The 30-page document A history of neglect: UK Export Finance and human rights shines a light on a little known agency operating out of the Department of Business, Innovation and Skills – UK Export Finance (UKEF).
Peter Frankental, of Amnesty International, explained:
“Through UKEF, the Government is enabling UK businesses to engage in high risk activities without proper scrutiny of their human rights impacts.
“Export credit agencies like UKEF should not be allowed to support projects that undermine human rights and destroy the environment. And yet the British public has no real idea what UKEF gets up to.
“It is shameful that through their inaction, David Cameron’s government cannot be sure that UKEF doesn’t contribute to forced labour, trafficking or abusive forms of child labour.”
Export credit agencies exist to fill a gap by supporting transactions and projects around the world that commercial banks consider too risky. The reasons can range from political instability to the fear that they will not get paid.
In these cases companies may turn for financial assistance to export credit agencies such as UKEF.
The concern, as revealed in the briefing, is that UKEF pays too little heed to international human rights standards such as the United Nations Guiding Principles on Business and Human Rights.
Instead, UKEF has chosen to be constrained by the weak international standard for export credit agencies, the OECD’s ‘Common Approaches’. This means that the only transactions which are potentially considered for human rights and environmental impact assessment have to hit the following criteria: be for more than £10 million; last more than two years; and not be for the aerospace or defence sectors.
UKEF’s recently released annual report showed that of the 138 transactions supported in the last 12 months only eight could have been considered for human rights and environmental impact assessments.
Peter Frankental said:
“UKEF reflects a fatal combination of an agency that doesn’t want to be held accountable for its impacts and a Government that won’t lift a finger to hold it accountable.
“Human rights should not be sacrificed in this way on the altar of trade and investment.
“That cannot be allowed to continue. As a matter of urgency, the government should be pushing for complete transparency and the highest level of accountability.”
UKEF guarantees payment to the UK company exporting or investing abroad. If the contract is with a foreign state which defaults, the debt is covered by UKEF and added to that country’s sovereign debt to the UK. Debts to export credit agencies represent the majority of the developing world’s bilateral debt.