Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Governance
The EBRD is committed to achieving the highest standards
of governance, integrity and transparency in the conduct of
its business and continues to strengthen key policies and
mechanisms in support of these goals.
[Link]
Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Good governance,
integrity and transparency
OPENNESS
The Public Information Policy (PIP) promotes disclosure and transparency, guided by the
presumption that, whenever possible, information concerning the Bank’s activities will be
made available to the public unless there are compelling reasons for confidentiality. The
Bank reviews the PIP every three years. The most recent review was in 2008, in parallel
with the review of the Environmental and Social Policy (ESP), and the next review is due
to take place in 2011.
INTEGRITY
The EBRD holds itself to the highest standards of integrity, ethics and business practice
in all its activities. The Bank’s Office of the Chief Compliance Officer (OCCO) is a key
participant in this effort: it advises on the selection of project sponsors, clients and
co-financiers, handles complaints by those adversely affected by EBRD projects and
investigates allegations of fraud, corruption and misconduct.
In 2009 OCCO provided advice on approximately 385 projects compared with 280 projects
in 2008. This increased volume of advice is consistent with the rise in the Bank’s overall
business volume.
OCCO also continued to advise on the application of the Bank’s own Codes of Conduct,
and dealt with 10 reports of suspected misconduct under the Bank’s Procedures for
Reporting and Investigating Suspected Misconduct (PRISM).
Policies
In April 2009 the Bank adopted its first Integrity Risks Policy, which details how OCCO
can help protect the EBRD’s reputation. Risks to integrity can stem from investment
activities and improper behaviour of employees, and failure to recognise and address
these risks can damage the EBRD’s name and standing. The new policy is available
at [Link]/about/integrity/
The Enforcement Policy and Procedures (EPPs), approved in December 2008, entered
into force in March 2009 following the establishment of the Enforcement Committee,
which determines whether an allegation of fraud, corruption, collusion or coercion has
been substantiated. The EPPs apply across all the activities and projects financed from
the EBRD’s ordinary capital resources, Special Funds resources (that is, funds from
donors that the Bank then uses for investment and technical assistance activities),
or from cooperation funds administered by the Bank.
Since the EPPs came into force, OCCO has dealt with seven complaints regarding
procurement exercises and seven complaints concerning the Bank’s private sector
Approximate number of projects operations. Of these 14 complaints, all but two were dismissed following preliminary
that benefited from advice from assessment. The remaining two (one involving an allegation of a fraudulent practice and
OCCO in 2009 the other, a collusive practice) are undergoing further investigation. Depending on the
outcome, a recommendation may be made to the Enforcement Committee as to whether
formal enforcement proceedings should ensue. If the alleged prohibited practice is found
385
to have occurred, enforcement actions range from reprimand to cancellation of financing,
restitution and/or debarment.
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European Bank for Reconstruction and Development
Annual Report 2009
Also in this past year the EBRD introduced its policy on workplace harassment, sexual
harassment and abuse of authority as part of ongoing efforts to ensure that staff
conduct themselves with the highest possible standards of behaviour.
Last year also saw the conclusion of the review of the Bank’s accountability mechanism,
the Independent Recourse Mechanism, and the approval of its successor, the Project
Complaint Mechanism (PCM). For further information on the review and the new
mechanism see the Sustainability Report 2009.
Looking to 2010, the EBRD will finalise its review of PRISM and Disciplinary Procedures,
as well as reviewing its Whistleblowing Policy. The Bank, as a member of the Joint
IFI Anti-Corruption Task Force, will also be considering better ways to deter and prevent
corrupt practices, including, for example, how an enforcement decision made by one IFI
Sharing information and knowledge with those who work (such as the World Bank) can be implemented by others.
for the EBRD is essential.
Information and training
Sharing information and knowledge with those who carry out work for the EBRD is an
essential part of promoting and maintaining high ethical working standards. For example,
in 2009 the Bank hosted an anti-money-laundering training programme for external
participants in Krasnoyarsk, Russia, and provided funding for 30 EBRD representatives
from its countries of operations to attend a seminar on countering terrorist financing
organised by the Basel Institute on Governance held in December.
Training EBRD staff members is equally important and in 2009 courses were run on
anti-money laundering, countering the financing of terrorism and integrity due diligence, as
well as the Bank’s Integrity Matters! Programme. In addition, 40 employees received training
on their role as nominee director on the boards of some of the Bank’s investee companies.
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Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Improving corporate governance in banking
The current financial crisis has The EBRD has set itself the target of It followed the joint EBRD/OECD policy
emphasised the need for sound working with banks and decision-makers brief on corporate governance of banks
corporate governance practices for in south-eastern Europe to strengthen in Eurasia a year earlier. The policy brief
achieving and maintaining confidence corporate governance standards for the provides banks in Eurasia with some
in the banking system. Corporate region’s banking system. A meeting in practical guidelines on how to improve
governance of banks is especially Belgrade in December 2009 jointly their corporate governance practices.
important in the EBRD’s countries organised by the EBRD and the Global Armenia, Azerbaijan and Georgia have
of operations, where the majority Corporate Governance Forum kick-started already drawn from the policy brief in
of stock markets are still relatively the discussion by bringing together the development of their national
underdeveloped and banks are the banking regulators and practitioners from corporate governance codes. Moldova
most important source of finance for Albania, Bosnia and Herzegovina, Bulgaria, and Mongolia are now following suit.
companies and the main depositories Croatia, FYR Macedonia, Montenegro,
for the nation’s savings. Romania and Serbia.
[Link]/fi
[Link]/law
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Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Number of projects for transport and
MEI financed in 2009
Procurement
63
The EBRD offers open and fair competition for the procurement of goods, works and
services needed for EBRD-financed operations. For private sector projects, the Bank
must be satisfied that procurement procedures are carried out under normal commercial
practices. For public sector projects, the procurement of goods and services must meet
EBRD guidelines.
The principles of non-discrimination, fairness and transparency are fundamental in all the
EBRD’s procurement activities. These principles are designed to promote good practice
and efficiency and to minimise risk in implementing Bank-financed projects. They are a
fundamental part of the Bank’s Procurement Policies and Rules, a revised version of which
was approved in May 2009. The revisions link the procurement process with the Bank’s
environmental and social considerations and the Enforcement Policy and Procedures.
Revised harmonised tender documents for goods and
design and build contracts are expected in 2010. All participants in the procurement process are expected to observe the highest standards
of ethics and conduct during contract tender and implementation. Any complaints received
from aggrieved tenderers during the tender process are always reviewed by the Bank’s
Procurement Complaints Committee. To enhance transparency in the procurement process
and inform about tenderers’ recourse, the Bank launched a new procurement complaints
section on the web site (see [Link]/oppor/).
New standard tender documents for IFIs
A new version of tender documents for works contracts – agreed among the IFI
community – was also launched in 2009 for public sector clients. Revised harmonised
tender documents for goods and design and build contracts are also expected in 2010.
Statistics for 2009
In 2009 EBRD-financed projects led to 84 public sector contracts for works, goods and
services, valued at €395.8 million, of which €243.1 million was financed by the EBRD
(representing 61.4 per cent of the total contract value). This compares with 124 contracts
valued at €1.2 billion in 2008, and indicates a 67 per cent decrease in total contract
value for 2009. Of the 84 contracts signed, 63 were for transport and MEI and totalled
€377.0 million. This represents 75 per cent by number and 95 per cent by value of
all public sector contracts awarded in 2009.
See [Link]/oppor/ for procurement opportunities concerning
EBRD-financed projects.
[Link]
Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Value of a technical cooperation
project to help Azerbaijan
Microfinance Institution
€’000
GENDER
134
Gender equality is key to advancing sustainable development in the EBRD’s countries
of operations. The Bank seeks to empower women by investing in their businesses and
promotes equality between women and men through various initiatives and activities,
such as micro lending programmes, the TFP and the TurnAround Management (TAM)
and Business Advisory Services (BAS) Programme.
In 2009 the Bank stepped up its support for gender equality. The Gender Action Plan,
developed in 2008, was implemented from May 2009. The plan will ensure that gender
equality is incorporated into all the EBRD’s activities, which will in turn benefit women
and men as workers and decision-makers. It also means mitigating any negative impact
that the Bank’s projects might have on men and women. For example, when a community
is displaced due to a project, the Bank will focus on the needs of anyone affected.
Throughout the year the EBRD also helped to build on existing initiatives that address
gender concerns. These include dedicated credit lines and microfinance for female
entrepreneurs through small business finance, improving the skills of businesswomen
through TAM/BAS and gender equality assessment during the project appraisal
conducted by specialists in the Bank.
As part of a €50 million EBRD loan for on-lending to small businesses outside large
Turkish cities, Garanti Bank committed to extend loans to female entrepreneurs
wherever possible. And a €134,000 technical cooperation project was approved to
help the Azerbaijan Microfinance Institution build its internal capacity to assist the
Bank in increasing the number of female loan officers and women clients in EBRD
partner institutions.
The EBRD also initiated several pilot projects in municipal and environmental
infrastructure (an area where many women are end-users) and agribusiness (a sector
in which a large proportion of the labour force is female) in three countries: Georgia,
the Kyrgyz Republic and Romania. These pilot schemes will test various approaches to
addressing gender priorities that could be replicated and adapted in other sectors and
other countries of operations.
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Governance
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European Bank for Reconstruction and Development
Annual Report 2009
Empowering Turkish women entrepreneurs
The EBRD began lending to Turkey’s In November 2009 the EBRD teamed still participate in meetings and
banking sector in late 2009 with the up with the Netherlands Development business training sessions or enter
financing of two of the country’s most Finance Company (FMO), the International Turkey’s Woman Entrepreneurs
important banks. A €20 million loan to Co-operation and Development Fund competition organised by Garanti Bank.
DenizBank targeted the development (TaiwanICDF) and five commercial banks
of the agricultural private sector, while to lend €50 million to Garanti Bank. The With research indicating that female
a €50 million loan to Garanti Bank is financing will be available for investments entrepreneurs are missing out on
supporting micro, small and medium- in small companies operating outside opportunities to access finance,
sized enterprises (MSMEs). the three main Turkish cities of Ankara, Turkey’s Garanti Bank is set to become
Istanbul and Izmir. the bank that does not just lend to
For the past five years, Garanti has loaned women entrepreneurs but also works
about €7 billion to 443,000 MSMEs but Another special feature of the loan is to empower them with knowledge.
the sector remains hungry for finance, which that it will promote lending to female
has become more scarce as a result of the entrepreneurs. Garanti Bank has
global financial crisis. The importance of developed the Woman Entrepreneurs’
small businesses to the Turkish economy is Support Package which includes [Link]/turkey
best told in figures. Over 1.7 million SMEs consumer loans with special rates for
provide over 76 per cent of Turkey’s total female entrepreneurs, letters of credit,
employment, but these enterprises receive long-term loans for small businesses
only 25 per cent of loans from the Turkish and even pension programmes. And if
banking sector. Businesses in rural areas businesswomen do not choose to take
are particularly affected. up any of the above services, they can
[Link]
Governance
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European Bank for Reconstruction and Development
Annual Report 2009
CIVIL SOCIETY
Civil society plays an integral role in promoting public dialogue about decisions that
affect the lives of local people and environments, as well as holding governments
and policy-makers publicly accountable. Open communication with non-governmental
organisations (NGOs) and communities enhances the Bank’s effectiveness and impact
in the transition region.
For the Bank’s purposes, civil society includes NGOs, policy and research organisations,
community-based organisations, business development organisations and other
socio-economic and labour-market actors. Dialogue between the EBRD and civil society
has to date focused on environmental and social issues, democracy, local community,
transparency and business development issues related to the Bank’s operations.
Civil society plays an integral role in promoting Activities in 2009
public dialogue. In 2009 the EBRD continued to engage with civil society through over 30 meetings,
workshops and dedicated consultations in London and some of its countries of
operations (Belarus, Georgia, Kazakhstan, Mongolia and Russia). These events gave
civil society groups the opportunity to share their views and provided valuable input to
the development of a range of Bank policies and country and sectoral strategies, as well
as project implementation. And throughout the year, EBRD Board Directors travelled to
Albania, Belarus, FYR Macedonia, Kazakhstan, the Kyrgyz Republic, Russia, Turkey and
Ukraine to meet civil society representatives to discuss local conditions.
In March at the Bank’s London Headquarters, representatives of international civil
society groups met the EBRD’s President Mirow and senior management to exchange
views on the Bank’s transparency and accountability and its clients, human rights issues
in Central Asia and the implications of the global economic crisis for the Bank’s activities.
This was followed by a Civil Society Programme at the EBRD’s Annual Meeting in London.
Here, around 40 NGOs and other civil society representatives from across the transition
region and shareholder countries discussed a variety of environmental and social issues
in a two-day series of meetings with Bank staff, senior management, the President and
Board Directors.
Environmental and social responsibility in mining is of crucial importance in the
countries where the EBRD invests, and was the theme of a special workshop hosted
by the Bank at its Headquarters in late 2009. The event brought together nearly 80
participants from the international mining industry and industry associations, experts
from environmental consultancies, law firms, international organisations, academia,
think-tanks and the NGO community, as well as EBRD staff. The discussions, which
focused on sustainability, health and safety, stakeholder engagement and artisanal
and small-scale mining, provided initial input into the preparations of the Bank’s new
Mining Strategy, likely to be implemented in 2010.
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