross-debarment is on the agenda of the IFIs and Article 45 of the new EC Public Procurement Directive requires EU member states to exclude companies that have been convicted by final judgment of corruption offences.(1)
• Reporting Bribery
• Level of evidence : ECAs are only required to report credible evidence of bribery to their national law enforcement agencies. The agreement does not require ECAs to report suspicions of bribery. It is not clear why the reporting bar should have been set so high.
• Support for whistleblowers : The new agreement does not require ECAs to put in place appropriate whistleblower procedures to enable either ECA employees or outsiders to report bribery.
• Monitoring Compliance with the New Agreement:
• The new measures do not provide for improved monitoring of ECAs’ implementation instead relying on collating and mapping information exchanged on developments in the national official export credit systems. It was hoped that the Group would adopt a system of mutual peer review as a means to ensure (functionally) equivalent implementation of the new anti-bribery standards, in view of the good practices developed by the OECD Working Group on Bribery.
• Political Commitment:
• The new measures are presented in an Action Statement and not as anti-corruption campaigners had hoped as a Recommendation. A Recommendation has to be signed by the OECD Council, not just the Export Credit Group, and thus carries a higher level of political commitment.

ECA Watch regrets that governments did not show greater ambition and use this important opportunity to put in place a show-case Recommendation based on a credible monitoring system that would ensure that ECAs were adequately equipped to deter, detect and sanction bribery in ECA-supported international business transactions.

Bob Thomson, Facilitator of the International NGO Campaign on Export Credit Agencies, notes: “While welcoming improvements over the ineffective Action Statement of 2000, we regret that this opportunity has been lost to close these loopholes with meaningful anti-bribery measures in line with international best practices.”

“ECA-Watch is committed to monitoring and benchmarking these new provisions against its own recommendations, made to the OECD over the past year, and other accepted best practices in international corruption standards, to determine the extent to which the new Action Statement plugs the loopholes and institutional failures that in the past have allowed bribery to persist in ECA-supported projects.”

The full text of the OECD Statement can be found on their web site at

http://webdomino1.oecd.org/olis/2006doc.nsf/43bb6130e5e86e5fc12569fa005d004c/8921bcae0049ac4ac125716b00355a46/$FILE/JT03208704.PDF

For further information, view our recent update on OECD anti-bribery policies at
http://www.eca-watch.org/problems/corruption/ECAW_bribery_update_23feb06.html

or contact us

Bob Thomson
Facilitator
ECA Watch - International NGO Campaign on Export Credit Agencies
Tel. +33 (0)1 48 51 18 90
Email: facilitator@eca-watch.org
Web: www.eca-watch.org

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1. Directive 2004/18/EC of the European Parliament and of the Council of 03/02/04 on the Coordination of Procedures for the Award of Public Works Contracts, Public Supply Contracts and Public Service Contracts