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The Export Credits Guarantee Department (ECGD) is the United Kingdom's official Export Credit Agency (ECA). It is a non-ministerial government department and an executive agency, reporting through a Minister of State to the Secretary of State for Business, Enterprise and Regulatory Reform. ECGD derives its powers from the 1991 Export and Investment Guarantees Act and undertakes its activities in accordance with a specific consent from HM Treasury.

ECGD's aim is to benefit the UK economy by helping exporters of UK goods and services to win business, and UK firms to invest overseas, by providing guarantees, insurance and reinsurance against loss, taking into account HM Government’s wider international policy agenda. ECGD is required by HM Government to operate on a slightly better than break-even basis, charging exporters premium at levels that match the perceived risks and costs in each case.

The largest part of ECGD's activities involves underwriting long term loans to support the sale of capital goods, principally for the export of military equipment, but also for aircraft, bridges, machinery and services; it helps UK companies take part in major overseas projects such as the construction of oil and gas pipelines and the upgrading of hospitals, airports and power stations. Support can be given for contracts as low as £25,000, but some of the projects ECGD backs can go well beyond the £100 million mark.

As part of its risk management process, ECGD has to make a judgement on the ability of a country to meet its debt obligations. The department uses a ‘productive expenditure’ test, undertaken in consultation with the Department for International Development, that makes sure that the countries defined as Heavily Indebted Poor Countries and those which are exclusively dependent on International Development Association financing only get official export credits from the UK for projects that help social and economic development without creating a new unsustainable debt burden. ECGD continues to check that the proposed borrowing is sustainable.

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Criticisms of the ECGD

The ECGD has been the subject of concern and criticism by UK-based NGOs; the Cornerhouse (see The Corner House (organisation)) has claimed that the ECGD has in effect provided public subsidy for bribery; Campaign Against Arms Trade has argued that the ECGD provides excessive levels of support for arms sales; Jubilee Debt Campaign has argued that the cancellation of debts owed to the ECGD should not be counted towards UK Official Development Assistance figures; World Wide Fund for Nature argues that excessive greenhouse gases are emitted from ECGD-supported projects and that this is inconsistent with wider UK environmental policy.

Defence Exports

The proportion of ECGD’s business in support of defence exports has ranged from 30% to 50% in recent years.

ECGD support for defence exports is conditional upon exporters obtaining valid export licences from the Department of Trade and Industry-based Export Control Organisation. All applications are assessed, on a case-by-case basis, against the consolidated EU and National Arms Export Licensing criteria.

Approximately 40% of UK export credits provided for 2006-07 were for defence exports. None of the exports supported is listed in the ECGD Resource Accounts for that year; defence sales are normally treated as commercially confidential. Slightly over half of the exports are treated as commercially confidential for that year.

ECGD’s Anti-Bribery and Corruption Procedures

ECGD aims to:

  • deter illegal payments, corrupt practices and money laundering by applicants for ECGD's support; and
  • ensure, as far as is practicable, that all transactions that ECGD supports do not place ECGD in breach of any UK or European legislation or place the UK in contravention of any international agreements to which the UK is a party.

It does this through the public information it provides and the declarations in its application forms; it has some powers to make enquiries but these are limited. ECGD does not have a formal investigative capacity.

Key aspects of ECGD's anti-bribery and corruption procedures are to:

  • Require applicants to provide copies of their codes of conduct and to confirm that they have applied them in tendering for the award of the contract for which ECGD’s support is sought;
  • Obtain information with a view to ascertaining whether any improper payments involving agents have been made;
  • Inspect, if necessary, exporters' documents relating to winning contracts and making payments to agents;
  • Remind applicants of their obligations to comply with UK anti-corruption legislation;
  • Remind applicants that ECGD will refer all allegations of bribery, corruption or money laundering to the appropriate authorities;
  • Require applicants to declare that neither they nor any of their directors have admitted to, or been convicted of, engaging in any form of bribery or corruption;
  • Require applicants to disclose whether they, or anyone acting on their behalf, is under charge in a UK court for bribery of a foreign public official;
  • Require each applicant to make reasonable enquiries concerning any of its subsidiary companies, agents or consortium partners who, in each case, are involved in the contract for which ECGD’s support is sought and to confirm that, on the basis of those reasonable enquiries, the applicant has no cause to believe that any of those parties, or any of their directors, has admitted to, or been convicted of, engaging in any corrupt activity; and
  • Require each applicant to confirm that neither the applicant nor anyone acting on the applicant’s behalf has engaged in corrupt activity in relation to the contract for which ECGD’s support is sought.

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