The European Investment Bank and its accountability mechanisms

A civil society perspective

Xavier Sol 05/11/2014

Presentation of Counter Balance

• Coalition of 9 European NGOs created in 2007, including CEE Bankwatch Network (operating in CEE countries, Balkans and European neighbourhood countries).

• Counter Balance’s mission is to make European public finance a key driver of the transition towards socially and environmentally sustainable and equitable societies.

• Created to monitor the activities of the EIB and push for its reform.

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The campaigns of Counter Balance

• Make the EIB a more sustainable institution: mainstreaming environmental and social concerns, ensuring better access to environmental information.

• Enhancing the accountability & transparency of the bank through more public participation, right to complain and transparency of financial operations.

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The European Investment Bank: an old bank with a recent history of

accountability

• In the 90s, when asked by Bankwatch colleagues on its strategic plans, the EIB management replied that the EIB was “only accountable to the markets”.

• Surprisingly, until recently, people impacted by the EIB’s activities had nowhere to go to lodge a complaint.

• While upward accountability – vis-à-vis the EU institutions – was arranged more or less at the time of the legal foundation of the EIB, downward accountability – towards taxpayers and citizens affected by its activities – was entirely lacking until the establishment of the EIB’s complaints Mechanism office in 2008.

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The creation of the EIB Complaints Mechanism

• In 2008, and following continuous pressure from civil society, the EIB established its own complaint Mechanism (cM) office.

• The CM office is part of the EIB’s administration, a fact that invites questions about its independence.

• What makes the EIB mechanism very specific is that, if not satisfied with the conclusions of the CM office, citizens have a second instance to seek remedy: the European ombudsman.

• A Memorandum of understanding signed between the EIB and the European ombudsman establishes that citizens (even outside of the EU if the ombudsman finds their complaint justified) can turn towards the ombudsman on issues related to ‘maladministration’.

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Main features of the CM Office

• Any person or group may submit a complaint to the EIB Complaints Mechanism Office if you believe the EIB has failed to act according to:– applicable law– EIB policy,– fails to respect the principles of good administration, or – violates human rights

• The EIB-CM has the following functions: • Complaints Investigation• Mediation Function• Advisory Function• Monitoring Function

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The European Ombudsman (EO) as a second layer of accountability

• The EO was “created” by the Maastricht Treaty of 1992. It is an EU institution to which any EU citizen or entity may appeal to investigate any EU institution or body on the grounds of maladministration.

• Every citizen of the Union has the right to complain to the EO. There is no requirement that the complainant must be personally affected by the maladministration or have any special interest in the case.

• The EIB and the EO signed a Memorandum of Understanding, (MoU) http://www.eib.org/infocentre/publications/all/memorandum-of-understanding-between-the-eo-and-the-eib.htm.

• The EO uses its own initiative power for handling complaints brought also by non-EU complainants.

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How the system works in practice

• The saga of the Bujagali dam, Uganda – Details on the case to be found here:

http://www.ombudsman.europa.eu/cases/decision.faces/en/51867/html.bookmark

• The Rivne-Kyiv High Voltage line, Ukraine– More details on the case can be found here:

http://www.ombudsman.europa.eu/cases/decision.faces/en/54587/html.bookmark

• The Mopani copper mince, Zambia– http://www.counter-balance.org/wp-content/uploads/2014/04/Letter-to-

EIB-on-Mopani-case_Final.pdf

• Bosnia and the bridget over the Sava river – 1st case ever where the EO rules maladministration of the EIB

http://www.ombudsman.europa.eu/cases/decision.faces/en/58171/html.bookmark

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What lessons to learn from 6 years of operations? 1

• Submission of complaints is a way to draw attention to national problems on an international level.

• Exploring all the national administrative and legislative actions to resolve problematic cases is fundamental.

• Creating media interest.• Obtain gain on precise issues: through various cases, we

achieved to access the disclosure of the Greenhouse Gas Emissions methodology of the EIB, and also that the bank sets up a registry of environmental documentation.

• A complaint is not a guarantee that a problem will be easily resolved, it is one tool for increasing pressure on the EIB and project developers, highlighting the abuses to media, and attracting support from abroad.

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What lessons to learn from 6 years of operations? 2

• The importance of follow-up: Once a complaint has been filed, it is important to continue to provide the mechanism with updated information about your complaint.

• At a minimum, if you file a complaint, your voice will be heard at the international level. It is possible that the complaint may only result in the creation of a record of the harm.

• The EIB management and President are very much concerned about how EP and Ombudsman look at the EIB.

• However please take into account that the EIB does not have the power or rights to interfere in national affairs. So they could give recommendations and expert opinions on your case, but how to use their statement most effectively is up to you.

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Structural weaknesses of the current system

• Internal pressures: a relative independence• No system of formal relations between the EIB board of

directors and the CMO. • Still a limited role for the European Ombudsman: the

current role of the ombudsman is strictly to review the work of the eIB complaints mechanism to assess if there was maladministration in the handling of complaints. – It has so far never launched Own Initiative Investigation about

EIB-related issues.

• The CMO and the EO can only give recommendations but cannot force the EIB to take steps.

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The challenges ahead

• Trends in finance, including the use of financial intermediaries and the creation of new financial instruments (such as Project Bonds or Blending Facilities), pose challenges to the effectiveness of accountability mechanisms. – Reaching out to SMEs creates a black hole in terms of accountability.

• Coordination with other grievance mechanisms.• Increased EIB lending capacity: there will be more and more

controversial projects to deal with, like large infrastructure projects under Juncker’s investment plan a focus on Quantity over Quality?

• When for the 1st ever CMO own-initiative investigation?• Monitoring of previous complaints as an area of improvement

(including what to do with already formulated recommendations).

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What to do?

• In 2015, there will be a revision of the EIB complaints mechanism, dealing with the procedures, policy and MoU with EO.– A public consultation will take place. Counter Balance invites all

stakeholders, including CSOs and trade unions, to take part in it.– Introducing a new form of external supervision over the EIB, through an

enhanced role for the EO?– Stronger role for the European Parliament and the European Court of

Auditors?

• Strengthening transparency: the revision of the EIB transparency policy is ongoing

• Sustainability: no climate policy at the EIB: there will be the creation of an EIB climate policy through a public consultation in 2015.

• Giving priority to the fight against tax evasion and stringent anti-fraud measures.

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Further readings

• CEE Bankwatch Network: publication on IFIs complaints mechanisms (in English and Russian)– http://bankwatch.org/publications/unlocking-accountability-

complaint-mechanisms-international-financial-institutions

• Counter Balance, May 2014: Holding the EIB to account– http://www.counter-balance.org/holding-the-eib-to-account-a-

never-ending-story/

• Accountability Counsel: Accountability resource guide– http://www.accountabilitycounsel.org/wp-content/uploads/

2012/04/ARG-7.1.pdf

• EIB CMO activity report 2009-2012– http://www.eib.org/infocentre/publications/all/complaints-

mechanism-annual-report-2009-2012.htm

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Contact details: Xavier Sol Director Counter Balance Xavier.sol@counter-balance.org www.counter-balance.org

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Thanks for your attention

@Counter_Balance

This presentation has been produced with the financial assistance of the European Union. The contents of this briefing are the sole responsibility of Counter Balance and can under no circumstances be regarded as reflecting the position of the European Union.