Glencore report: European Investment Bank must drag its secrets into the light
Reasons given by the bank for refusing to publish findings of an investigation into alleged tax evasion remain unconvincing
When commodities giant Glencore publishes its half-yearly report on Wednesday, it is unlikely to mention what may be a significant victory for the firm.
This relates to an investigation into allegations of tax evasion by a mining firm in Zambia controlled by Glencore – allegations the companies have always denied.
The inquiry was ordered by the European Investment Bank (EIB) in 2011, because the bank had lent $50m (£30m) to Glencore subsidiary Mopani Copper Mines plc.
Glencore has been called “the biggest company you’ve never heard of” – and something similar could be said about the bank. It is owned and controlled by the UK and other EU member states, and last year lent more than €70bn (£56bn), yet it is increasingly secretive.
One of the manifestations of that secrecy concerns Glencore.
Many organisations, including Christian Aid, Counter Balance, Tax Justice Network Africa, Oxfam International and Eurodad have urged the bank to publish its investigation into the tax allegations in Zambia.
Christian Aid argued that the bank had no right to keep secret information that could allow tax justice to be done in one of the world’s poorest countries or, alternatively, allow Glencore and Mopani to clear their names.
But the bank has refused, in bizarre fashion, to reveal its findings and has given unconvincing reasons for doing so. Bizarre in that the senior management have publicly overruled their colleagues in the bank’s complaints mechanism, who investigated the dispute and recommended that the bank publish a redacted version of the Glencore-Mopani report.
And unconvincing in the sense that the managers are relying on an extremely narrow interpretation of EU law.
Another oddity is that the bank is claiming that although it twice sent investigators to Zambia in 2011, they failed to discover anything more about the alleged tax evasion.
Of course, the bank’s secret report may yet become public. The European ombudsman is investigating a complaint from Christian Aid over the bank’s refusal to publish. Legal action against the bank is another possibility and the report could also be leaked by one of the many people who has a copy.
Perhaps the most disturbing aspect of the situation is that the bank is now threatening to revise what it calls its transparency policy in ways that would allow it to be even more secretive.
According to a ranking of multilateral donor organisations by Publish What You Fund, the EIB is already in the second-most secretive group.
Some of the bank’s proposed changes to its transparency rules are clearly a reaction to the Glencore-Mopani case and intended to deter any future requests for investigation reports.
But the EIB isn’t just any old bank. It belongs to EU citizens and holds billions of euros of our money as part of its capital base, not to mention the tens of billions it spends every year on infrastructure projects that affect our lives.
At a time when the case for genuine transparency is clearer than ever and when ministers and international institutions are more outspoken about it as a necessary condition of good governance, the EIB cannot be allowed to lurch in the opposite direction.
It’s time for European governments to drag the bank into the light. Their finance ministers sit on the bank’s board of governors and their civil servants on its board of directors. George Osborne represents the UK, along with senior officials from the Treasury and the Department for International Development.
The bank’s next board of directors meeting is in September, when the UK and the other EU governments that own the bank should demand that it abandon secrecy and embrace transparency. The review of its transparency policy is the best place for this to begin.
Civil society can help, by responding to the bank’s public consultation on its transparency policy, which ends on 26 September. We will keep fighting for the Mopani-Glencore report to be published, as a matter of significant public interest both in Europe and Zambia.