December 15, 2003

The Canadian Crown corporation says it is satisfied with safeguards in place, but a new report indicates it shouldn’t be.

Ottawa: Export Development Canada ranked 15th among 28 OECD countries in terms of measures it has taken to deter and sanction bribery, a report by the Trade Union Anti-Corruption Network (UNICORN) revealed today. Export credit agencies (ECAs) from Austria, Denmark, and Australia topped the list.

“As primary supporters of international business, ECAs have a vital contribution to play in international efforts to eradicate bribery,” said Roy Jones, of the Trade Union Advisory Committee. “But many governments, including all G7 countries, are still a far cry from making this vision a reality.”

Although the G7 ECAs outperformed other OECD members in terms of informing companies of the legal consequences of corruption and requiring them to sign a no bribery declaration, they fared less well on transparency around commissions and agents, and taking actions to sanction companies found guilty of corruption. EDC, for example, does not require details of commissions to be provided, and applies a ceiling of 10% on these commissions, rather than the 5% recommended by the report. Like five other G7 ECAs, EDC also has the option to debar a company convicted of bribery before a decision to support it is made, but the report says that it, like all other G7 ECAs, chooses not to do so.

“This report will hopefully be a wake-up call to EDC and others”, said Fraser Reilly-King, Coordinator of the NGO Working Group on EDC, “that being tough on corruption isn’t about having the right policies in place, it is about acting on them when the occasion arises.”

In August 2003, Canadian Acres International was found guilty of corruption in the Lesotho Highlands water project. Although EDC was not involved in the project, it has since reviewed past transactions and the procedures that Acres have put in place, and has said it is satisfied with both the safeguards Acres has implemented, and with its own anti-corruption program. The report, however, recommends that EDC upgrade its procedures, and sanction such companies.

According to the report, eight ECAs, including Hungary and Greece, would debar companies from future support in light of a conviction for bribery.

The report was based on an OECD survey of member’s anti-corruption policies, and can be found on-line at:
www.probeinternational.org/files/edc/Unicornreport.pdf

A brief on the report follows.

For further information, contact:
Roy Jones, Trade Union Advisory Committee to the OECD
Tel: +33-1-55-37-37-37
Fraser Reilly-King, NGO Working Group on EDC, Tel: (613) 266-8100

Brief on ECAs, EDC and Corruption

Anti-bribery Index
UNICORN developed the index based on an OECD survey of members on measures that countries take to deter bribery, their actions before and after granting official support, and information exchange.

Top twenty ranking: Austria (1), Denmark (2), Australia (3), Norway (4), Greece (5), Netherlands (6), New Zealand (7), Czech Republic (8), Belgium (9), Finland (9), Luxembourg (9), France (12), Hungary (Ex-Im) (13), Japan (JBIC) (14), Canada (15), Spain (15), Slovak Republic (17), United Kingdom (18), United States (19), Hungary (MEHIB) (20).

Since Japan has both JBIC and NEXI, there are 8 G7 ECAs

1) Measures to deter bribery
All G7 ECAs require companies to sign a no-bribery declaration. (Only 7% of all ECAs do not.)

• Four G7 ECAs, including EDC, don’t request applicants to provide details of commissions companies paid to agents. Canada is among the 37% of OECD ECAs that do not provide such details.
• The report recommends all ECAs request such details.
• Canada is one of three G7 ECAs to have a ceiling on commissions.
• However, the report recommends EDC lower it from 10% to 5%.2) Informing Investigative Authorities BEFORE support has been provided
• Nineteen ECAs, including EDC, have the option to inform the investigate authorities on a suspicion of bribery, but elect not to do so.
• Seven ECAs, including EDC, can pass on evidence of bribery to the authorities, but elect not to do so.
• The report recommends that EDC do so in both instances and that the OECD action statement on bribery, which currently only requires ECAs to inform national authorities in the event of bribery being uncovered after support has been approved, be updated.3) Loan Interruption AFTER a decision to support
• 63% of all ECAs have the option of interrupting loan disbursements on the basis of a legal judgment, and 43% do this in practice.
• In contrast, 75% of G7 ECAs, including Canada, have the option of interrupting loans on the basis of a legal judgment. However, only 38% do so in practice, Canada NOT included.4) Debarring Companies a) BEFORE a decision to support
• 70% of ECAs have the option to debar a company on the basis of a legal judgment. Of these, 27% do so in practice.
• No G7 ECA debars or blacklists companies in practice, even though five, including EDC, have the option to do so.b) AFTER support has been given
• 43% of ECAs, including EDC, have the option to debar a company on the basis of a legal judgment of bribery, although only 10% of ECAs (Austria, Denmark and New Zealand) would do so in practice.
• Four G7 ECAs, including EDC, can debar a company on the basis of a legal judgment of bribery.5) Exchange of Information
• EDC is prepared to disclose information on bribery, as long as it does not constitute a breach of its operating facility.