(Global Trade Review, London, 31 January 2018) The Australian export credit agency (ECA), Efic, has been armed with A$3.8bn to help companies sell military equipment overseas. Over the years, ECAs have been heavily criticised for selling arms which often help prop up tyrannical regimes and which can fall into the wrong hands. Indeed, the murky track record of the UK’s ECA was reportedly one of the reasons behind its rebranding from the Export Credits Guarantee Department (ECGD) to UK Export Finance (UKEF). ECGD was found to have funded a succession of arms deals involving despotic regimes including a £49mn loan made to Zimbabwean President Robert Mugabe to buy a fleet of fighter jets and police Land Rovers. Alas, its successor UKEF has continued the trend. It was reported in 2015 to have guaranteed £130mn in financing for repressive governments to spend on arms over the previous years. These include loan guarantees for the Indonesian government to purchase anti-aircraft missiles and a bond guarantee for Saudi Arabia to buy unspecified arms amid Saudi Arabia’s ongoing offensive in Yemen. Over half of UKEF support in the last annual report was for defence… and UKEF is by no means the only ECA involved in funding weaponry. Last year, US Ex-IM was questioned over its funding of dual-use goods which ended up in the militaries of Cameroon, Mexico and Qatar. Last year, the Russian ECA Exiar lent US$100mn to the Armenian government for the purchase of Russian-made munitions and French ECA Coface issued a 50% guarantee on a US$5.9bn loan from a group of French banks to the Egyptian air force to buy 24 multi-role fighter jets built by French company Dassault.
Mexico
Mexican chapter in the Odebrecht saga underscores need to bolster transparency at EDC
(Hill Times, Ottawa, 15 January 2018) When allegations emerged last fall that the Mexican president’s 2012 election campaign was funded in part by a subsidiary of the Brazilian construction giant Odebrecht, the news barely made headlines in Canada. But this recent development in the far-reaching Odebrecht corruption scandal should give us pause, because it raises crucial questions about the anti-corruption and disclosure policies of our export credit agency, Export Development Canada (EDC). In December 2012, EDC loaned $300 million USD to Braskem, an Odebrecht subsidiary, for construction of a petrochemical complex in Veracruz, Mexico. Earlier that year, Braskem allegedly paid over $3 million USD in bribes towards President Peña Nieto’s election campaign. In its review this year of the Export Development Act, the government must turn a critical eye to this issue. The review, conducted by the trade minister every ten years, provides a crucial opportunity to enhance the transparency of EDC’s due diligence practices.
