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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

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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

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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

Marubeni and Alstom’s corruption records cast new doubts on Croatian coal project, warns new analysis


Zagreb — Japan’s Marubeni Corporation and France’s Alstom – who have together been chosen as the preferred bidding consortium for the Plomin C* coal power plant project in Croatia – have a poor integrity record including several convictions for corruption offences which should raise alarm bells and increase vigilance among the Croatian public and potential financiers of the project, according to a new paper by CEE Bankwatch Network, published today.[1]

Online discussion on Balkan coal

To hear more about Plomin C and other coal plants in the Balkans, consider joining a Google hangout to be organised by Bankwatch on Oct. 10, 10 a.m. CET.

For more information, please write to claudia.ciobanu@bankwatch.org

Alstom and/or its staff has been found guilty of corruption offences in relation to at least seven cases in seven years across different continents, and is under investigation for several more, including around the Sostanj 6 lignite power plant in Slovenia. Most recently, the UK Serious Fraud Office charged Alstom Network UK with paying around USD 8.5 million in bribes between 2000 and 2006 to win transport contracts in India, Poland and Tunisia. Alstom has been under observation by the Norwegian Finance Ministry since 2011 after its Council on Ethics recommended in 2010 to exclude Alstom SA from the Government Pension Fund Global. [2]

“After years of watching the Sostanj case in Slovenia, where prosecutors have been investigating Alstom for corruption deeds, it was quite shocking to see the company selected as a preferred bidder in neighbouring Croatia,” said Pippa Gallop of CEE Bankwatch Network. “We can only hope that Plomin C will not turn out to be a similar debacle to Sostanj, which has ended up being a disastrous and overpriced project where many mistakes were made – mistakes which the authorities are now powerless to rewind.”

Marubeni, meanwhile, has been found to have been involved in two major corruption cases within three years, for which it has had to pay penalties of USD 88 million and USD 54.6 million. As a result the company has been debarred from receiving loans from the Japan International Co-operation Agency for nine months starting from March 2014. [3]

“The choice of these two companies is a giant leap of faith at best from Croatian authorities”, said Pippa Gallop. “Their poor track record makes it an obligation for the Croatian public and authorities to closely monitor these companies’ activities at Plomin C and for any institutions that are considering financing this new coal unit to conduct tight screening of the project.” [4]

As well as the non-acceptability of new coal plants per se due to coal’s climate impacts, the viability and legality of Plomin C in particular are already under scrutiny because of several issues:

  • The project relies on imported coal and will not help Croatia’s energy import dependence.
  • The former Director for the construction of the existing Plomin 2 power plant at the same location has calculated that the project will be economically unviable. [5]
  • In order to overcome this, the project promoter HEP is offering investors a long-term power purchase agreement to buy off at least 50 percent of the electricity produced for at least 25 years. According to an analysis by Hungarian law association EMLA, this agreement is likely to be illegal under EU state aid legislation. [6]

For more information, contact:

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

Bernard Ivcic, Zelena akcija/Friends of the Earth Croatia
bernard@zelena-akcija.hr

Notes for the editors

* Read more about the Plomin C project, including about other problematic aspects surrounding this new coal unit: https://bankwatch.org/our-work/projects/plomin-coal-power-plant-croatia

[1] The paper is available at:
https://bankwatch.org/sites/default/files/briefing-Plomin-AlstomMarubeniCorruption.pdf

[2] Ministry of Finance: Government Pension Fund Global: Company placed on observation list, 06.12.2011,
http://www.regjeringen.no/en/archive/Stoltenbergs-2nd-Government/Ministry-of-Finance/Nyheter-og-pressemeldinger/nyheter/2011/government-pension-fund-global-company-p.html?id=665635

[3] JICA notice, Measures against Fraud, March 26 2014,
http://www.jica.go.jp/english/notice/140326_01.html

[4] It is not yet clear which banks are considering financing the Plomin C project. Several public and commercial banks with which Bankwatch, Zelena akcija and Banktrack have been in contact have denied involvement.

[5] See http://slidesha.re/18JYncL for a calculation by Professor Enco Tireli using the European Commission’s Guide to Cost-Benefit Analysis (2008). He also examined different scenarios regarding CO2 emissions pricing and found that Plomin C on coal would not be economically acceptable even with a CO2 price of EUR 4 per tonne.

[6] See https://bankwatch.org/sites/default/files/PlominC-legalopinion-publicsummary-22Apr2014.pdf

[7] See further information about corruption cases associated with Alstom in their nomination for the “Public Eye Awards”, a public recognition of the corporations with least ethical behaviour: https://bankwatch.org/news-media/for-journalists/press-releases/alstom-nominated-prestigious-public-eye-awards

Visegrad countries pose fresh threat to 2030 targets

Brussels – The group of four Visegrad countries (Poland, Hungary, the Czech Republic and Slovakia) plus Romania and Bulgaria declared yesterday their readiness to block EU 2030 binding renewables and energy efficiency targets which are to be agreed upon at a European Council Oct. 23-24. Yet cracks are appearing in the group.

“This is a disappointing position coming from the V4 + 2 group,” comments Bankwatch energy campaigner Ondrej Pasek in reaction to the declaration issued by the countries yesterday.(1) “But what was surprising to observe were the widening gaps among countries, with Poland and the Czech Republic at two ends of the spectrum.”

“Visegrad countries are asking for a compensation mechanism to channel money from the old member states into the modernization of their obsolete, carbon intensive industry. But at the same time, they do not want to be bound by specific targets,” explains Pasek. “This is completely irrational and detrimental. We need binding targets on renewables and energy efficiency to generate savings and jobs for people. We need to make all countries accountable for how they use the funding provided by the EU public budgets.” (2)

Meeting Sept. 30, Ministers of Environment of Visegrad countries plus Romania and Bulgaria declared that their countries could potentially endorse one of the three 2030 climate targets planned to be adopted by the EU in October, the binding emissions reduction target, but only if the target “is set realistically and in a technologically neutral way.” The ministers added that 2030 binding targets for renewables and energy efficienct were “undesirable”.

Poland was the toughest among all V4+2 which indicates that either it will not accept the binding targets or it would demand for significant financial benefits in exchange for agreeing to targets. This tough line was echoed by the new Polish Prime Minister Ewa Kopacz (who is replacing Donald Tusk), who declared in her inaugural speech to the Polish Parliament today that “during the European Council on Oct. 23- 24 my government will opose provisions which will increase costs and prices of energy”.

In its final declaration, however, V4 countries, Romania and Bulgaria did not bow to the Polish tough stance and finally jointly called for a binding emission reduction target. The position of the Czech Republic , adopted in August, actively promoting non-binding targets in energy efficiency and renewables, was not reflected in the declaration either – the countries were not able to agree even on non-binding targets.

“What we are seeing is that new member states find it increasingly hard to come up with a common approach to decarbonisation of the EU,” says Ondrej Pasek. “The final V4+2 declaration comes down to the least common denominator which may not reflect well the ambitions of each of the countries. The Czech Republic, for example, is well aware of economic benefits of a common energy efficiency target but it could not do more at this stage.”

„The new Polish government seems to be just as much hostage to the coal industry as that of Donald Tusk and this is no surprise,” comments Marek Jozefiak from Polish NGO Polska Zielona Sieć. „Blocking the development of renewable sources of energy will have far-reaching consequences for Polish energy security. If we maintain our current energy mix, based on coal, we will either increase our dependence on energy imports, due to the rise in hard coal imports, or get burdened by the huge costs which are necessary to keep our ruined industry alive.” (3)

„Tusk has made a name for himself in Europe by promoting energy security, but what Poland and the other countries in the V4+2 group are doing now is precisely putting this energy security under great jeopardy,” adds Jozefiak.

For more information, contact

Ondrej Pasek, CEE Bankwatch Network
ondrej.pasek@bankwatch.org

Marek Jozefiak, Polska Zielona Siec / Polish Green Network
marekjozefiak@zielonasiec.pl

Notes

1. The full text of the declaration is available here:
http://www.mos.gov.pl/g2/big/2014_09/d6cdc9370500325c6f02a77f46f9d1c5.pdf

Excerpts from the declaration are below.

2. According to latest Greenpeace report, cheap prices of energy produced from coal are an expensive illusion. In the last 25 years subsidies to coal mining and coal-based electricity production in Poland reached 170 bn PLN, whereas external costs on health amounted to further 700 bn PLN.

3. Read more about investment needs in energy efficiency in Central and Eastern Europe here:
https://bankwatch.org/sites/default/files/no-half-measures.pdf

And country by country recommendations for the sustainable use of EU funds in Central and Eastern Europe:
https://bankwatch.org/publications/funding-sustainable-development-european-regions-recommendations-programming-eu-funds

Excerpt from the final declaration made yesterday by the V4+2 group:

„The Ministers and State Secretaries reiterate that the single greenhouse gas (GHG) emissions reduction target at EU level must be set realistically and in a technology neutral way. The introduction of any legally binding renewable energy and energy efficiency targets at EU or national level is not desirable, in particular in the context of the proposal for the new governance system.

Moreover, the V4+ countries share the common view that the final agreement on the policy framework is conditioned by fair effort sharing and solidarity mechanism in both ETS and non-ETS sectors among the Member States based on the current distribution criteria reflecting 2020 package ambition levels, in particularly in non-ETS.2

Furthermore V4+ is convinced that predictable, stable and efficient rules protecting industry against carbon leakage are also indispensable part of a future agreement. Besides that V4+ supports higher flexibility between ETS and non-ETS sectors and the banking AEAs after 2020.

In addition, the V4+ Ministers and State Secretaries also declare that in addition to fair distribution of efforts in both ETS and non-ETS sectors an additional compensatory mechanism should be established enabling lower income Member States to finance modernization of their energy systems and industrial innovations. The V4+ countries also maintain their position that any decision on climate and energy policy must respect that it is the sovereign right of every Member State to freely choose its most suitable energy mix as provided in the Treaty.”

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Image by Dennis Jarvis (CC BY-SA 2.0)