Export Credits Guarantee Department
Encyclopedia
The Export Credits Guarantee Department (ECGD) is the United Kingdom
's Export Credit Agency (ECA). It reports through to the Secretary of State for Business, Innovation and Skills. 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 was established in 1919 to promote UK exports lost during the submarine blockade of World War I.
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 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 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 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.
) 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.
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.
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:
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
's Export Credit Agency (ECA). It reports through to the Secretary of State for Business, Innovation and Skills. 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
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
. ECGD was established in 1919 to promote UK exports lost during the submarine blockade of World War I.
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
Underwriting
Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products . The name derives from the Lloyd's of London insurance market...
long term loans to support the sale of capital goods, principally for the export of 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 £
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
25,000, but some of the projects ECGD backs go well beyond the £100 million mark.
As part of its risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
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
Department for International Development
The Department For International Development is a United Kingdom government department with a Cabinet Minister in charge. It was separated from the Foreign and Commonwealth Office in 1997. The goal of the department is "to promote sustainable development and eliminate world poverty". The current...
, that makes sure that the countries defined as Heavily Indebted Poor Countries
Heavily Indebted Poor Countries
Heavily Indebted Poor Countries is a group of 40 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund and the World Bank.- History and structure :...
and those exclusively dependent on International Development Association
International Development Association
The International Development Association , is the part of the World Bank that helps the world’s poorest countries. It complements the World Bank's other lending arm — the International Bank for Reconstruction and Development — which serves middle-income countries with capital investment and...
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.
Criticisms of the ECGD
The ECGD has been the subject of criticism by UK-based NGOs; the Cornerhouse (see The Corner House (organisation)The Corner House (organisation)
The Corner House is a not for profit company limited by guarantee founded in 1997 in the United Kingdom. According to its website, it aims "to support democratic & community movements for environmental & social justice"...
) has claimed that the ECGD has in effect provided public subsidy for bribery; Campaign Against Arms Trade
Campaign Against Arms Trade
Campaign Against Arms Trade is a UK-based NGO and campaigning organisation working towards the abolition of the international arms trade. Founded in 1974 by a broad coalition of peace groups, CAAT is united in opposition to the military industrial complex and the growth of the private military...
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
Official development assistance
Official development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
figures; World Wide Fund for Nature
World Wide Fund for Nature
The World Wide Fund for Nature is an international non-governmental organization working on issues regarding the conservation, research and restoration of the environment, formerly named the World Wildlife Fund, which remains its official name in Canada and the United States...
argues that excessive greenhouse gases are emitted from ECGD-supported projects and that this is inconsistent with wider UK environmental policy.
Defence exports
While in the early years of the decade the proportion of ECGD’s business in support of defence exports ranged from 30% to 50%, this has now declined to under 1% in 2009-10.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.
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.
External links
- Export Credits Guarantee Department official website
- The UK Export Credit Guarantee Department: Corruption and the Case for Reform UNICORN, Cardiff UniversityCardiff UniversityCardiff University is a leading research university located in the Cathays Park area of Cardiff, Wales, United Kingdom. It received its Royal charter in 1883 and is a member of the Russell Group of Universities. The university is consistently recognised as providing high quality research-based...
, June 2002 - Corner House: UK, ECGD and anti-corruption
- Mark Thomas finds corruption sadly unregulated Mark Thomas, New StatesmanNew StatesmanNew Statesman is a British centre-left political and cultural magazine published weekly in London. Founded in 1913, and connected with leading members of the Fabian Society, the magazine reached a circulation peak in the late 1960s....
, 1 January 2005 - Depraved Debt Collectors, George Monbiot
- The Use of Environmental and Social Criteria in Export Credit Agencies’ Practices, by Markus Knigge et al. Published in 2003 by the Deutsche Gesellschaft fuer Technische Zusammenarbeit - GTZ