Canadian companies may be wreaking havoc with public lending

Canadian companies may be wreaking havoc with public lending; EDC remains secretive

Ottawa, January 8, 2003

Export Development Canada (EDC) may be helping to finance a number of projects under development by Canadian companies without the necessary environmental and social due diligence, reveals a new report issued today by the NGO Working Group on the EDC

EDC continues to hide the environmental and social risks of its investments from the public, despite a report from the Auditor-General calling for disclosure and transparency, said Fraser Reilly-King, Coordinator for the NGO Working Group on the EDC.

As of October 2001, EDC has started to list projects it may be supporting, although releasing the name of the Canadian companies involved is not mandatory on its web site. EDC has also began listing projects before consideration if the company agrees.

However, there is still no reporting on the implementation of the Environmental Review Directive, and disclosure of the full environmental impact assessment (EIA) remains at the discretion of the company involved. Last week, Trade Minister Pettigrew revealed that EDC would guarantee $328 million in loans to complete the Cernavoda 2 nuclear reactor in Romania, said Shawn Patrick Stensil of the Campaign for Nuclear Phaseout.Yet, to date, a full environmental impact assessment has never been made available to the public. This is unacceptable, especially given the serious risks involved. This is also in direct contrast to international standards.

Both the World Bank and EDC's US counterparts make the public disclosure of EIAs for controversial projects a prerequisite of project approval. While US export credit agency the Export-Import Bank requires the public availability of this information at least sixty days prior to Board approval, EDC has neither a requirement for disclosure, nor a minimum number of days for doing so.

This is setting a double standard, said Melanie Quevillon of Mining Watch Canada. The Canadian public would be outraged if the government backed a mining project that had potentially devastating impacts on local livelihoods and the environment without consulting groups prior. Yet in Patagonia, Chile, despite significant opposition and expected environmental impacts, Noranda is still scheduled to go ahead with its Alumysa aluminum smelter. The Working Group has twice asked EDC whether they are involved in Alumysa. On both occasions, their disclosure policy prevented them from saying.

The EDC has also shown interest in backing projects that private investors are hesitant to support, such as Inco's Goro mine project in New Caledonia, says Catherine Coumans of MiningWatch Canada. If the EDC backs this project, Canadian public funds will be put at risk. EDC is a public financial institution, whose credit rating is guaranteed by the government and whose capital base is derived from taxpayer dollars.

In spite of the changes to EDC policy, it seems to be business as usual one year on from the adoption of its Environmental Review Directive,says Mr. Reilly-King. EDC as a crown corporation should be setting the high standards we would expect Canadian companies to follow.

In addition to Alumysa, Cernavoda and Goro, the Working Group's report documents Inco's involvement in a nickel mine in Indonesia, Gabriel Resources's involvement in a gold mine in Romania, Encana's role in the OCP oil pipeline in Ecuador, and Manhattan Mineral's interest in developing a gold mine in Peru

"Seven Deadly Secrets: what EDC does not want you to know is available in full on the Halifax Initiative's web site http://www.halifaxinitiative.org.

For further information, contact:

Fraser Reilly-King
Tel: (613) 266-8100
Coordinator, NGO Working Group on the EDC
153 rue Chapel St., Suite 104, Ottawa, ON K1N 1H5
Telephone: 1-613-789-4447 Fax: 1-613-241-4170
Email: info@halifaxinitiative.org