Index for October 2016

Volume 15, Issue 10

  • (Reuters, London, 12 October 2016) Britain's Serious Fraud Office (SFO) is working with French authorities in its investigation into alleged fraud, bribery and corruption at European aerospace group Airbus (AIR.PA) and expects to proceed "fairly quickly", its head said on Wednesday. The SFO launched a criminal inquiry in August into Airbus' use of third-party agents to win commercial jet sales after the company's compliance teams informed Britain's export credit agency, which arranges credit guarantees for overseas sales, of inaccuracies.

  • (Medium, Washington, 15 October 2016) Friends of the Earth USA conducted a field study of the impacts of the development of liquefied natural gas on rural communities and their lands in northern Mozambique, a project considered for financing by the U.S. government Export Import Bank. Friends of the Earth U.S. is working with Justiçia Ambiental/Friends of the Earth Mozambique and the Center for Biological Diversity to discourage Ex-Im Bank from supporting this project. Not far from the city of Pemba, Mozambique, villagers clamored to tell their stories of threats and lost land and livelihoods. Read the report here.

  • (Lexology Newsfeed, 5 October 2016) On 17 November 2015, members of the OECD which are party to the OECD Arrangement on Officially Supported Export Credits (the Arrangement), agreed to a new sector understanding that limits the availability of export credit finance for less environmentally friendly coal-fired power projects (the New Sector Understanding). The New Sector Understanding is due to come into force in January 2017. The members of the OECD that have signed up to the New Sector Understanding are Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland and the United States. The New Sector Understanding is likely to have a notable effect on the availability and terms of OECD export credit financings. However, it remains to be seen whether local commercial banks and development finance institutions in countries that are party to the Arrangement will align their approach to financing coal-fired power projects with that of the participating OECD export credit agencies.

  • (Eurodad, Brussels, 7 October 2016) Eurodad has learned that at an October 10 meeting of the OECD Development Assistance Committee (DAC) it was to be decided that the DAC would approve a blurring of lines between export credits and Official Development Assistance (ODA). The issue is now to be discussed with the OECD's Export Credit Group at the ECG's mid-November meetings. In times of shrinking ODA budgets and shrinking political support for ODA in donor countries, efforts have been proposed to design administrative tricks to stop this diminished support, developing measures that would allow export credits to be counted as ODA. NGOs oppose this move as export credits are only meant to support the corporate sector in industrialized countries.

  • (PressTV, Tehran, 21 October 2016) International insurance companies say they expect to see a major opening in the Iranian market in 2017 with several key players saying they have already won deals to cover businesses in the country. Industry experts told Reuters that industry executives say aviation and energy are two main sectors in focus in Iran’s multi-billion insurance market. They emphasized that top tier European export credit agencies had specifically become active in guaranteeing trade finance for Western companies doing business with Iran. Reuters further added that Germany's Hermes, Italy’s SACE, and France's Coface have all recently signed agreements to guarantee a certain trade activity with the Islamic Republic.

  • (Climate Change News, London, 14 October 2016) The Export-Import Bank of Korea (Korea Exim) has drawn sharp criticism from Saudi Arabia for withdrawing its application to be a conduit for climate funding, days after protests attacked its history of financing coal. The board of the Green Climate Fund (GCF) was set to decide on Friday whether to accredit the bank. This would have allowed it to oversee projects that will help poor countries cope with the transition demanded by a changing climate. The Saudi Arabian representative noted: "We have spent time and effort at the last board meeting discussing this case and now for no obvious reason I can see the applicant has withdrawn” The accreditation of export credit agencies, such as Korea Exim, has proven to be a controversial issue both inside and outside the GCF. Several board members, particularly Sweden’s Anders Wallberg, have expressed concern that the parochial motivations of these agencies, which primarily exist to help domestic businesses win overseas contracts, were incompatible with the fund’s supranational vision. Lidy Nacpil, the regional coordinator of the Asian Peoples Movement on Debt and Development (APMDD), said: “[The bank’s] withdrawal of its GCF application is an important victory for many networks and movements worldwide. But our work is far from over. We want to stop all financing of fossil fuels.”

  • (EuroActiv, Brussels, 7 October 2016) International finance institutions and member state export credit agencies continue to invest in projects outside the EU involving cruel farm animal confinement systems banned in the EU. Better joined-up thinking is needed with regard to investment policy and animal welfare, writes Joanna Swabe, executive director for Humane Society International/Europe. In 2013, Humane Society International released a report that revealed that EU countries were funding many animal agricultural projects in non-EU members, either through international finance institutions (IFIs) or export credit agencies, which employ housing systems that have long been prohibited and phased-out in the EU.

  • (NASDAQ, New York, 10 October 2016) Boeing's third-quarter 2016 commercial deliveries of 188 airplanes were down due to lower demand for the 737, 777 and 787 Dreamliners. During the release of first-quarter delivery numbers, CEO Muilenburg had revealed that the company is losing out on important contracts related to aircraft and satellites to overseas rivals due to a stand-off in Congress over the future of U.S Export-Import (Ex-Im) Bank. This has restricted the export credit agency's financing capabilities.

  • (Business Wire, Washington, 25 October 2016) [A vignette from the polarized US debate over Ex-Im] Citizens Against Government Waste (CAGW) named Rep. Charlie Dent (R-Pa.) its October Porker of the Month for his efforts to allow the wasteful Export-Import (Ex-Im) Bank to function with limited accountability... Rep. Dent is failing to tell his constituents the inconvenient fact that 64 percent of Ex-Im Bank financing is directed to just 10 giant, highly profitable corporations, including a whopping 40 percent to Boeing... Rep. Dent is fighting to allow the bank to operate with just two board members instead of three, which means one-third less accountability for the taxpayer-backed corporate welfare it provides.

  • (The Herald, Harare, 5 October 2016) The Zimbabwe Government has mobilised $7,2 million which will go towards part repayment of debt arrears owed to China Export and Credit Insurance Corporation (Sinosure) following reports the insurance company has been reluctant to guarantee loans from Chinese banks to Zimbabwean companies.It is reported that Sinosure has been reluctant to guarantee loans from Chinese banks to Zimbabwean companies because of Government’s failure to repay arrears owed to the Asian country.

  • (Indian Express, Dubai, 16 October 2016) Kuwait National Petroleum Co (KNPC) expects to finalise a loan of well over $5 billion to finance its Clean Fuels project by the end of the first quarter of next year, one of the world's largest-ever loans backed by export credit agencies. NBK Capital is acting as exclusive financial adviser for the facility, which would have backing from the South Korean, Dutch, British and Italian export credit agencies. HSBC is coordinating the transaction.

  • (The Irish Times, Dublin, 6 October 2016) The Government is planning a series of budget initiatives to help Irish companies raise finance, particularly in targeting new export markets in light of Brexit. The schemes will focus on circumstances where normal finance would not be available from banks. The Government is likely to ramp up SME lending from the State-owned Strategic Banking Corporation of Ireland (SBCI) and to develop specific programmes to support export sales to new markets.

  • (India Infoline, Mumbai, 13 October 2016) Members of the BRICS ECAs Forum are also the members of the International Union of Export Credit and Investment Insurers, London (U.K.) also known as Berne Union. BRICS countries had a share of around 22 percentage of World Trade with total Exports of about USD 3.5 trillion in 2015. BRICS ECAs supported more than USD 473 billion of exports from the Member countries. Members exchanged notes about various credit insurance products, business sectors and major destinations covered by the group. Members also discussed business trends and the rising defaults and claims in the light of heightened political and economic risk. The Terms of Reference for co-operation finalized in the last BRICS heads of ECAs meeting held at Russia were signed by the CEOs of BRICS ECAs. The next BRICS Heads of ECAs meeting will be hosted by SINOSURE, China under the chairmanship of China.