Corruption
Did You Know?
Corruption and bribery have been major and largely accepted features of ECA-backed projects, causing severe economic, social and political damage to both the countries receiving exports and in the export countries themselves. Bribing foreign officials in order to secure overseas export contracts has become a widespread practice: for example, Japanese and Canadian ECAs played a key role in supporting the Suharto regime in Indonesia by financing corrupt foreign investors and projects. ECAs also indirectly support corruption by turning a blind eye to the track-records of companies they finance and many of them fail to investigate corruption allegations made against companies they support. In 2000, the OECD Working Party on Export Credits and Credit Guarantees (ECG) issued an“action statement” regarding ECAs and bribery. Transparency International believes the Action Statement has fallen significantly behind what would be regarded as international best practice and OECD staff have admitted that the Statement represents the “least common denominator” for Members’ policies and practices. Negotiations began in 2005 to enhance the Statement, however some OECD members have opposed and delayed these small steps toward addressing corruption among ECAs, despite calls from the G8 to strengthen anti-bribery requirements for those applying for export credits and credit guarantees.
" The price of western companies' bribery is ultimately paid for by people of the Southern countries in which the companies operate. They pay for it in the form of increased debts incurred for overpriced and poorly planned projects that often provide little benefits to people or countries."
- Susan Hawley,The Corner House, June 2003 |
Protester, World Social Forum (2002)
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Important Background Documents on Corruption
ECA Watch/Cornerhouse compare ECA anti-bribery proposals [PDF] ECA Watch, March 15, 2006
ECA Watch/Cornerhouse synthesize OECD Anti-Bribery Working Group recommendations on ECAs [PDF] ECA Watch, February 23, 2006
Financial Times details breakdown in anti-bribery statement talks Financial Times, Berlin, February 15, 2006
OECD presents draft Action Statement on Bribery and Official Export Credits [PDF] OECD, November 2005
Strengthening the OECD Action Statement on Combating Bribery in Officially Supported Export Credits - A Historic Opportunity [PDF] October 3, 2005 by ECA Watch campaign participants.
The OECD began negotiations toward an enhanced Action Statement on Bribery and Official Export Credits in April 2005 to replace the current statement from 2002 [PDF]
Combating Bribery in Export Credits: the Agenda for 2005 [PDF] June 22, 2005 by ECA Watch campaign participants - an NGO presentation on corruption given at the EU Council Working Group on Export Credits.
Transparency or High Risks?: A Profile in Public Information Disclosure [PDF] 2002 by Leila Mustanoja for the Finnish ECA Campaign.
Globalization's Most Perverse Secret: The Role of Export Credit and Investment Insurance Agencies [PDF] May 2002 by Aaron Goldzimer for Environmental Defense; paper presented at the Alternatives to Neoliberalism Conference sponsored by the New Rules for Global Finance Coalition, contains a section on ECAs and corruption.
ECA Finance in Indonesia: Ecological Destruction and Corruption
December 1, 2000 by Stephanie Fried, Environmental Defense; and Titi Soentoro, Bioforum, The OECD ECA Working Party
Publicly Guaranteed Corruption - Corrupt Power Projects and the Responsibility of Export Credit Agencies in Indonesia November 2000 by Peter Bosshard, Berne Declaration
Submission from the Campaign Against Arms Trade to the International Development Committee's Inquiry into corruption September 2000 by CAAT
Transparency International Working Paper: Export Credit Insurance and the Fight Against International Corruption February 26, 1999 by Dieter Frisch, Brussels, Transparency International
The OECD and Corruption
OECD Releases new Action Statement on Bribery and Officially Supported Export Credits, ECA Watch, Paris, 15 May 2006
ECA Watch summarizes the current state of play in the OECD ECG negotiations for an enhanced Action Statement on Bribery and Official Export Credits, Paris, February 23, 2006
The OECD Working Party on Export Credits and Credit Guarantees (ECG) agreed in November 2000 on an Action Statement on Bribery and Officially Supported Export Credits [PDF]. The statement, however, is in many ways vague and lacking in enforcement measures.
The ECGD and Corruption
ECGD BAE arms bribery scandal receives extensive news coverage, ECA Watch, 31 January 2007
ECGD approves new/old anti-corruption policies Guardian, March 16, 2006
Cornerhouse protests ECGD delays in changes to anti-bribery measures Cornerhouse, February 1, 2006
Besides the Lesotho Highlands Water Project, the UK Export Credits Guarantee Department (ECGD) has other black marks on its record with regards to corruption, as well as a weak anti-corruption policy.
Lesotho Highlands Water Project Corruption Case Summary
In 2002 a Canadian firm was convicted of paying bribes to win Lesotho Highlands Water Project contracts. It was called "a landmark decision" when on September 17, 2002, the High Court in Lesotho convicted Acres International, a Canadian engineering consulting firm, of paying bribes to win contracts on the multi-billion dollar Lesotho Highlands Water Project (LHWP). Acres was found to have paid $266,000 in bribes to Masupha Sole, the former chief executive of the LHWP. Earlier this year, Sole was sentenced to 18 years in prison for receiving bribes from Acres and a number of other multinationals, including the consortium of which Balfour Beatty, the UK construction giant, was a part. Spie Batignoles, the lead company in the consortium, is due to appear in court on bribery charges next year. Balfour Beatty received financial support from the UK Export Credits Guarantee Department (ECGD).
Nigeria's Bonny Island LNG Project Corruption Case Summary
Brown & Root (KBR), the British subsidiary of Halliburton, has been accused of offering a USD $180M bribe to Nigerian officials to secure a contract for the construction of the Bonny Island liquefied natural gas (LNG) plant. Other scandals have plagued the Bonny Island operations, and at the same time the operations threaten a large area of mangrove forests, which local people depend upon for fishing. The US ExIm Bank and the UK ECGD back this project.
SACE of Italy and NCM (now Atradius) of the Netherlands also have provided backing.
News 2006
 OECD Releases new Action Statement on Bribery and Officially Supported Export Credits, ECA Watch, Paris, 15 May 2006
ECA Watch summarizes the current state of play in the OECD ECG negotiations for an enhanced Action Statement on Bribery and Official Export Credits, Paris, February 23, 2006
News 2004-2005
Britain and Nigeria's half-hearted war on corruption (Financial Express, 21 October 2005) Britain's ECGD has shown little
inclination to follow up allegations that a client agreed to pay $170m
of bribes to secure billions of dollars of work on a giant Nigerian gas
plant. The Commission for Africa set up and chaired by Mr Blair to
devise an agenda for the G8 summit highlighted the failure of rich
country export credit agencies to tackle corruption. These are
important elements in the controversy over $18 billion in Nigerian debt
relief recently approved by the Paris Club.
Consensus not reached on enhanced Action Statement on Bribery (ECA Watch, Paris, November 22. 2005) Sources close to the OECD negotiations on an enhanced Action Statement on Bribery and Official Export Credits indicate that a consensus could not be reached in discussions during the week of November 14th in Paris.
A Sakhalin Mayor Says Shell Unit Offered Cash Payment Oct. 27, 2005 (Dow Jones Newswire) - Russia's scandal-plagued Sakhalin II oil and gas project is under consideration for backing by the ECGD, US Exim and JBIC.
OPIC OKs Loans for Firms Tied to Mafia June 27, 2005 Matt Kelley, Associated Press Writer (via KFMB.com)
SEC Subponenas Chicago Bridge on ECA Funded Nigerian Work May 27, 2005
(Reuters) — The SEC is investigating payments made by a construction
consortium led by Halliburton Co. to determine whether any Nigerian
officials were bribed to win the Bonny Island LNG contract which
received extensive support from Ex-Im Bank, ECGD and other European
ECAs.
Law Suit Filed on Cancelled Tanzanian Water Project May 27, 2005 (EDIE.net, UK) — An ECGD-backed water project in Tanzania has been cancelled by that country's government.
OECD to Revise Anti-Bribery Statement May 16, 2005 (Source: ECA Watch)—The OECD Working Group on Export Credits (ECG) has agreed to strengthen its 2000 Action Statement on Bribery at its November 2005 plenary meeting.
British MPs Hit Bribery Rule Weakening April 5, 2005 (Financial Times) — An MP inquiry has attacked the government for ceding to industry pressure.
Iraq Rebuild 'Risks Massive Corruption' March 17, 2005 (Financial Times)
Trade Secretary Now Facing Review for Weakening Corruption Controls December 2, 2004 (The Guardian, UK) - The ECGD weakened its new anti-corruption standard on the demand of Trade Secretary Patricia Hewitt, and she is now facing a judicial review for her actions.
Did Halliburton Bribe Nigerian Dictator on ECA-backed LNG Terminal? October 3, 2004 (The Independent - UK) - A French corruption investigation has uncovered that a low-end UK lawyer worked with three British executives from the US construction group Halliburton to pay at least $132M USD in "unjustified" fees to contacts in Nigeria. These transactions helped a consortium including Halliburton to win a $12B USD contract to build a gas terminal at Nigeria ’s Bonny Island.
Firms May be Barred from Future Business in Nigeria September 2, 2004 (The Guardian) - Several firms including Halliburton Energy Services Company, Technic Snamprogetti, and the Japanese Gas Corporation face possible exclusion from future business in Nigeria until the government concludes its investigation of alleged corruption involving the Bonny Island Liquid Natural Gas plant.
UK ECA Threatens Engineering Group with Blacklisting for Saddam Kickbacks August 1, 2004 (The Observer, UK)
US Ex-Im Bank Chairman Diverts Letter About Alleged $180m Bribe Involving Halliburton Subsidiary May 25, 2004 (Vanguard, Nigeria) The African Network for Environmental and Economic Justice (ANEEJ) is pursuing a corruption charge against TSKJ (the joint venture team of Technip-Coflexip, Snamprogetti, Halliburton KBR and JGC Corporation) in a Paris court.
Export Credit Group Rebuffs NGO Call for Discussion on Bribery May 6, 2004 (Source:The Corner House, African Network for Environmental and Economic Justice
Nigeria, et al.)
News 2002-2003:
The Questions Taxpayers Must Ask February 2, 2003 by Susan Hawley of Cornerhouse, "Today's Observer report again raises questions about how the British government subsidises overpriced and controversial projects abroad. But the Export Credit Guarantee Department has a long history of backing corruption-prone projects. A major overhaul is long overdue."
Rolls-Royce Accused of Bribery: Angry Investors Want a Court to Hear Allegations that the British Company Offered a Multi-million Pay-off for an Indian Power Station Contract February 2, 2003 by Antony Barnett, "The brand is a byword for quality, reliability and integrity. But the
reputation of Rolls-Royce is now being threatened by a tale of alleged
bribery and skulduggery that spans three continents."
Enron's Pipeline Pain August, 2002 by Jimmy Langman, "At issue is the role of U.S. government agency Overseas Private Investment Corp. (OPIC), which doled out US$3 billion to support Enron’s international projects during the 1990s."
News 2000-2001:
Publicly Guaranteed Corruption: Corrupt Power Projects and the Responsibility of Export Credit Agencies in Indonesia November, 2000 by Peter Bosshard for the Berne Declaration.
ECA Finance in Indonesia: Ecological Destruction and Corruption December 1, 2000 by Stephanie Fried, Titi Soentoro, and Bioforum for Environmental Defense.
For more information, contact the ECA Watch Facilitator.
ECA Watch Campaign Member Links:
The Corner House, UK, Susan Hawley -
www.thecornerhouse.org.uk
BothEnds, Wiert Wiertsema -
www.bothends.org
Eyes on SACE, Antonio Tricarico -
www.crbm.org
Pacific Environment, Doug Norlen - www.pacificenvironment.org
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