The European Investment Bank has committed to writing a second draft proposal on disclosure policy-expanding and extending its process for consultation and review after the first draft, and the process, came under criticism.
According to a July 21 announcement, "the Bank feels it appropriate to launch a second round of consultation on the basis of a re-edited draft policy, taking into account stakeholder comments and contributions received during the 45 days consultation period," which ended on July 21.
The first round was kicked off with a May 19 EIB announcement. Critics faulted the first draft for numerous reasons and suggested that it was remarkably close to current policy.
Remy Jacob, deputy secretary general of the EIB, said June 29 that the first draft was meant as a starting point and likely to change. At the same time, he also said that he would recommend that the institution produce another draft and undertake a second round of comments. He spoke at a half-day session on the EIB policy review in Brussels, sponsored by members of the European Parliament who have been critical of the draft policy.
The EIB’s executive directors discussed the draft policy and procedures at a closed meeting on July 18. The first comment period is set to close July 21, and the original plan was to make a decision this fall. NGO representatives suggested a new draft and further consultations.
That schedule has now been pushed back somewhat with the EIB pledge "in principle" to produce a new draft on the EIB Web site on Sept. 26 with a 15-day comment period. After the 15-day comment period EIB says it will produce a "pre-final draft revised policy," reviewed by the management committee, that will be the subject of further consultations, including at a consultation workshop. After that, the draft review of the policy and a "Consultation Report," including the public comments "and the bank’s responses" will be sent to the EIB board for a final decision. The EIB press release is ambiguous about whether the revised draft or the Consultation Report will be disclosed before the board meeting, but states that the new policy and the Consultation Report will be issued after board approval.
The extended and expanded consultation process was lauded as "a positive development," by Magda Stoczkiewicz, speaking for the CEE Bankwatch Network and Friends of the Earth Europe.
Also during his remarks in Brussels, Jacob announced that the EIB intends to create an "inspection panel" to process complaints about matters, including implementation of the transparency policy, from persons outside the EU. Currently, EU citizens have recourse through the EU Ombudsman for such complaints.
Reaction to the proposed EIB policy has been critical, with one comprehensive review coming in a letter signed by more than 120 NGOs, and another emanating from two members of parliament, Alain Lipietz, of the Green Party, and Gaby Zimmer, from European United Left – Nordic Green Left (from France and Germany, respectively). Lipietz spoke at the June 29 session in Brussels that was sponsored by CEE Bankwatch Network and Friends of the Earth Europe.
Aarhus Controversy
Numerous issues have emerged in the early days of the debate over the EIB draft policy, issued May 19, but one controversy harks back to an unannounced EIB effort to remove itself from being covered by the Aarhus Convention, the United Nations agreement establishing transparency policies for environmental policy formation.
In a nonpublic letter, the EIB suggested that it be exempted from regulations still being drafted to implement Aarhus. The Dec. 7, 2004, letter signed by EIB President Philip Maystadt says "some aspects of the proposed text need to be adjusted, in order to take into due account the Bank’s specific nature and statutory mission as a credit institution and to avoid unexpected adverse effects on the Bank’s activity." He referenced the EIB position from a Nov. 10, 2004, "Non-Paper" on the draft regulation in which the EIB suggested language to protect confidential information submitted by third parties. A second suggestion calls for the insertion of language to clarify that EIB is exempt from public consultation requirements for its environmental plans and programs. The EIB noted that this would still permit voluntary consultation.
The regulations on Aarhus remain under development.
The EIB argues that too much transparency could endanger the health of it operations, which in 2004 provided $45 billion in loans to private and public sector borrowers. Jacob noted, "We do not want to end up being a non-lending lending institution." He added, "Yes we are a European Union institution, but we are also a bank."
Among other things, on June 29 Jacob defended the EIB’s current practice of allowing private sector applicants to avoid having their applications cited in the so-called pipeline, the EIB online listing of potential projects under appraisal. Critics have demanded that all applications be listed.
Providing new data about this practice, Jacob said that 64 percent of applications were disclosed in 2003 and 87 percent in 2004. He predicted a 95 present level of disclosure this year, attributing the upswing to questioning of applicants by the EIB staff about the necessity of confidentiality. "Now we ask the promoter to justify why," he said, "and he has to show it is a commercial or financial risk."
Nevertheless, researchers using the EIB database complain of gaps and note that projects under consideration are often announced only days before board approval. A freedominfo.org review looked at the 15 projects most recently approved (as of June 29). The research indicated that four of the 15 were made public on the same day they were approved. One project, a loan for a hydroelectric project in Ethiopia, was announced 82 days after being approved. For the other projects, disclosure in the pipeline came from two to 42 days in advance of board approval. Researchers seeking to understand the EIB’s lending to developing countries have recently compiled their own listing, www.eibprojects.org. This web site is an initiative of Friends of the Earth International, Campagna per la Riforma della Banca Mondiale and CEE Bankwatch Network.
Jacob said the EIB is likely to adopt a more liberal transparency policy than suggested by the first draft, which he said was a compilation of three related existing policies intended to get the consultation started, not a thorough-going rewrite. "We are prepared to go a certain distance, but not the distance you are proposing," he said in reference to the suggestions of NGOs and parliamentarians. Requests for earlier disclosure that projects are under consideration and for less deference to confidentiality claims, Jacob said, compete with the value of efficient operations. In his presentation, Jacob stressed that the EIB has in recent years expanded the amount of information provided.
Asked about the possible disclosure of project monitoring reports, Jacob said that under loan covenants borrowers pay for the monitoring reports and so it is up to them to decide whether to publish them. An NGO representative, Toby Mendel of Article 19, suggested that disclosure of such reports could be an EIB requirement.
Parliamentarians Offer Suggestions
EU parliamentarians Lipietz and Zimmer June 20 made numerous recommendations for EIB disclosure policy in their capacities as rapporteurs for parliamentary committees dealing with EIB matters.
Among other recommendations, the EP members have suggested that EIB protection of confidential business information should occur only when there are "compelling reasons" in terms of competitive harm. They also suggest that confidentiality claims could be rejected in cases of "overriding public interest." Lipietz and Zimmer also suggest that the EIB publish definitions to guide its confidentiality policy and keep a logbook of nondisclosure decisions. They recommend publication of other materials associated with the project review process, such as the final report leading to approval, a practice at many other international financial institutions (IFIs).
In addition, the parliamentarians propose that the EIB adopt a policy of releasing drafts of potential policies and seeking public comments before their approval by the board of directors. The EIB’s handling of the draft disclosure policy is the first time it has followed such a procedure, increasingly common among other international lending institutions. EIB officials say they do less such policymaking. They point to the publication of the Corporate Operational Plan as a unique disclosure of a detailed plan of action. However, the EIB does not publish a draft COP. Nor did it publish an advance copy of a recently announced strategy paper.
The parliamentarians make a wide variety of other proposals, including the disclosure of board agendas, minutes and voting records. They also seek disclosure of the projects financed through other banks using EIB funds (the Global Loan process).
The parliamentarians’ report is available here.
NGOs Propose Principles for Disclosure Policy
Another set of recommendations was developed by nongovernmental organizations including CEE Bankwatch Network, Friends of the Earth, Article 19, and the bank Information Center. These proposals are available here.
A preamble notes that the EIB is "vastly less transparent in some critical areas than other public international financial institutions."
By Toby McIntosh
Filed under: IFTI Watch