Resources: International financial Institutions

Campaigners from across Europe and the Democratic Republic of Congo (DRC) have published a new report chronicling one of the most scandalous failures of development bank investment in agriculture. The report details how Europe's largest development banks poured upwards of US$150 million into an oil palm plantation company in the DRC despite the company's land conflicts with communities and allegations of serious human rights violations and opaque financing made against it.

The World Bank has invested almost a quarter of a billion dollars in Seven Energy, an oil and gas company operating in Nigeria. Months before the first investment was made, the then Governor of Nigeria's Central Bank alleged that the company's flagship contract involved operating a scheme that was looting billions of dollars in state revenues. A number of the people associated with the contract are now either on the run or charged with money laundering.

Effective research and other action in the field of environment and law requires an understanding of how profoundly both have changed under neoliberalism. The growth of the neoliberal state amid productivity crisis and the move to a more financialized, rent-based global economy has been accompanied by sweeping legal innovations relating to property, trade, investment, rent and criminality as well as an expansion in the mass of written law and in the gaming of legislation.

This presentation challenges the current rush towards mega infrastructure projects that are being planned the world over as a means of boosting economic recovery.

This short blog highlights the financial guarantees underpinning today's boom in infrastructure spending.

Classically, environmental racism is defined in terms of the racialized distribution of pollution. But it's also about the ways people, ethnic groups, nature and pollution are co-defined in the first place. This aspect of environmental racism is perhaps even more visible in forests than elsewhere, argues this piece from the World Rainforest Movement Bulletin, available here in English, French and Portuguese.

A Spanish-language version of the article is also available from The Corner House upon request.

The gap between rich and poor has widened massively over the past 30 years, within and between countries. Such inequality does not come about by accident or simple mismanagement. It is best understood as 'a proxy for how effectively an elite has constructed institutions that extract value from the rest of society.' A presentation available upon request argues that public-private partnerships are such a set of institutions, with important implications for activism to challenge them.

"What news on the Rialto?" one of Shakespeare's businessman characters asks another in "The Merchant of Venice", referring to the bridge where Venice's merchants met to trade. If such a scene were played out today on Wall Street, the topic of conversation might well be how to make money out of saving the Rialto itself. But those who have always lost out as a result of the goings-on on the Rialto may want to talk about something other than how to "fix" a system that has always disadvantaged them.

A powerpoint presentation available on request from The Corner House explores these themes.

Lawyers acting for The Corner House and Indian group Samata requested a Judicial Review of the decision by the UK's Export Credits Guarantee Department (ECGD) effectively scrapping its absolute ban on providing financial support to projects overseas involving "harmful" child labour and forced labour. ECGD stated in response that it does not have to consider whether its support contributes to human rights abuse, because it "does not owe obligations to persons outside the jurisdiction of the UK".

In March 2010, The Corner House and Campaign Against Arms Trade (CAAT) submitted a complaint to the European Commission alleging that the UK gives unlawful state aid to GEFCO, a special purpose vehicle used by the UK's export credit agency, the Export Credits Guarantee Department (ECGD), to refinance its loss-making interest-rate support scheme provided to UK exporters. After much correspondence, it emerged in March 2011 that the complaint should have been directed at the companies receiving the support rather than at GEFCO itself and should have cited a different clause in the WTO's Agreement on Subsidies and Countervailing Measures. The groups will submit a new complaint on this basis.

The Joint Committee on Human Rights of the UK Parliament requested evidence for its inquiry into business and human rights on the State's duty to protect against human rights abuses by businesses; corporate responsibility to respect human rights; and the need for individuals to have effective access to remedies when their human rights are breached. The Corner House submission to the Committee focused on the policies and practices of the UK Export Credits Guarantee Department (ECGD) in the context of the state's duty to protect human rights. The Committee subsequently called for supplementary evidence on the government's Draft Bribery Bill and the Industry and Exports (Financial Support) Bill, which The Corner House provided.

The UK Government is using emergency powers to amend the Export and Investment Guarantees Act 1991 governing the Export Credits Guarantee Department (ECGD), so that exporting companies can apply for insurance after they have started constructing their overseas projects (such as oil and gas pipelines, hydroelectric dams and power plants). The amendments would enable companies to circumvent the Department's human rights, environment and sustainable development safeguards.

Environmentally- and socially-destructive development projects are increasingly being funded by hedge funds, private equity and sovereign wealth funds (instead of by public or private banks) that are not subject to transparency, governance or reporting requirements. Public financial institutions are also investing in these alternative vehicles, which are often based in offshore tax havens. Basic information about these vehicles is not routinely made public. But in the midst of the financial crisis, the Asian Development Bank is pushing for even less transparency for such risky investments. Regulatory authorities should instead focus on much stronger transparency and accountability requirements and address the use by public financial institutions of "secrecy jurisdictions".

38. The current protectionist backlash against state-owned sovereign wealth funds (SWFs), particularly from the Middle East and China, stems from Western policy makers' fears that SWFs follow strategic political objectives rather than commercial interests, investing in Western companies and banks to secure control of strategically important industries such as telecommunications, energy and banking. This paper examines these fears in order to understand the potential impact and implications of sovereign wealth funds in a rapidly-changing global political economy.

This Corner House submission to a 2008 inquiry by the Environmental Audit Committee into the UK's Export Credits Guarantee Department and Sustainable Development critiqued the ECGD's decision-making procedures concerning sustainable development; its inadequate Business Principles and need for a proactive approach; its due diligence and monitoring; information disclosure; and the OECD and ECA reform.

WWF-UK's 'witness statement' (as part of its joint claim for a judicial review of the UK Export Credits Guarantee Department's decision in March 2004 to support the Sakhalin II oil-and-gas project off the far eastern coast of Russia) describes the project; outlines concerns about its impacts on the Western Gray Whale, fisheries, local communities, and climate change; summarises the flawed process of the Environmental Impact Assessment; and details how WWF-UK eventually learnt about the ECGD's decision to support Sakhalin II by means of a Freedom of Information request.

On 15 August 2007, WWF and The Corner House filed for a judicial review of a legally-binding, but until recently undisclosed, decision in March 2004 by the UK Government's Export Credits Guarantee Department (ECGD) to support the Sakhalin II oil-and-gas project off the far eastern coast of Russia.

ECGD released in July 2007, in response to a Freedom of Information Act request, its impact assessment of the Jindal Vijayanagar, Steel plant in India to which it had given support in 2005.

In 2007, the UK's export credit agency, ECGD, released documents indicating that it had classified a nuclear power plant in South Korea (for which it gave support in 2005) as having "low potential impacts"; this classification meant that the project did not require ECGD to carry out a more detailed impact assessment before giving support.

This Bloomberg Markets article describes the allegations by BP consultant Derek Mortimore that the engineering company contracted to monitor the BTC oil pipeline has no experience in pipeline corrosion work.

Any ECGD support for the Anglo-Dutch petrochemical multinational Shell to develop two oil and gas fields off Sakhalin Island in Russia's Far East would breach international guidelines and conflict with the UK's sustainable development commitments and its international environmental obligations.

Many corporations now rely on bilateral and regional treaties to get what they want in other countries. Some companies are using Host Government Agreements to set up a specific legal framework giving them effective control over national legislation and regulations affecting their activities. Oil and gas companies are using Production Sharing Agreements to gain almost complete control over natural resources in the countries of the former Soviet Union and West Africa and in Iraq.

On 21 October 2005, the ECGD announced several proposed changes to its anti-corruption procedures. This document outlines The Corner House's concerns about these proposals, particularly the weak audit clause and the non-requirement to supply the identity of agents.

Northern governments may grant more export credits for large dams by classifying them as "renewable energy". This report details the negative impacts of five large dams and one water privatisation scheme financed with export credits.

This submission to the OECD Working Group on Export Credits and Credit Guarantees argues that a strong new OECD Action Statement on Combating Bribery in Officially Supported Export Credits should be agreed in October 2005 and recomends key anti-bribery measures to be incorporated into it.

In January 2005, the UK's export credit agency, ECGD, announced a public consultation into its weakened anti-corruption procedures, introduced following industry lobbying. This submission to that consultation argues that the ECGD should revert to its revised procedures if it is to prevent bribery in the projects that it supports.

At the beginning of 2005, the UK Parliament's Trade and Industry Select Committee conducted an inquiry into the UK's Export Credits Guarantee Department (ECGD). During its inquiry, it interviewed the Government Minister responsible for the ECGD about the Department's watering down of its anti-bribery procedures following industry lobbying. In March 2005, the Committee published a report, Implementation of ECGD's Business Principles, that was highly critical of the changes the Department had made to its procedures. This document is The Corner House's submission to the Committee's inquiry.

In December 2004, The Corner House instituted legal proceedings against the UK's Secretary of State for Trade and Industry as the government minister responsible for the Export Credits Guarantee Department.

In response to a Freedom of Information request from The Corner House, the UK's Export Credits Guarantee Department (ECGD) released a letter it had written on 4 March 2004 to the Sakhalin Energy Investment Company confirming that it had approved conditional support for several UK contracts for the Sakhalin II project.

Institutional practices within the taxpayer-funded UK Export Credits Guarantee Department have exacerbated bribery and corruption by Western companies.

Since October 2000, the UK Export Credits Guarantees Department (ECGD) has been bound by the UK Human Rights Act. But many of the ECGD's procedures potentially conflict with this Act.

Publicly-traded companies involved in resource exploitation should be required to publish a breakdown of all payments which they make for the products of every country in which they operate.

Arms sales currently take up a disproportionate amount of official export credit support. The Export Credits Guarantee Department (ECGD) and other Export Credit Agencies (ECAs) should end support for military goods.

The ECGD's support for defence-related exports has lost money every year for the past 12 years. This strongly suggests that arms sales are being deliberately subsidised.

Summary of an NGO seminar held in the UK parliament to discuss Export Credit Agency reform.

The UK Export Credits Guarantee Department (ECGD) has a legal obligation to combat corruption. But its failure to adopt non-discretionary, transparent procedures is fundamentally flawed, argues this presentation at an NGO Seminar on Export Credit Reform held in the House of Commons, London.

This Corner House submission to British House of Commons' International Development Committee's Inquiry into corruption urges the Committee to examine the structural causes of corruption in the countries of the South, such as the policies and programmes that Western governments and agencies push on these countries. It recommends that the Committee focus less on the perceived "lack of political will" to tackle corruption and more on those vested interests that generate immense political will to block investigations when they are initiated and to undermine anti-corruption drives.

The companies that want to build the controversial Ilisu Dam on the River Tigris in the Kurdish region of Southeast Turkey have sought financial backing from the export credit agencies (ECAs) of their countries. In January 1999, the ECAs attached four conditions to be met before they would issue export credits. During 9-16 October 2000, an international Fact Finding Mission of Non-Governmental Organisations from the UK, USA, Germany and Italy went to the region of the proposed dam to assess the Turkish government's progress meeting the four conditions.

“Moral dilemmas” are not unattached to political, bureaucratic, social and economic interests. They are deeply political and are products of everyday conflicts over meaning, resources and ways of living and power. Who raises a particular moral dilemma and why is thus of critical importance.

“Third World development” seldom achieves its stated objectives and is repeatedly discovered to be based on false assumptions. Although discredited, however, it has survived and flourished. This briefing asks to what extent development’s critics have inadvertently increased both its longevity and its capacity to produce falsehoods and failure. Forging an effective critical activism requires reexamining the dynamic between development projects and their opponents, helpers and beneficiaries.

All development projects follow a three-act dramatic plotline, as development agencies try to impose plans, meet local opposition, and improvise freely in an attempt to overcome resistance.

Increasingly, multilateral development banks are funding private companies to undertake projects, underwriting the investments through guarantees or providing loans direct to the companies involved. Development is effectively being “privatised”. For companies, a raft of new “corporate welfare” programmes are on offer.