By IPS Correspondents
BONN, May 17 2006 (IPS)

The international NGO campaign ECA-Watch has welcomed the decision of the 30-nation club of rich nations to deter bribery in export credits, but regretted that it does not go the whole hog..

Members of the Organisation for Economic Co-operation and Development (OECD) agreed last week “to step up efforts to avoid giving official support to export contracts that are tainted by bribery.”

Government-backed export credit agencies, commonly knows as ECAs, provide about 60 billion dollars a year in loans, guarantees and insurance to corporations from their home country that seek to do business in developing countries and emerging markets. Most industrialised nations have at least one export credit agency.

“We welcome 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,” Bob Thomson, facilitator of ECA-Watch told IPS.

“But ECA-Watch is disappointed that the new standards fall short of meeting internationally accepted best anti-bribery practices, missing an opportunity to close a number of loopholes and, in some areas, failing to meet the OECD’s own best practice standards,” Thomson said in an e-mail interview from Paris.

Explaining the bright side of the agreement announced May 12 in Paris, Thomson said: “It replaces, and in many areas significantly strengthens, existing standards adopted in the ineffective action statement of 2000.”

But under the agreement as worded now, though a company with a serial record of bribery convictions would be automatically subjected to “enhanced due diligence”, it could still get taxpayer-funded export credit support if it could convince the national ECA that it had implemented some sort of system, Thomson said.

“In the event that it (an exporter or applicant) is listed, or has disclosed violations of national anti-bribery laws, 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,” explained the ECA-Watch facilitator.

“One case in point on this is Acres of Canada who have been convicted of bribery in the Lesotho Water Scheme, have been debarred by the World Bank, but who have not been banned by Export Development Canada (EDC), who say they have revamped their administrative controls,” Thomson said. He added: “To be fair, EDC has not yet however, to the best of my knowledge, approved any support for Acres.”

It is of particular concern to ECA-Watch that the agreement requires exporters and applicants to disclose the identities of agents and the amount and purpose of commission 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.

ECA-Watch finds fault with the new agreement because it does not require exporters and applicants to disclose either the place of payment or the relationship between the agent and the buyer. Also ECAs are only required to check whether exporters or applications currently appear on the publicly available debarment lists of the main international financial institutions (IFIs).

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..

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 European Commissin’s Public Procurement Directive requires EU member states to exclude companies that have been convicted by final judgment of corruption offences,” Thomson noted.

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.

Nor does the new agreement require ECAs to put in place appropriate whistleblower procedures to enable either ECA employees or outsiders to report bribery.

The new agreement defines credible evidence 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.”

But the agreement does not specify who is to carry out this ‘critical analysis’ and makes no provision for training of ECA staff in legal matters concerning court evidence.

The new measures do not provide for improved monitoring of ECAs’ implementation instead of relying on collating and mapping information exchanged on developments in the national official export credit systems.

“We had 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,” Thomson said.

ECA-Watch also says that 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,” Thomson said.

He added: “We regret 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.”

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