JANUARY 2003
How EIB Officials Look at Transparency: A freedominfo.org Interview

The European Investment Bank is "not comparable" to other international financial institutions, began Henry Marty-Guaquie, Director de la Communication for the EIB, in an interview about transparency with freedominfor.org Nov. 5.

By this he means that the EIB should be viewed less as a policy-setting organization than as a financial institution with special needs to preserve band market confidence in its operations.

"We work in a legal framework that is very, very strong," emphasized Marty-Guaquie. Under the 1958 Treaty of Rome, which established the EIB, its lending policies are governed by EU policies. Many of the proposed projects, (the bulk of which are in the private sector) get reviewed at the local and national levels, EIB officials stress. So it is there that environmental impact statements are conducted, although the EIB integrates its own environmental review into its project appraisal.

"We're really to be viewed as facilitators and intermediaries," said Adam McDonaugh, head of the Communications Department.

The Bank lent nearly 40 billion euros in 2001, approving several hundred applications, which originate from project "promoters," both in the private and public sectors.

The primary aim, the officials stress is to accept viable projects. As Marty-Guaquie put it, "The reputation of the Bank is based… on the quality of our investments."

McDonaugh added, "We say our prayers to AAA." He was referring to the very high bond rating for EIB paper, an asset that allows borrowing at the very best rates.

Confidentiality Justifications

The EIB's bank-like culture is reflected in its information disclosure policy. (For a fuller report of the EIB's new disclosure policy click here.)

One standard for denying disclosure is whether such a release would be "contrary to professional ethics, rules and practices applicable in the banking and financial sector." (For full text of the EIB's standards for public access to documents click here.)

On a day-to-day basis, the EIB readily defers to the requests from potential borrowers for confidentiality as the application moves through the process, and sometimes even after a loan has been approved.

Approximately one-third of EIB loans that are not disclosed prior to approval. EIB officials explained that assurances of confidentiality are necessary to attract top-notch applications.

Most of these requests are based on real world business purposes, Marty-Guaquie said. He described EIB disclosure policy by saying, "Confidentiality is a matter of fact, not a matter of principle."

The confidentiality helps preserve what EIB officials regard as the bank's most valuable asset, its AAA bond rating, which enables it to attract capital at the best interest rates.

In addition, EIB officials said greater disclosure would "open the gate to many kinds of influences," in Marty-Guaquie's words. Restating the point, McDonough said, "The emphasis is on independence … and to give the market confidence."

Another EIB official expressed the concern that disclosure of project appraisal materials, even after approval, might cause EIB staffers to be "more cautious than they should be."

Overall, a low percentage of EIB-funded projects generate controversy, and, as Marty-Guaquie put it, "We receive nearly no comments." He noted further that the Bank welcomes correspondence and is committed to replying. Neither letters nor EIB replies are posted publicly.

Critics say EIB confidentiality hampers them in making comments on projects under consideration. (For a fuller report on recent criticisms of the new EIB disclosure policy).

In a few situations, involving controversial loans, the EIB has prepared special public statements. On May 31, 2002, the EIB issued a two-page statement on a mission it sent to review the Val d'Agri oil treatment centre following a minor oil spill.

Policy Setting

While basically under an obligation to follow EU policies, the EIB issues some policy-setting documents amplifying its lending policies. The EIB's disinclination to release such policy statements in draft form also has frustrated its critics.

EIB officials defend this practice, stating a desire to avoid outside influence and to gain efficiency. One official said other lending institutions suffer from "consultation constipation."

"Sometimes you can see they get very frustrated, very bogged down, and the end result may not be worth the candle," commented Peter Carter, head of the Environment Unit.

By Toby McIntosh

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