1 Introduction
1. The Export Credits Guarantee Department (ECGD)
is the UK's official Export Credit Agency (ECA). It is a separate
Government Department reporting to the Secretary of State for
Trade and Industry and derives its powers from the 1991 Export
and Investment Guarantees Act. Its 400 staff are based in London
Docklands and in Cardiff. Its objective is to assist UK exporters
of goods and services to win business, and UK firms to invest
overseas, by providing guarantees, insurance and reinsurance against
loss, taking into account the Government's wider international
policy agenda. It provides them with insurance and/or backing
for finance to protect against non-payment and currently operates
on a break-even basis, charging exporters premium at levels that
match the Department's[1]
view of the risks and costs in each case. Established in 1919,
ECGD was the world's first export credit agency. Now every industrialised
nation has an ECA, although the status and method of working of
each agency may differ.
2. The ECGD's 'Mission and Status Review 1999 - 2000',
published in July 2000,[2]
set out a new approach to the conduct of its business and the
development of its relationship with its customers and others
with an interest in its operations. Key elements of the new strategy
included greater openness and transparency in ECGD's operations;
a wider remit and membership for the Export Guarantees Advisory
Council (EGAC); more focus on the needs of small and medium-sized
exporters and investors; ensuring ECGD's policies and activities
were consistent with the Government's objectives of promoting
sustainable development, human rights, good governance and trade;
and the transfer of ECGD's funding to a capitalised funding system
i.e. a Government Trading Fund.
3. ECGD subsequently published a statement of Business
Principles in December 2000 which addressed these and other issues
identified by the Mission and Status Review.
4. Last year we inquired into the progress made by
the ECGD since the publication of the Review, in advance of the
Government's announcement of the future funding arrangements for
the Department.[3] We
set out to review the effect of the revision and implementation
of ECGD's objectives and business principles; the relationship
between ECGD, its customers and other Government organisations;
the Department's role in the promotion of sustainable development;
and its relationship with commercial banking and insurance companies,
and the development of the private export credit and reinsurance
sector.
5. During the course of that inquiry we received
a significant body of evidence, written and oral, from Non-Governmental
Organisations (NGOs) and individuals which focused on ECGD's support
for the Baku-Tbilisi-Ceyhan (BTC) pipeline project undertaken
by a business consortium of which BP was a leading member. These
submissions raised questions about the Department's compliance
with its own business principles as they related to the Government's
objectives for sustainable development, environmental protection,
the protection of human rights and the prevention of corruption.
We decided that this evidence required further consideration and
consultation with the witnesses involved, and would be the subject
of a further Report.
6. We asked the ECGD to supply further written evidence
in support of its contention that the Department has indeed acted
in conformity with its working standards. We then invited those
NGOs and individuals who had submitted memoranda critical of ECGD's
actions in supporting the BTC pipeline project to comment on the
Department's further justification of its actions. It had been
our intention that this evidence would have given us sufficient
material from which to draw conclusions on ECGD's support for
its own Business Principles, using the BTC project as a case study.
7. However, on 5 November 2005 the Department announced
that it was amending its anti-corruption proceedings, which it
had introduced only on 1 May, in response to representations made
by its customers. This announcement attracted criticism from anti-corruption
campaigners on the grounds that they represented a marked relaxation
of arrangements which had been well received by all but ECGD's
customers. We decided to include consideration of the background
to the Department's decision as part of this Report.
8. The Corner House, PLATFORM, the Baku Ceyhan Campaign,
the Kurdish Human Rights Project, the Halkevi and Friends of the
Earth (England, Wales and Northern Ireland), Mr Derek Mortimore,
Dr John Leeds and Mr Michael Gillard submitted evidence on the
BTC pipeline project; the Corner House, the Confederation of British
Industry (CBI) and Transparency International (UK) provided comments
on the changes to ECGD's anti-corruption measures; and ECGD officials
contributed to both aspects of our inquiry. We are grateful to
them all.
1 In this Report the term 'Department' refers to the
ECGD unless otherwise specified. Back
2
The ECGD Mission and Status Review, Cm 4790, July 2000. Back
3
Trade and Industry Committee, Sixth Report of Session 2003-04:
The Work of the Export Credits Guarantee Department, HC
506-I, 15 June 2004 Back
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