The CEE Bankwatch Network has submitted comments making suggestions for improving disclosure at the European Bank for Reconstruction and Development (EBRD).
The Bank in December sought comments on its existing public information policy (PIP). (See previous Freedominfo.org story.) The next stage will be preparation of a draft proposal.
A top priority for the CEE Bankwatch, a European nongovernmental organization and a member of the Global Transparency Initiative, is “the opacity of investments made through financial intermediaries.” The group explained in a press release:
Up to 40 percent of the EBRD’s portfolio is injected into commercial banks and other intermediary institutions who then on-lend the funds to businesses in their countries. Neither the intermediaries nor the EBRD offer any meaningful information on the final destination, the size or conditions, let alone the social and environmental impacts of these sub-loans.
CEE Bankwatch has recently pointed out disclosure gaps regarding financial intermediaries at the European Investment Bank. (See related Freedominfo.org report.)
The group said that “EBRD’s involvement is not preventing financial intermediaries from investing in harmful projects, even if not directly using the EBRD’s money. Notorious examples include VTB Armenia, which is financing the highly contested Teghut mining project, and Russian state-controlled Sberbank, which is general partner of the environmentally disastrous Sochi Olympic Games.”
Financial Intermediary Information Said Lacking
The EBRD informs the public of financial intermediaries (FI) projects that are sent to the board for approval through project summary documents (PSDs), the CEE Bankwatch submission explained. It continued: “PSDs however rarely contain more than the very basic details of the proposed FI loan and/or equity. The EBRD also rarely updates these PSDs during the lifetime of the projects, surprising given the periodic reporting responsibilities of the clients. In this context, the public is not given the opportunity to engage in FI projects.” More information on environmental impacts should be disclosed, the group stated as part of a list of recommended disclosures.
Project-Related Information Needed
A variety of recommendations concerning projects include:
– The Bank should establish an Internet based resource for tracking project status and all the relevant project based information and documents.
– The EBRD should disclose Environmental and Social Action Plans, and not leave it upon the client to do so, both for A and B category projects or at minimum, should keep an overview and disclose in cases of significant public interest.
– The EBRD should disclose public sector board reports on a routine basis;
– The EBRD should make publicly available board reports for private sector projects.
– The EBRD should disclose OPER [evaluation] reports for the public and private sector projects within 6 months from the evaluation mission.
While applauding the disclosure of minutes of board meetings, the group urges that the minutes should include more information and be released sooner.
Another series of recommendations are designed to improve public participation.
Noting an increase in the number of derogations to the timely release of Project Summary Documents, CEE Bankwatch asked that the PIP include a provision that details how and when derogations will be disclosed to the public.
As an example, the comment letter said:
The Centerra Revolving Debt Facility regional project has appeared in the list of the projects for the Board of Directors meeting in late October 2010 with no PSD disclosed (http://www.ebrd.com/english/pages/project/psd/2010/41543.shtml). The project has raised great interest on the local and international levels, given the company’s history of operations in Kyrgyzstan. Information requests and letters were submitted to the EBRD and Secretary General. One month after the project’s approval, the PSD appeared on the Bank’s website and the delay was described as a derogation.
The consultation process itself also was criticized. Among other things, the group suggested that “the final revised draft policy/strategy should be made available to the public with a summary of comments received and staff responses before the policy considered for final Board approval.”
It was suggested that the Bank’s online schedule of upcoming policies and strategies for review is sometimes incomplete and should be updated as soon as concepts are approved by the management. In addition, “The EBRD should open the Capital Resources Review to the public and adopt formal provisions for its consultative participation.”
The submission also addressed problems with certain environmental disclosures, translations, and the updating of project summary documents.
The group stressed, that “automatic disclosure of project-related information in all the phases of the project is a key element to effective public participation in the decision-making process.” It recommended that “project based factual and technical documents should be available online and linked to the project PSD.”
A summary of the main elements of co-financing for a given project should be available to help estimate the risk the EBRD assumes and how it is distributed between participants, the submission said, and the PSDs for the multi-project facilities should include clear information on the projects to be financed.
“The EBRD should disclose in its entirety all the initial discussion papers, including the Concept Clearance Memorandum, Concept Review Memorandum, Environmental Screening Memorandum, draft Environmental Summaries, Initial Environmental Examinations, [and] Final Review Memorandum.”
Also, “The EBRD should disclose all documents related to the loan agreement between the EBRD and the project sponsor, including the client’s Environmental Action Plan, loan contract and social and environmental impact assessment documents.
“The PIP should require the disclosure of all project implementation reports, including Annual Environmental Reports, Periodic Environmental Audits and Exit Audits.” The submission continued: “We advise that the EBRD follows the example of the European Investment Bank and releases at a minimum environmental information gathered by the Bank during project monitoring.”
Topic-specific studies and analyses elaborated or commissioned from independent experts and consultants for the EBRD (such as the recent gender analysis), also should be released, the group said.
The EBRD website should include a complete staff contacts directory, including contact emails, the group stated. Also, the PIP “should require the disclosure of a schedule of the EBRD senior management visits to countries of operation with adequate notification.”
While welcoming the annual publication of the EBRD’s Anti-Corruption Report, the group said the report should include general information on allegations of fraud and corruption filed against EBRD staff or EBRD-financed operations, their current review status, the key findings of investigation, and a description of how the complaints were addressed.
Documents produced by the Project Evaluation Department should be released in their entirety and without confidentiality exceptions, according to the comments.
Filed under: IFTI Watch