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European Ombudsman: EIB weakens EU efforts to strengthen rule of law

Brussels – In an unprecedented ruling this week, the European Ombudsman concluded at the end of an investigation into the EIB’s involvement with a road construction project in Bosnia and Herzegovina that the institution’s behaviour was “totally unacceptable” and it “risked putting into question the EU’s commitment for strengthening the rule of law in Bosnia and Herzegovina.”

During the investigation, the Ombudsman found that the EIB went on to finance the project to construct a bridge over the Sava river in Bosnia and Herzegovina regardless of complaints from an Italian company Impresa Pizzarotti & C. SpA which had been excluded from the tender despite having offered the lowest bid.

The EIB’s Complaints Mechanism, an internal body meant to ensure that the institution complies with its own policies, had ruled that the complaint of the Italian company was grounded, yet the EIB management chose to ignore the ruling of its own policy-enforcing body.

The European Ombudsman Emily O’Reilly found that the EIB management decision was based on an incorrect interpretation of the tender documents and said she was considering opening an own-initiative inquiry into the systemic issues underlying the EIB’s handling of the case.

“An inquiry into systemic issues would be very welcome,” says Anna Roggenbuck, Bankwatch EIB coordinator. “This is not the first time that we see the EIB management ignoring or interfering with the work of its own Complaints Mechanism. NGOs have been for years complaining about this bad practice to the bank but it seems that the management chooses to run counter to its own standards for the short term interests of its clients, often big corporations.”

According to Bankwatch, in sensitive and controversial cases such as the Mopani mines in Zambia, the Bujagali dam in Uganda, or the Sostanj coal power plant in Slovenia, the EIB management has given the impression of interfering with the work of the complaints mechanism. In the Mopani case, there is evidence that the management went against the Complaints Mechanism decision to disclose the investigation report, and in the case of Bujagali EIB President Werner Hoyer has had to send a letter asking EIB staff to ensure the independence of and cooperation with the Complaints Mechanism office.

In a previous ruling from 2013 [1], the European Ombudsman found that1 enormous delays in Bujagali case were caused by insufficient staffing of the Complaint Mechanism office and that the release of the Complaint Mechanism assessment of the case was caused by internal pressure within the EIB.

“The Complaint Mechanism was created to give people an opportunity to defend their rights but this purpose is defeated if the EIB management itself prevents the body from functioning as it should,” says Anna Roggenbuck. “This is unacceptable. We all need to think about better accountability mechanisms for the EIB if this institution is to further the application of the rule of law.”

“In light of the EIB’s extensive role in the upcoming EU investment package of EUR 300bn, it should be made clear that the bank needs to step up its transparency and accountability both towards European citizens and EU institutions,” says Counter Balance’s director Xavier Sol. “But right now what we are seeing is the exact opposite. Currently in the process of reviewing its transparency policy, the bank is actually trying to increase the list of exceptions to information disclosure which would mean that more information can be kept confidential as commercially sensitive.”

According to the Aid Transparency Index 2014 [2], the EIB was assessed as having poor transparency standards among international donors and is one of the two most non-transparent multilateral development banks.

For more information, contact:

Xavier Sol
Counter Balance
Xavier.sol@bankwatch.org

Anna Roggebuck
Bankwatch
annar@bankwatch.org
+ 48 509 970 424

Read more:

Final ruling of the European Ombudsman on the Sava Bridge in Bosnia and Herzegovina case:
http://www.ombudsman.europa.eu/cases/decision.faces/en/58171/html.bookmark

Holding the EIB to account, Counter Balance, April 2014:
http://www.counter-balance.org/holding-the-eib-to-account-a-never-ending-story/

Notes

1. EO 2288/2011/MMN dated 17.01.2013

2. http://ati.publishwhatyoufund.org/index-2014/results/

Image by flickr user ssalonso (CC BY-NC-SA 2.0)

Visegrad countries push for more gas imports in 2030 deal

Prague – The Visegrad plus 2 countries (Poland, the Czech Republic, Hungary, Slovakia, together with Romania and Bulgaria) have all included a strong statement of support for the Southern Gas Corridor into their comments to the drafted EU 2030 Council conclusions to begin in Brussels this Thursday.

The Southern Gas Corridor is a set of planned projects meant to bring gas into Europe from the Caspian region, including three major pipelines: South Caucasus, Trans Anatolian and Trans Adriatic.

In the „energy security” section of the draft Council conclusions, each of the submissions of the six countries from Central and Eastern Europe contains an identical paragraph which states the need for the Southern Gas Corridor projects to be expedited:

„Member States and the Commission will ensure that the implementation of the critical projects of common interest in the gas sector identified in the European Energy Security Strategy, in particular the North South Gas Corridor and the Southern Corridor, will be completed in expedite manner, bearing in mind the necessity of increasing the energy security of the most vulnerable Member states.”

This paragrah is a totally new addition that each of the V4+2 countries have made to the Council conclusions since their meeting September 30th when they coordinated their positions in order to get more out of the bargain with the rest of the EU member states.

During his European Parliament hearing last week, Slovakia’s EU Commissioner designate Maros Sevcovic, the future EU Commission Vice-President for Energy Union, indicated his support for the realisation of the Southern Gas Corridor projects.

“V4+2 countries seem keen on shooting themselves in the foot with this one,” comments Ondrej Pasek, Bankwatch energy campaigner. „They strongly argue for energy security, but instead of pushing for financing of high energy efficiency and renewable targets to help their own citizens and companies get rid of dangerous energy dependency, they just want to put more money in pipelines. Yet the Southern Gas Corridor can only source gas from politically problematic regions, such as the Caucasus or the Middle East. Can this be called security in any sense?”

A 2030 energy efficiency target for the EU of 30 percent would reduce gas demand in Europe by as much as 20 times the import volumes that would be coming through the Southern Gas Corridor, making this new piece of mega-infrastructure redundant. In their coordinated positions, V4+2 countries are all calling for a non-binding 25 percent energy efficiency country for the whole block (not for each individual country).

A study published on the 20th of October by the World Resources Institute shows that more investment in renewables and energy efficiency in three sectors (housing, industry and power generation) can cut natural gas imports to the European Union by 50% and CO2 emissions by 49%.

For Thursday’s summit, Sweden and Denmark have been pushing for at least 30% binding energy efficiency target, with Germany, Luxembourg and Portugal supporting the 30 percent figure (not more). From the Western European countries, only Cyprus and the UK advocate for no energy efficiency target at all. There is no mention of the Southern Gas Corridor in the comments of the countries wanting a higher energy efficiency target.

„In their positions, the Visegrad countries are not only turning against many Western European countries who would want a more ambitious energy efficiency target, but they are also cannibalising EU efforts to build a strong internal power market,” comments Bankwatch’s energy camppaigner Kuba Gogolewski. „This is because they are suggesting financing for more gas pipelines should be given priority over investments in power interconnectors which would help to integrate the European energy market and especially allow countries to share their renewables.”

Comments of V4+2 countries on the draft conclusions of the EU Summit explicitly ask to delete a sentence asking the Union and Member States to secure adequate financing for interconnectors.

”An ambitious EU climate and energy policy for the period after 2020 would essentially eliminate the need for massive investments in natural gas import pipelines such as the Southern Gas Corridor or LNG terminals,” concludes Kuba Gogolewski. „By not adopting ambitious climate policies and giving in to the Visegrad group pressure, the EU would only turn the mantra of gas companies, that we ‘need’ more gas, into a sef-fulfilling prophecy.”

For more information, contact:

Ondrej Pasek, Bankwatch energy campaigner
ondrej.pasek@bankwatch.org
Tel.: 420 608 381 602

Kuba Gogolewski, Bankwatch energy campaigner
kuba.gogolewski@bankwatch.org
Tel.: 0032485358317

Slovenia coal fraud charges serve as warning for other Balkan countries, say NGOs


Ljubljana, Slovenia: Slovenian police yesterday reported that ten people had been charged with fraud [1] in relation to the beleaguered Sostanj 6 lignite power plant project, causing a suspected EUR 284 million in financial harm to Slovene electricity consumers. The charges serve as a new warning to decision-makers across the Western Balkans [2] to closely scrutinise coal power plant projects planned across the region if the mistakes made in the Sostanj 6 project in Slovenia [3] are not to be repeated, warned several NGOs today.

Slovene police declined to provide any names, but unofficial information obtained by the Slovene Press Agency/Slovenska tiskovna agencija indicates the company suspected of this EUR 284 million fraud is Alstom, the main contractor for the Sostanj 6 project, which is believed to have secured financial gains by changing contracts and increasing the cost of the project.

The allegations come at a particularly sensitive time for Croatia, which at the beginning of September chose a consortium including Alstom for the controversial Plomin C coal plant project.

Coal in the Balkans

Find out more

Less than two weeks ago Bankwatch and Zelena akcija/Friends of the Earth Croatia drew attention to Alstom’s troublesome integrity record in a briefing paper detailing the repeated convictions and charges of Alstom employees for corruption offences [4].

“The Sostanj 6 project has been dogged by scandals, its price tag has doubled to EUR 1.4 billion, and now some of those involved are being charged for fraud,” says Bankwatch’s Pippa Gallop. “European development money has potentially been lost to fraud here and the two public banks financing the project – the European Bank for Reconstruction and Development and the European Investment Bank – owe it to the public to expand their internal investigations to include these new charges in Slovenia, to complete the investigations and make their findings known to the public.” [*]

“Sostanj 6 is the perfect alarm call for everyone in southeast Europe to wake up and start looking more carefully at what’s going on with coal projects in the region”, said Barbara Kvac from Focus Slovenia. “In Slovenia, our state is already struggling under the financial burdens of this failed project. This should not be allowed to happen in other countries too. It’s time to stop swallowing unsubstantiated promises of jobs and economic development and time to start asking tough questions.”


* The doubtful economic viability of the Sostanj 6 project has been repeatedly presented to the EIB and the EBRD by civil society. However, according to the results of an investigation by the EIB’s Complaint Mechanism, this kind of information was not sufficiently presented by the EIB management to the Board of the Bank, leading the Board of the EIB to make the questionable decision to finance Sostanj 6. Such gaps in proper assessment of a project before financing need to be properly investigated by the EIB so as to avoid future risky use of scarce European development funds. Similarly, better due diligence is also expected of the EBRD, who also financed this project despite corruption suspicions and whose internal investigation into Sostanj 6 has still not yielded any public results. Evidence of the miscommunication at the EIB can be found in correspondence between NGOs and the EIB which is available upon request.

Contacts:

Pippa Gallop, CEE Bankwatch Network
pippa.gallop@bankwatch.org
Tel.: 00385997559787

Notes for editors:

[1] For more information see here:
http://www.sloveniatimes.com/alstom-caught-up-in-tes-criminal-investigation
A total of ten persons have been charged with abuse of office and forgery or destruction of business documentation according to the head of criminal investigators at the Celje Police Administration, Damjan Turk. Eight persons from Slovenia, one from Austria and one from France are among the suspects.

[2] For information about the plants see here: https://www.bankwatch.org/coal

[3] For more information about the ill-fated Sostanj 6 project, see:
https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia

[4] See here:
https://bankwatch.org/news-media/for-journalists/press-releases/marubeni-and-alstoms-corruption-records-cast-new-doubts-cr

Green 10: the Parliament must reject this Commission

Brussels – The Green 10, the alliance of leading environmental NGOs in Europe, reiterates the call to reject the Commission unless rigorous changes of mandates, job titles and re-allocation of posts are made.

Download the Green 10 public appeal as pdf.

Angelo Caserta, Birdlife Europe Director and Chair of the Green 10 stated: ”We have listened carefully to the hearings of designated Commissioners hoping, until the very last word, that President Jean Claude Juncker would send a message of peace to the environmental community. Sadly, that has not happened. We can only reiterate our appeal for a rejection of this Commission. The European Parliament cannot accept it without seriously alienating millions of citizens in Europe who want decision-makers to protect the environment and secure a sustainable future”.

In its public appeal (pdf) to the European Parliament the Green 10 state: ”After following the hearings of the EU Commissioner-Designates in front of the European Parliament, the Green10 Coalition confirms its strong concern over President-Elect Juncker’s attempt to downgrade the environment in Europe and asks the European Parliament to reject the Commission.

As put forward in our open letter to President Schulz the Green10 deplore that the structure of the new European Commission, the mission letters, and the choice of Commissioners reveal a roll-back of existing EU commitments on sustainable development, resource efficiency, health, air quality, biodiversity protection and climate action”.

The Green 10 conclude: ”Against this backdrop, we believe the European Parliament must reject the Commission unless rigorous changes of mandates, job titles and re-allocation of posts are made along the lines indicated by the Green 10 in the letter to the Conference of Presidents and Conference of Chairs on October 3rd.

The EP should make clear that EU citizens and their representatives can only accept a Commission that takes seriously environmental sustainability, people’s health and much needed transformation of Europe’s economy”.

European Banks are most opaque multilateral organisations, 2014 Aid Transparency Index

The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) are ranked 16th and 17th respectively out of 17 multilateral organisations on the 2014 Aid Transparency Index (ATI) which is published today. The transparency index comes at a momentous time for the EIB as the institution is currently reviewing its transparency policy and NGOs fear that the ‘EU bank’ is preparing to further downgrade its transparency requirements.

Today aid watchdog Publish What You Fund (PWYF) published its yearly transparency chart for the 4th time, ranking all important aid donors worldwide according to how transparent they are about their funding.

Out of the total 68 institutions assessed by PWYF (out of which only 17 are multilateral organisations, others include aid organisation or governmental branches), the EIB and the EBRD occupied respectively the 44th and 45th places scoring 24.6% and 24.5% for transparency (a score of 100% would mean excellent transparency).

Both the EIB and the EBRD score worse than last year and are labeled ‘poor’ when it comes to transparency. The transparency indexes of both banks are more than 30% below the average of all EU institutions which stands at 56.7%.

The top ranking agency is the UNDP with a score of 91%. The UK Department for International Development, the Millennium Challenge Corporation and GAVI, the Vaccine Alliance come close on the heels of UNDP, all scoring above 85% and performing well on most indicators. As in 2013, China takes the last place, scoring just 2%.

The EIB started voluntarily submitting information about its standards and activities to the International Aid Transparency Initiative Standard in September 2014 but this has not yet led to any improvement in the institution’s ranking.

According to the PWYF “the EBRD performs best on organisation planning information, with scores above the poor category average. It lags on commitment indicators, organisation financial information and basic activity and classifications information. It is the only IFI that does not score for forward-looking country budgets.”

“The EIB performs relatively well on organisation planning but does not score on performance information (results, conditions and impact appraisals) and scores on less than half the activity-level indicators.”

PWYF also recommends the EIB to “ensure that its revised Transparency Policy reflects best practice on presumption of disclosure, exceptions, public interest overrides and independent appeals processes.”

Xavier SOL, Counter Balance director, said:

“Transparency is a precondition for good governance and these figures should ring an alarm bell for anyone who is concerned about the quality of EU funding. This is a new low in the EIB’s transparency track record. Its new transparency policy will be the next one, if the bank is not willing to dramatically improve its first draft.”

Fidanka Bacheva McGrath, Bankwatch EBRD coordinator:

“Ranking last among multilateral development institutions speaks for itself and should be a strong motivator for the EBRD to improve its practices, especially now that it has a president who has personally committed to transparency. Some aspects are improving over the years, but the EBRD lags way behind its peers. The bank can and should do better, instead it has increasingly delegated disclosure responsibilities to its clients.”

Rachel Rank, Publish What You Fund, said:

“A lot of progress was made at the political level in the early days of aid transparency, including a promise to publish aid information to an internationally-agreed common standard by the end of 2015. But with a year to go until that deadline, progress has stalled. The ranking shows that no matter how many international promises are made, and no matter how many speeches there are around openness, a startling amount of organisations are still not publishing what they fund.”

Linda McAvan, Chair of the European Parliament’s Development Committee said:

“Greater transparency on aid flows is absolutely critical to enabling parliamentarians and civil society organisations to hold policymakers to account. We need to ensure we are able provide European taxpayers with assurances that their money is being spent in the most effective way possible.”

Notes for editors:

1. The European Investment Bank is currently reviewing its transparency policy. Among other things, the bank is proposing a significant expansion of its existing exemptions on information disclosure. A new policy is expected. For more information see
http://www.counter-balance.org/europes-finance-ministers-urged-to-stop-eu-banks-extraordinary-slide-towards-secrecy/

2. For the full ranking and all background information on the ATI please visit
http://www.publishwhatyoufund.org/index/2014-ati/

For more information please contact:

Xavier Sol, Counter Balance
xavier.sol@counter-balance.org
Tel.: +32 2 893 08 61

Fidanka Bacheva-McGrath, CEE Bankwatch Network
fidankab@bankwatch.org
Tel.: +359 877 3030 97

–

Image by Jeremy Keith – CC 2.0 BY

Environmental Impact Assessment for new Bosnia-Herzegovina coal plant contains false information, reveals expert analysis


Bijeljina, R. Srpska, Bosnia and Herzegovina, 6.10.2014: The Environmental Impact Assessment (EIA) study for the planned Ugljevik III lignite power plant [1] near Bijeljina in Bosnia and Herzegovina contains data on the plant’s SO2, NOx and dust emissions which is demonstrably false [2], and the study is missing key information needed to assess the plant’s environmental impact, according to a new analysis [3] submitted by NGO Center for Environment to the responsible Ministry today.

[See photos from the report’s launch event below.]

The environmental permit for the new coal unit which currently subject to a legal challenge in Republika Srpska [4] was issued on the basis of the contested environmental study in July 2013. The new analysis commissioned by Center for Environment and carried out by Polish expert Dr Leszek Pazderski [5] demonstrate that the environmental study is missing several key elements, for example:

  • data on greenhouse gas emissions and the climate impact of the project;
  • quantative data on emissions of carbon monoxide, ammonia, hydrogen fluoride, hydrogen chloride, heavy metals, benzo(a)pyrene, benzene, or radioactive isotopes;
  • information about the quantity and composition of wastewater and its impact on surface water.

These omissions together with the incorrect emissions figures mean that the EIA does not enable an assessment of the plant’s impacts on the environment and does not fulfil the minimum requirements of the EU EIA Directive, which is legally binding on Bosnia and Herzegovina under the terms of the EU-backed Energy Community Treaty.[6]

“This is the latest in a series of environmental approvals for risky projects in Bosnia and Herzegovina which have been waved through with very little oversight”, said Igor Kalaba of Center for Environment. “This has already caused problems in the cases of the Stanari coal power plant, which will not be in line with the EU Industrial Emissions Directive, and in the Ulog hydropower plant, in which two workers were killed by landslides in 2013 – incidents which might have been avoided if the project’s impact on land stability was better covered in the Environmental Impact Assessment process”.[7]

“With such shocking findings about the quality of the environmental study for Ugljevik III, the Ministry now needs to annul the environmental permit if it wants to uphold the law, protect the inhabitants of the Ugljevik area and avoid serious and expensive problems in the future”, added Natasa Crnkovic of the Center for Environment.

Contacts

Igor Kalaba, Center for Environment, Banja Luka, igor.kalaba@czzs.org
Tel: (00 387) 51 433 142, Mobile: (00 387) 65 860 796

Notes for editors

[1] The 600 MW lignite power plant Ugljevik III, promoted by Russian billionaire Rashid Sardarov’s Comsar Energy and constructed by the China Power Engineering and Consulting Group Corporation (CPECC) is planned to be built near the site of the existing Ugljevik plant in the north-east of the Republika Srpska entity of Bosnia and Herzegovina. The plant has raised concerns as existing air pollution in the area is high, and it seems unlikely that the new plant will comply with the pollution limits stipulated in the EU Industrial Emissions Directive. Its net efficiency level is expected to be very low at only 34.1%.

[2] The data provided for expected emissions of SO2, NOx and dust are inconsistent. The allowed emissions levels according to the Industrial Emissions Directive, and with which the plant is purported to comply, are:

SO2:200 mg/m3
~NOx: 150 mg/m3
~Dust: 10 mg/m3

Thus the ration of hourly and annual concentrations of emissions of these substances must be = 20:15:1. However this is not the case, meaning that the data is clearly false.

[3] The analysis is online at:
https://bankwatch.org/sites/default/files/analyis-Ugljevik-06Oct2014.pdf

[4] Due to Bosnia and Herzegovina’s exceptionally dispersed administrative structure, environmental legislation is the defined at the level of the Entities, Republika Srpska and the Federation of Bosnia and Herzegovina.

[5] Dr hab. Pazderski is a researcher and lecturer at the Nicolaus Copernicus University in Poland.

[6] More information about the Energy Community can be found at www.energy-community.org. Bosnia and Herzegovina has been increasingly testing the Energy Community’s nerves with its frequent failure to adopt and implement its obligations under the Treaty, which include the adoption of certain elements of EU environmental legislation. In January this year, Center for Environment submitted an official complaint to the Energy Community Secretariat on the environmental permit for the Stanari power plant. The complaint is awaiting further action. Two weeks ago the country narrowly escaped having sanctions imposed on it by the Energy Community for its failure to adopt gas-related legislation, but if it does not take corrective action soon the sanctions may yet be implemented.

[7] For more information about the legal issues around the Stanari coal power plant project see here:
https://bankwatch.org/news-media/for-journalists/press-releases/stanari-power-plant-bosnia-allowed-pollute-2-10-times-high

At the Ulog hydropower plant project the Republika Srpska entity government gave the project promoter EFT an environmental permit to construct a 35 MW hydropower plant on the upper reaches of the stunning River Neretva in Bosnia and Herzegovina. In September 2012 Sinohydro signed an EPC contract with EFT to carry out the works, and some works on access roads started to be carried out. In April 2013 a construction permit was issued, but then in early July 2013, within just four days of one another, two workers died in separate landslide incidents. Since then, preparatory works have grind to a virtual halt. Recent pictures of the site are available here:
http://zeleni-neretva.ba/index.php?option=com_content&task=view&id=303

Photos from the report’s launch event