Select Committee on Environmental Audit Minutes of Evidence

Supplementary Memorandum submitted by The Corner House


  In its oral evidence to the Committee on 16 July 2008, the ECGD referred to a legal opinion that The Corner House had submitted as part of a consultation on ECGD's anti-bribery procedures in 2005. In order to assist the Committee in its deliberations, the Opinion is attached.[29]

  The Opinion examines the legal powers of ECGD to blacklist companies that have been involved in bribery and corruption. In the view of its authors, Lord Lester QC and Ben Jaffey, the ECGD would be perfectly entitled, under public law, to have a firm policy to refuse cover to companies that have previously engaged in bribery or corruption, provided that it also considered the exceptional circumstances of any particular case on its merits.[30] As pointed out in the Opinion (and in The Corner House's submission to the current EAC inquiry [para 9]) the ECGD already operates several clear exclusion policies with respect to other issues.

  The Corner House believes that, for the reasons identified in the Opinion, it would be similarly within ECGD's existing powers to introduce a policy, subject to the procedures identified in the Opinion, of excluding from ECGD support specified activities that are incompatible with meeting the UK's sustainable development objectives.

  The Corner House would also like to take this opportunity to comment on a number of unjustified or erroneous assertions made by ECGD in its oral evidence to the Committee:

A.   World Bank Group Standards

  The ECGD appeared to suggest that the World Bank Group has human rights standards. This is incorrect. The World Bank Group has two main sets of standards: the ten "Safeguard Policies"[31] operated by the Bank's International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); and the recently introduced Performance Standards[32] operated by the International Finance Corporation (IFC), the private sector arm of the World Bank. Although both sets of policies cover a number of areas that involve human rights considerations (such as forced resettlement), the existing policies do not explicitly require adherence to binding international human rights Conventions. As a recent review of the IFC Performance Standards by the Centre for International Law (CIEL), the World Resources Institute (WRI) and the Bank Information Centre (BIC) notes for the IFC's Land Acquisition and Involuntary Resettlement policy, no reference is made "to the right to housing or other economic and social rights that may be jeopardized by forced displacement", nor does the policy incorporate "the corpus of interpretation and elaboration of those rights that has been developed by the Committee on Economic, Social and Cultural Rights or other authoritative bodies".[33]

  Even where reference is made to internationally-agreed human rights principles and norms, these principles and norms are not fully incorporated into the World Bank Group's standards. In the case of the IFC's "Performance Standard 2 on Labour and Working Conditions", which was cited by ECGD in its evidence, the IFC states that the Standard has been "in part guided" by "a number of international conventions negotiated through the International Labour Organization (ILO) and the United Nations (UN)".[34] However, as the CIEL/WRI/BIC review notes, Performance Standard 2 "does not actually incorporate the ILO standards and clients are not expected to adhere to the requirements of ILO Conventions, interpretations and recommendations except to the extent that the [the Performance Standard has] implicitly adopted them".[35]

  Further, there are no requirements in either the IFC's Performance Standards or the IBRD's Safeguard Policies for an explicit assessment of the potential impact of projects on human rights. Issues of vital concern—such as the extent of freedom of expression (and thus the possibility of affected communities to be adequately consulted on projects) or access to effective remedies—thus go unassessed. Indeed, the CIEL/WRI/BIC review of the IFC Performance standards concludes that they fail "to address many critical human rights issues and address others only partially or in ways that do not meet international norms and standards".[36] As such, they "do not provide project sponsors with a robust framework for meeting their responsibility to respect or remedy human rights".

B.   Shin Kori Nuclear Power Station

  ECGD stated that it had classified an export intended for the Shin Kori nuclear power station in Korea as "low impact" on the grounds that the export was a diesel generator.

  The Corner House notes that ECGD's stated case handling procedure is to analyse both "the impacts of the goods and services being exported" and "the project of which they form part".[37] From the ECGD's evidence, it would appear that the export consisted of a back-up generator. Such generators are an integral part of a nuclear facility and form a critical part of the safety regime. It would therefore seem essential that a more comprehensive assessment of the entire project should have taken place.

  The Case Screening Impact Form for Shin Kori has not, to The Corner House's knowledge, been released to the public. However, that for another export (also classified as "low impact") to the Shin Wolsuing Nuclear Plant in South Korea, is now in the public domain (see Appendix 3 of The Corner House's submission to the Committee).[38] There is no evidence from the completed Case Impact Screening Form for the Shin Wolsuing export that the impacts of the nuclear plant for which the export was intended were analysed. The Corner House would therefore argue that classifying the Shin Wolsuing export as "low impact", without apparent consideration of the impacts of the project of which it would form a part, breached the ECGD's stated screening procedures.

  The Committee may wish to seek to examine whether such impacts were considered in the case of the Shin Kori export and, if so, how the ECGD took them into account when classifying the export as "low impact".

  Should the Committee wish any further clarification of the above points, The Corner House will be very willing to assist.

21 July 2008

29   Not printed. Back

30   Lester, A. and Jaffey, B, "In the matter of the ECGD's Anti-Corruption and Anti-bribery Provisions: Joint Opinion", 16 May 2005. Lester and Jaffey write: "It is trite administrative law that a decision maker may not fetter his discretion. However, a policy is not a fetter on discretion, providing that: a) the policy itself is rational and justifiable (Wheeler v Leicester CC [1985] AC 1054 (HL)); b) each case is considered individually under the policy; and c) each case is considered in light of any representations that the person affected may wish to make (British Oxygen Co Ltd v Board of Trade [1971]AC 610 (HL) and Fordham Judicial Review Handbook, 4th Ed. para. 50.4)." Back

31   World Bank, "World Bank Safeguard Policies",,,contentMDK:20094702menuPK:224064pagePK:220503piPK:220476theSitePK:228717,00.html. Back

32   International Finance Corporation, "Performance Standards", Back

33   Centre for International Environmental Law, World Resources Institute and Bank Information Centre, "IFC's Performance Standards and the Equator Principles: Respecting Human Rights and Remedying Violations?", July 2008, page 7. Back

34   International Finance Corporation, "Performance Standard 2: Labor and Working Conditions", paragraph 2,$FILE/PS_2_LaborWorkingConditions.pdf. "The requirements set out in this Performance Standard have been in part guided by a number of international conventions negotiated through the International Labor Organisation (ILO) and the United Nations (UN)." Back

35   Centre for International Environmental Law, World Resources Institute and Bank Information Centre, "IFC's Performance Standards and the Equator Principles: Respecting Human Rights and Remedying Violations?", July 2008, page 7. Back

36   Centre for International Environmental Law, World Resources Institute and Bank Information Centre, "IFC's Performance Standards and the Equator Principles: Respecting Human Rights and Remedying Violations?", July 2008, page 1. Back

37   ECGD, Case Impact Analysis Process, May 2004, paragraph 2.3, "ECGD analyses the environmental, social and human rights impacts of all civil, non-aerospace transactions for which applications for support are received. Where possible, the impacts of the goods and services being exported, and the project of which they form part, are both assessed" (emphasis added). Back

38   Not printed. Back

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