Volkswagen’s emissions scandal and the EU’s bank
With the spotlight bright on Volkswagen for cheating in emission tests, the EU’s house bank must now come forward and show exactly what it has done to ensure proper oversight over its loans to the company.
We closely follow international public finance and bring critical updates from the ground.
In September 2015, news broke that Volkswagen had installed defeat-devices in its diesel cars to rig emission tests, resulting in some models emitting pollutants up to 14 less in emission tests than what they did on the street.
Shortly after, Bankwatch uncovered that the European Investment Bank, the world’s largest public lender, supported the world’s largest car producer with 19 loans worth EUR 4.3 billion between 2005 and 2015.
Fourteen of the 19 loans were intended for improving fuel efficiency and reducing emissions. Out of them five were classified under the bank’s so-called ‘climate action’ lending.
Warnings from the past
Already in 2009, when billions of EIB funds were disbursed to European carmakers (including VW) in response to the financial crisis, Bankwatch warned that the EIB must ensure that the stated environmental goals of the loans, namely cutting carbon emissions from cars, are indeed implemented.
First tranche of EIB car “crisis” loans requires scrutiny, warn Bankwatch and Greenpeace
Press release | March 12, 2009
Between 2005 and 2015, the EIB lent European automakers EUR 20.4 billion. Cars of at least seven of these companies showed considerably higher emissions in more stringent tests.
Up in smoke: the billions for Europe’s auto industry from the EU’s house bank
Blog post | October 21, 2015
Online media briefing: Dieselgate at the EU’s bank
An investigation by OLAF, the EU’s anti-fraud office, has concluded that Volkswagen had misused a EUR 400 million loan from the European Investment Bank, confirming concerns raised by Bankwatch shortly after the Dieselgate scandal broke.
Watch Bankwatch’s EIB policy officer discuss the EIB’s role in the Dieselgate affair or read a Politico story on the OLAF investigation.
EIB reluctant to disclose information
Since September, Bankwatch is requesting the disclosure of information on the EIB’s loans to Volkswagen, in particular such that helps assess the bank’s performance in making sure its funds were not being misused.
In January 2016, the EIB’s president Werner Hoyer admitted that the bank cannot rule out that one of the loans to Volkswagen in 2009 has been used to finance a cheating device to rig emission tests.
Yet, until 2017, the EIB has not been very forthcoming and the disclosed information is still not satisfactory.
Trying to squeeze blood out of a stone
Bankwatch first contacted the European Investment Bank (EIB) in late September 2015 with a detailed request (pdf) to disclose information on 12 of its loans to the VW Group.
Almost two months later, and after failing to meet an extended deadline, the bank sent only finance contracts related to two outstanding VW loans. Much of these documents had been redacted by the EIB.
In view of the profound public interest in the case, the highly insufficient responses were particularly disconcerting. Bankwatch therefore asked the bank’s Board of Directors in a letter (pdf) to urge the bank’s management to disclose the relevant information.
On December 18, 2015, three weeks after a final confirmatory application, the last available resort within the EIB’s transparency policy, the bank provided redacted versions of all twelve finance contracts signed with the VW group and of the completion reports provided by VW to the EIB at the closure of each project. (See all documents in this Google drive folder.)
New documents on European Investment Bank loans to Volkswagen
Blog post | January 18, 2016
Finance contracts and completion reports
Google Drive folder with documents related to twelve EIB loans to Volkswagen
Many files were still heavily redacted, making it difficult to interpret the information. For two loans Bankwatch therefore filed a second confirmatory application on January 25.