*CEE Bankwatch Network, Focus **Slovenia**, CEKOR **Serbia**Press Release*

For immediate release: December 9

*EBRD soft on coal sector corruption, new analysis shows***


The European Bank for Reconstruction and Development has been approving
financing for coal projects over which corruption allegations loom, and
in some cases even while official corruption investigations were
underway, according to an analysis [1] published by CEE Bankwatch
Network today.

The set of three case studies focuses on EBRD loans to the coal sector,
which will be under scrutiny at the bank tomorrow as the Board of
Directors approves a hotly-debated new Energy Strategy [2].

In three countries coal companies financed by the EBRD have been
implicated in corruption scandals within the last few years, yet the
bank has gone ahead with its projects in all three cases:**

lignite power plant in Slovenia*, for which a EUR 200 million loan was
signed by the EBRD in 2011 and disbursed earlier this year in spite of
an ongoing investigation into the project by the European Anti-Fraud
Office OLAF.**

lignite mines in Serbia*, which were part of both the 2003 EPS Power II
project in 2003 and the EUR 80 million Kolubara mine improvement project
loan, signed in 2011 by the EBRD. Investigations are currently ongoing
by the national authorities on multiple corruption scandals involving
EPS management and practices.**

·*Turceni lignite power plant and mines in Romania*, where an
unsuccessful rehabilitation project approved by the EBRD in 2008 was
resurrected and re-approved in 2013 in spite of the fact that a number
of corruption allegations involving management of the project developer
had come to light in the meantime. During autumn this year, five people
including a Member of Parliament were sentenced to jail for up to seven
years over one of the allegations.

/“//The EBRD is risking its reputation by repeatedly committing to
financing projects while national and even European authorities are
investigating corruption allegations,” /comments Bankwatch’s Pippa
Gallop, the coordinator of the study. /“Under no circumstances can a
public bank justify getting involved in projects where the risk of
misuse of funds is big enough to spark criminal investigations.”/

/“//In all of these cases well-founded corruption allegations were
publicly revealed before the bank approved the projects, yet the bank
still went ahead”, /Gallop added./“The bank should behave in exactly the
opposite way: pick up early signals about companies that could behave
above the law and wait with committing to loans until all suspicion is

/“//In the Kolubara case the situation is even more embarrassing as the
EBRD was financing the company in a previous project during the years
when the alleged corruption was actually being carried out, yet it has
never given the public any explanation of what went wrong and instead in
2011 approved a further loan to that company”, /said Zvezdan Kalmar of
CEKOR in Serbia.

/“//Such practices by the EBRD make it very hard for us to believe that
the bank is part of the solution and not of the problem”/, Kalmar added.
/“In the case of EPS, it is crystal clear that EBRD involvement in
EPS-managed projects did not contribute to eliminating mismanagement and


*Contacts: *

Pippa Gallop

Bankwatch Research Coordinator

[email protected] [email protected]>


Inquiries about Sostanj specifically: Lidija Zivcic [email protected]

About Kolubara: Zvezdan Kalmar [email protected]

About Turceni: Ionut Apostol [email protected]


*Notes for editors:*

[1] The case studies paper is available at:

[2] Coal is the main topic of debate in the strategy as the EBRD is the
latest bank to reconsider its strategy after the Nordic Investment Bank,
World Bank, European Investment Bank and US ExIm Bank all seriously
limited lending for coal. At the EBRD, countries such as the UK, US and
Scandinavian countries favour virtually halting public finance for coal
projects, while some bank staff and shareholder countries are not ready
to do so.