APPENDIX 12
Second supplementary memorandum by ECGD:
Opening Remarks
1. Chairman, could I first introduce myself
and my two colleagues. I am John Weiss, currently the Acting Chief
Executive of ECGD while we await the arrival, probably in early
July, of Patrick Crawford who was announced early last month as
the new Chief Executive of ECGD in succession to Vivian Brown.
2. My colleagues are Tom Jaffray, Group
Director for Risk Management and John Ormerod, Director of Strategy
& Communication. I hope between us that we will be able to
cover the full range of your questions.
3. It has been four years since your Committee
last looked at ECGD. A lot has happened since including more recently
the appointment of a new top management team of Patrick Crawford
and Graham Pimlott who was appointed in February to a new post
of non-executive Chairman.
4. The economic crises of the late 90s in
SE Asia and Russia and the events of 11 September have provided
a challenging economic environment for our business. Nevertheless
we have continue to issue guarantees worth between £3 and
£3.5 billion for the past three or four years.
5. We believe that this clearly demonstrates
the continued importance of ECGD to a wide range of exporters
operating in an equally wide range of overseas markets. While
the bulk of our business involves the major export projects of
the UK's largest exporting companies we know that the benefit
of our support trickles down to a very large number of smaller
companies who are in the supply chain.
6. Whilst civil aerospace and defence are
our key business sectors, the oil and gas sector has gained prominence
in recent years. Examples of the latter was our support in 2002-03
for the Nigeria LNG project and in the last FY for the BTC pipeline.
We have also been successfully supporting UK exporters to winning
business in the rapidly growing petrochemical sector in Iran.
7. Since the Mission and Status Review in
2000, we have been restructuring our operating and risk systems
to bring them in to line with best commercial practice. Key examples
include our Active Portfolio Management programme—under
which we are transferring some ECGD risk back into the private
sector—and the upcoming major overhaul of our IT business
systems and processes. These will stand us in good stead for the
intended conversion of ECGD into a Trading Fund. We have also
made significant progress in applying our Business Principles,
ensuring that what we do takes proper account of the Government's
wider political and economic agenda.
8. Ministers have set financial objectives
for ECGD which seek to set a fair balance between giving exporters
the support they need while not being a drain on the taxpayer.
Some of those who have given evidence to your Committee have expressed
concern that the need to meet this objective means that we are
not always able to match the other Export Credit Agencies on cover
and price. We recognise this situation and are, therefore, at
the forefront of working multilaterally to reduce any trade-distorting
subsidies and thus create a level playing field for UK exporters.
9. Our customers tell us that availability
of cover is what matters most to them. With this in mind, since
January 2003 we have had an improved country cover regime that
has given customers greater clarity on what cover is available.
More than four out of five of all markets now have unambiguously
clear cover positions, compared to fewer than half previously.
We constantly monitor the risk environment in major markets and
move quickly to restore or increase cover where risks allow.
10. Recent examples of important markets
where we have increased cover include Russia and Romania, India,
Iran and Vietnam. ECGD was also one of the first of the major
ECAs to restore cover for Libya earlier this year.
11. We recognise that there has been some
loss of confidence in ECGD amongst our customers in the past three
years. I know that our new top team want to tackle this as a priority.
We are committed to consulting our customers in the run up to
the launch of the pilot Trading Fund and will be listening to
their views while the pilot is running and before the move to
full Trading Fund status. This consultation will cover most of
the issues of concern about the Trading Fund which they have raised
with you.
12. Thank you, Chairman, for giving me the
opportunity to make this opening statement.
11 May 2004
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