Transparency & Accountability • 02 May 2015
Long awaited investigation into Glencore for alleged tax dodging shows EU bank's lack of transparency and vulnerability to abuse
February 5, 2015
BrusselsBack to overview
The European Investment Bank (EIB) is virtually powerless in the face of abuse of its own funds, an internal investigation published last week by the EIB shows. What’s even worse is that the EIB’s new transparency policy – to be adopted in the coming weeks – would formally allow the bank to keep such internal investigations into abuses of its funds secret, hereby undermining public scrutiny of public money.
The draft transparency policy, which has been criticised by civil society on several occasions, includes a provision allowing the EIB to refuse the disclosure of any documents related to internal investigations, reports and audits even when they concern matters of public interest. The provision goes against EU legislation and is based on a biased interpretation of the jurisprudence of the EU Court of Justice*.
In parallel to this policy process, the bank last week finally released a brief summary of its 2011 investigation for alleged tax dodging into the Zambian Mopani copper mine owned by mining giant and former beneficiary Glencore. Despite numerous requests by civil society organisations, the bank’s management refused to make the outcomes of its investigation public for more than three years and even neglected the advice of its own Complaints Office to disclose it. The bank’s behaviour on the Mopani case illustrates its reluctance to face public scrutiny despite managing public funds. It was only following a recommendation by the European Ombudsman that the EIB caved in and finally released a two page summary last week.
The summary revealed that the bank never managed to complete its investigation because the beneficiaries refused cooperation:
“The work of the EIB Review Team was non-conclusive due to the difficulties faced in the investigation of the case. As not all of the necessary information could be obtained, it was not possible to comprehensively prove or disprove the allegations raised in the Leaked Draft Report regarding Mopani’s costs, revenues, transfer pricing, employee expenses and overheads.”
Consequently the EIB closed a deal with Glencore to repay the entire loan in 2012 but a proper investigation was never carried out.
Xavier Sol, Counter Balance director said:
“This confirms what we have seen on several occasions: once a deal is agreed upon the EIB is virtually powerless in the face of abuse of its funds. The Inspectorate General of the bank has clearly fallen short of its responsibilities but instead of drawing adequate conclusions, the EU Bank opts for a watered down transparency policy that would allow them to keep similar abuses secret in the future”.
Anna Roggenbuck, EIB coordinator at CEE Bankwatch Network said: “The watering down of the EIB’s commitments to transparency is particularly worrying at a time when the Bank’s responsibilities are being expanded to orient and manage Juncker’s EUR 315 bn investment plan. As it stands today, the new transparency policy casts serious doubts over the EIB’s ability to manage EU funds in a responsible and transparent manner”.
Laetitia Liebert, Sherpa director said: “We currently see international trends for transparency where companies, governments, and even the banks are more and more required to be transparent. This is particularly true at the EU level with the various EU directives adopted in the last few months. By reducing opportunities for transparency in its policy, which message does the Bank send to the European citizens? We are here to remind the EIB that it is a public bank that should work in the public interest and we have all the right to know how its money, our money, is managed”.
* See Client Earth contribution to the public consultation on EIB Transparency Policy: http://www.eib.org/attachments/consultations/eib_group_tp_comments_client-earth_20150109_en.pdf