Friday

19th Apr 2019

Opinion

How the 'EU's Bank' fails to raise the bar on accountability

  • The HQ of the European Investment Bank in Luxembourg (Photo: Matt Tempest)

As the financial arm of the European Union, the European Investment Bank (EIB) likes to call itself the "EU Bank" and to publicly praise its environmental and social standards in comparison to other investment banks.

Nevertheless, over the last years, a dangerous setback on accountability and transparency has taken place at the EU Bank.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Back in 2015, the EIB adopted a controversial transparency policy including significant exceptions to the disclosure of internal documents.

Setting in stone the possibility to keep secret internal investigations into irregularities such as corruption and maladministration, this policy has been used to sweep sensitive stories under the carpet.

For example, drawn into the Dieselgate scandal because of its allegedly misused loan to the Volkswagen Group, the EIB still refuses to disclose the critical report drafted by the European Anti-Fraud Office on the case.

On Tuesday (13 November), a new step backwards has been taken by the EIB.

During a meeting of its board of directors, a revised policy for the bank's complaints mechanism has been approved.

This decision concludes a lengthy revision process that saw civil society organisations raise numerous concerns over the bank's move to undermine the control function of its accountability body.

The complaints mechanism is a key tool for anyone affected by the projects financed by the EIB to seek remedy for harmful impacts.

From Luxembourg to Madagascar

Since its creation in 2008, it has been used by individuals and communities across the EU and beyond as the main channel to make their voices heard at the bank, from citizens in Madagascar threatened by the impact of a nickel mine, to residents in Spain denouncing the financial and environmental fiasco of the EIB-financed Castor Project.

But our analysis of the accountability architecture at the EIB shows that in practice, the complaint mechanism doesn't provide satisfactory results: indeed, its recommendations are not binding and its independence is jeopardised.

Holding a marginalised position within the bank, the mechanism lacks resources.

To our surprise, instead of trying to improve the current set-up of the complaints mechanism, the EIB has put it under further pressure, and used the revision of its policy and procedures to reduce its independence.

The new policy leaves room for the EIB staff and services to interfere with the complaints mechanism's decisions, thus further weakening its capacity to operate independently for those who need redress the most.

The interferences allowed by the policy could go as far as preventing the publication of reports that could potentially damage the reputation of the bank by exposing wrongdoings or lack of due diligence on projects.

This is extremely concerning for a public institution that invests public money and should apply the highest standards of transparency and accountability in its operations.

The EIB is the largest multilateral lender globally, lending more than EUR 70 billion per year all across Europe and the world.

Given this volume of operations, it is no surprise that some operations may bear problematic impacts from an environmental, social or even corruption perspective.

But one would expect that in such cases the institution would try to learn lessons to improve its policies, standards and practices, and prevent failures from happening again.

Instead, the EIB prefers hiding sensitive cases by limiting the mandate of its grievance mechanism.

Through several capital increases and its prominent role in the 'Juncker Plan', the bank has recently gained a stronger political profile, but its accountability framework has not evolved much.

For instance, there is room for the European Parliament, Commission and Court of Auditors to do much more to scrutinise EIB operations.

In 2018 the EIB celebrates its 60th anniversary, and as a watchdog NGO coalition monitoring its activities for more than a decade, we're convinced that fundamental reforms are needed to make it a more sustainable, transparent and democratic institution and ensure its operations benefit the citizens of the EU and beyond.

Xavier Sol is director of Counter Balance

EIB 'more sensitive' to fraud after Dieselgate

The president of the European Investment Bank, Werner Hoyer, said the bank had high standards - but did not explain why an anti-fraud report on a loan to Volkswagen was being kept secret.

EIB silent on report into 'fraudulent' VW loan

European Investment Bank vice-president Taylor tells EUobserver the fraud investigation into a €400 million EIB loan to Volkswagen had 'considerable ramifications', but didn't want to explain why the report was kept secret.

How Brexit may harm the new EU parliament

British plans to - maybe - take part in EU elections risk legal chaos in the next European Parliament, which could be resolved only by treaty change - an unlikely prospect.

Press freedom and the EU elections

We are campaigning for the next European Commission to appoint a commissioner with a clear mandate to take on the challenge of the protection of freedom, independence and diversity of journalism.

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Latest News

  1. Romania drafts EU code on NGO migrant rescues
  2. Bulgaria, Hungary, and Malta shamed on press unfreedom
  3. EU drafts $20bn US sanctions list in aviation dispute
  4. Brunei defends stoning to death of gay men in EU letter
  5. US Democrats side with Ireland on Brexit
  6. Wifi or 5G to connect EU cars? MEPs weigh in
  7. How Brexit may harm the new EU parliament
  8. EU parliament backs whistleblower law

Stakeholders' Highlights

  1. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  2. Nordic Council of MinistersNordic talks on parental leave at the UN
  3. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  4. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  5. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  6. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  7. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  8. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  9. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  10. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  11. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  12. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov

Join EUobserver

Support quality EU news

Join us