Tag Archive for: Chinese Banks

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New analysis on regulations in development institutions present in Latin America

Together with the rest of the organizations that make up GREFI, we publish a comparative analysis of the regulatory frameworks of the main institutions that finance development in Latin America, with a focus on the similarities and differences between traditional, emerging and chinese banking institutions.

“Below, we offer a google translate version of the original article in Spanish. This translation may not be accurate but serves as a general presentation of the article. For more accurate information, please switch to the Spanish version of the website. In addition, feel free to directly contact in English the person mentioned at the bottom of this article with regards to this topic”.

The Regional Group on Financing and Infrastructure (GREFI), made up of FUNDEPS, DAR, Ambiente y Sociedad and Fundar, recently published its latest research paper on the regulations of international financial institutions (IFIs): Comparative Analysis of IFIs regulations Present in Latin America This is a comparative analysis that takes as an object of study the operational policies of different institutions: the Inter-American Development Bank (IDB), the World Bank (WB), the Inter-American Investment Corporation (IIC), the Corporation Financiera Internacional (CFI), the Development Bank of Brazil (BNDES), the Development Bank of Latin America (CAF), the Development Bank of China (BDC) and the Chinese Bank of Exports and Imports (ExIm Bank). The essential objective was to be able to achieve a comparison between those traditional institutions, new development institutions and Chinese institutions. The anchoring of this study is given by the number of new actors that today are part of the financial and investment scenario in Latin America.

The analysis was carried out on four axes: access to information, citizen participation, indigenous peoples and social and environmental safeguards. The indicators for these categories were obtained from the best international practices in each of these subjects (the OAS model law on access to information, ILO Convention 169, among others). Each category was divided into different elements that received a score. The product of this work is presented in a statistical way, expressing at what level (percentage) the policies of the institutions achieve the highest standards.

The main results obtained in the study report that two banks categorized as traditional IBRD-BM (86%) and CFI (64%), in addition to an emerging CAF bank (62%), obtain the highest ratings. Among institutions rated less than 50% are two traditional IDB banks (45%) and CII (26%), one emerging bank BNDES (17%) and two Chinese banks BEIC (8%) and BDC (0%). An interesting finding is that only in the categories of traditional banking and emerging banking institutions with relatively high rating are observed. In contrast, Chinese banks stand out with the lowest evaluations according to the proportion of estimated adequacy. This is partly explained by the BDC bank, which does not obtain a qualification in any thematic axis, since, due to lack of access to its regulations, these are not known. (See the specific chapter on CDB).

More information:

Full publication Comparative analysis of the regulations of IFIs present in Latin America

Contact:

Agustina Palencia: agustinapalencia@fundeps.org

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What does 2017 leave us in relation to trunk pipelines?

“Below, we offer a google translate version of the original article in Spanish. This translation may not be accurate but serves as a general presentation of the article. For more accurate information, please switch to the Spanish version of the website. In addition, feel free to directly contact in English the person mentioned at the bottom of this article with regards to this topic”

The year 2017 began with important and promising news for the Gasification Project of Localities of the Interior of the Province of Córdoba, better known by the people of Córdoba as the “main gas pipeline project”. During the first days of January, the Governor of Córdoba Juan Schiaretti and President Mauricio Macri were present at the inauguration of a Pressure Reducing Plant in La Calera, work carried out by the Brazilian company Odebrecht within the framework of the systems awarded to it after the public tender launched in 2015. The reduction plant constituted the first section inaugurated by the Córdoba-Gran Córdoba Ring System, comprised of 52 kilometers of gas pipelines. reinforcement, and that will benefit 300 thousand inhabitants of both Córdoba and La Calera and of Saldán, Villa Allende, Mendiolaza, Malagueño and Malvinas Argentinas, according to official information.

The presence of Macri at the inauguration of the work represented a gesture of political support for the Schiaretti government. Especially taking into account the strong questions and criticisms received by the provincial government for the involvement in this project of the Brazilian construction company Odebrecht, involved in a corruption scandal in Brazil and other Latin American countries, even in Argentina. Despite these questions, the Schiaretti government always defended the participation of the company by resorting to the debatable argument that the corruption events in which it is involved occurred between 2004 and 2013, while the tender in Córdoba was carried out only in 2015.

However, after a few days the project suffers a major setback: Schiaretti announces that, due to delays in obtaining loans from Chinese banks, 4 stretches of gas pipelines would be re-tendered to avoid postponing the start of the works in said sections, but in this case with the Province’s own financing. Recall that of the 10 trunk systems that were defined in 2015, 4 were awarded to Transitory Business Unions (UTEs) made up of Argentine and Chinese companies and financed by Chinese banks (ICBC and Bank of China); and the remaining 6 were awarded to Odebrecht (at first it was said that the Brazilian company would present its own financing for the start of the work, but finally this was not the case, making the province have to resort to indebtedness to start the works).

Thus, criticisms of the link with Odebrecht in the work will be added to questions about the delays in Chinese financing; the lack of relevant explanations regarding the reasons for the fall in financing; the need to re-tender the work and the decision of the provincial government to go back to the market to borrow to finance the work and even for the substantial increase in the cost of the work, which went from a budget of 8,600 million pesos in 2015 to 12,480 million pesos at the beginning of 2017 (an increase of 45% in almost two years).

After a new call for bids in February, in March the works of the four aforementioned systems were re-awarded to the same UTEs that had won in the first tender. In turn, the government issued a new batch of public securities for 460 million dollars to finance the start of works in the 4 tranches of the project, with the financial agent of Banco de Córdoba (Bancor).

Although in that same month of March advances were announced in the negotiations with the Chinese banks to finish making the committed credits for the work, surprisingly on April 21 the Governor Schiaretti announced the definitive fall of the Chinese financing and the signing of a decree that rendered ineffective the adjudication of the works of the 4 corresponding trunk systems. While Schiaretti himself blamed the Chinese banks for the fall in funding, arguing that they raised conditions “leonine, unacceptable to Cordoba and the national government,” the fact is that the government never made clear the true reasons and reasons that led to the fall of Chinese financing.

In this way, the government of Córdoba decided to launch a new tender for 437 million dollars for the construction of the 4 gas pipeline systems, which now in the new call would become 8 systems (in addition to the 6 remaining systems already awarded to Odebrecht ) and whose financing would come from the same province. In this case, the allocation of the new systems fell to national companies.

In early May, and despite criticism from the opposition, the provincial legislature approves a bill that enables new changes in the pipeline project: the negotiations with Chinese banks to finance 4 of the trunk systems are terminated, and it is approved that it is now the provincial government itself that must obtain the totality of the funds to complete the work (ratifying in this way the authorization granted by law 10,339 that enabled operations to take public credit to carry out the works). Just a few days later, the government made official through a decree published in the Official Gazette, a new debt collection for 450 million dollars to finance the work. By the end of June, Schiaretti himself would announce through his Twitter account that the province had obtained the total financing for the work through the placement of bonds in the international capital market.

In short, this strategic project for Córdoba that was going to have in the beginning with financing provided or managed by international actors (initially through the National Bank of Economic and Social Development of Brazil -BNDES-, then through Chinese banks and own financing provided by the Odebrecht company) to depend exclusively, for its concretion, on the province’s own resources or obtained through debt through the issuance of government securities.

The second half of the year would be marked mainly by the progress of the work (according to the government by the end of the year 14% of the work had been completed and the work was planned to be completed by mid-2019), but also by the constants and recurring questions from sectors of the opposition and civil society in relation to the project. Especially after Córdoba was mentioned in the framework of the Lava Jato case as one of the destinations where the Odebrecht constructure paid bribes in Argentina.

Although the national government of Mauricio Macri began a campaign to review and investigate the possible involvement of Odebrecht in the payment of bribes in numerous public works projects in Argentina (which even led the national government to suspend the company to carry out works at a national level), the gas pipeline project in Córdoba was strangely excluded from said revision and the relevant explanations were never provided to justify such exclusion. Even the company continues to operate in the province despite its suspension at the national level (its main work is precisely that of gas pipelines in Córdoba) and the requirements from the opposition that the same be done at the provincial level. Given the lack of answers at the national level, some opposition legislators traveled to Brazil in October of this year to ask the prosecutors of the Lava Jato case to investigate the link between the Brazilian company in the payment of bribes in the framework of the bidding process in 2008 for the construction of trunk pipelines.

In this way, between marches and counter-marches, the balance of 2017 in relation to the trunk gas pipeline project throws little light and many shadows and suspicions in relation to the transparency and execution of the project. Not only because of the never entirely clear fall of Chinese financing at the beginning of the year but also, and above all, because of the way the provincial government has handled the involvement of the construction company Odebrecht in the work and the numerous causes of corruption that splash throughout Latin America and even in Argentina itself. Although the government of Schiaretti has detached the company from any kind of connection with the possible delivery of bribes and corruption in the bidding of the work (even with the support of the national government of Macri itself that has initiated a kind of “Crusade” against the Brazilian company for its actions in the country during the Kirchner government), the truth is that the year that ends leaves many questions and aspects not clarified about the project.

Undoubtedly, 2017 has left a huge debt outstanding in terms of transparency and accountability in relation to this strategic and emblematic project for Córdoba. From FUNDEPS, we expect this debt to be paid in 2018.

More information

– Working Document: Transparency in the gasification project of localities in the interior of the province of Córdoba by Melanie Mackenzie – December 2017. FUNDEPS.

– Notes and publications of FUNDEPS in relation to trunk gas pipelines.

–  Main gas pipelines in Córdoba: a work that advances in the shadow of corruption by Agustina Palencia – December 2017. El Entramado. FUNDEPS.

Image source

La Voz del Interior

Authors

Macarena Lourdes Mustafa / Voluntaria del Área de Gobernabilidad Global

Gonzalo Roza / Coordinador del Área de Gobernabilidad Global

Contact

Gonzalo Roza / Coordinador del Área de Gobernabilidad Global

gon.roza@fundeps.org

China-Argentina relations under the Macri administration: do we change?

This working document presents a brief analysis of the current relations between the People’s Republic of China and Argentina in a national and international context; and taking into account aspects such as the relationship between the Asian giant and the Kirchner government, the change of government that took place in Argentina at the end of 2015, the Argentine economic reality and the election of the Republican Donald Trump as president of the United States.

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We participated in the workshop on advocacy actions against Chinese investments in the region

Representatives of civil society and native communities participated in the workshop in the city of Bogotá (Colombia). The result was the elaboration of an agenda that complements the territorial demands of the affected communities with the proposals raised from civil society and the academy.

“Below, we offer a google translate version of the original article in Spanish. This translation may not be accurate but serves as a general presentation of the article. For more accurate information, please switch to the Spanish version of the website. In addition, feel free to directly contact in English the person mentioned at the bottom of this article with regards to this topic”

On May 17 and 18, the workshop was organized by the Regional Group on Financing and Infrastructure and the Regional Coalition for Transparency and Participation. The workshop sought to strengthen the joint action of civil society (communities, movements and social organizations, national and local) that are being affected by projects financed by Chinese banking and what monitor the social and environmental impacts of these investments in Latin America.

Topics related to the social and environmental policies currently implemented by Chinese institutions, the analysis of Chinese funding in the region, the projects to which it is intended and the identification of the impacts of these projects on the environment and human rights were addressed. We attended civil society representatives from Argentina, Chile, Bolivia, Brazil, Peru, Mexico, Colombia, Venezuela, Ecuador and representatives of native and peasant communities.

We emphasize the alarming situation of environmental defenders in Chinese investment contexts in countries of the region, who are not only criminalized for the defense of their collective rights but also lack the protection of the State . We succeeded in strengthening the Continental Alliance to follow up on Chinese investments to face the geopolitical strategy that seeks to maintain the constant export model of raw materials in Latin America and the Caribbean.

Those of us participating in the workshop agree that weakening the environmental and social frameworks of the region does not guarantee respect for the rights of the communities involved in the area of ​​influence of the projects that are financed by Chinese banks. Added to this is the non-binding nature of the Chinese banking guidelines. The non-existence of protection at the national level and at the level of multilateral banking puts the communities that are being affected by the investment at risk.

As a result of the Workshop, an advocacy agenda was drawn up that brings together and complements the territorial demands of the affected communities with the reform proposals put forward by civil society and academia. In this regard, at the international level, new standards for companies and Chinese banking are proposed that guarantee compliance, greater participation and effective consultation processes; At the national level, a joint strategy that will reverse the weakening of socio-environmental legislation and provide guarantees of equitable access to justice for environmental defenders.

More information

Contact

María Victoria Gerbaldo, victoriagerbaldo@fundeps.org

Chinese investments in Argentina: the aqueducts in Entre Ríos

Within the long list of Chinese investments in Argentina, the case of aqueducts in the province of Entre Ríos has been one of the most controversial. Irregularities in the bidding process, approval and execution of the project have aroused the suspicion and the demands of various sectors of civil society.

“Below, we offer a google translate version of the original article in Spanish. This translation may not be accurate but serves as a general presentation of the article. For more accurate information, please switch to the Spanish version of the website. In addition, feel free to directly contact in English the person mentioned at the bottom of this article with regards to this topic.”

 

In a changing international context, in which the most important actors have been changing, Argentina has encountered difficulties in accessing traditional sources of financing. Over the last few years, especially since the Kirchner administration, the scenario of foreign investment in Argentina has been marked by the preponderance of the PRC. Several of the major infrastructure projects that are being carried out are behind the backing of Asian companies.

There are two projects that have been working between the Nation and the province of Entre Ríos for some years and had to do with the possibility of building two aqueducts for irrigation in the north of Entre Ríos. For the construction of these, the provincial government and the China State Construction Engineering Corporation (CSCEC) signed a commitment letter for the supply of fresh water, incorporating 200,000 hectares of irrigation.

In mid-June 2013 the CSCEC expressed its interest in investing in infrastructure works in the province of Entre Ríos. During a meeting with representatives of the company, developed at the House of Entre Ríos in Buenos Aires, Governor Sergio Urribarri “proposed three basic lines of action: irrigation works, Paraná-Santa Fe metropolitan link and port development.” According to the governor, the development of the works would be linked to a great extent to increase the productive capacity of the province.

The agreement with China for the construction of the two aqueducts was signed on July 18, 2014. Within the framework of strategic agreements for infrastructure works, signed in the Casa Rosada between Xi Jinping and Cristina Fernadez de Kirchner, meeting in which Urribarri participated.

The aqueducts will have a total length of 546 kilometers between main branch and secondary branches. Two works, the first in the Arroyo Mandisoví basin in the Federation department to implement a collective irrigation system, from the Uruguay River, for rice, citrus and fruit-horticultural production. The second in the department of La Paz to build an aqueduct of the North Entre Ríos, with the contribution of water from the Paraná River and provide a marginal area of ​​access to water for irrigation.

The costs of the works total an amount close to USD 98,000,000, according to the data presented by the “Provincial Agricultural Services Program” in its feasibility reports of which the province should contribute 20%. However, the budget of the CSCEC was USD 430,387,552 awarded without competitive bidding. Funding would come from ICBC, with a credit of USD 366 million at 15 years (with a grace period of 5) with a LIBOR rate of 4.5%. Likewise, the credit agreement provides as applicable law the same as that of England.

The project provoked rejections in some sectors, such as the organizations nucleated within the Multisectoral in Defense of the Heritage of the Entrerrianos, which promoted the nullity of the law that, among other points, enabled the direct granting, without public bidding, of the work to A Chinese capital company, as well as a debt exceeding $ 430 million. The M’biguá Foundation and Environmental Justice also warned about the lack of transparency and information about the project.

The case of aqueducts is the first to reach justice. As discussed above, the Multisectoral for the Defense of the Patrimony of the Entrerrianos presented an unconstitutionality action with respect to the law No. 10.352 that authorized the Provincial Executive to become indebted to the financial institution of China. This action is based on the fact that this law has not fulfilled the formal requirements that the provincial constitution urges for its approval, for example: there was no Environmental Impact Assessment, there is no opinion from the commissions of Finance and Economy, or the prosecution Of state, among other irregularities. The total lack of controls in the legislative process, the treatment on tables of the norm, the absence of debate on the subject and, especially, the secrecy with which the government was managed not to make known the project, is another aspect Demand.

Among the main points of the complete demand are:

– Ineffectiveness of Law 10.352 for irregularities in its processing.

– Non-observance of the principle of reasonableness.

Authorization to the Governor to agree and keep secret the contract with the Chinese Bank.

– Authorization to the Governor to contract with the Chinese Bank ICBC a loan in which Entre Ríos accepts to be governed by the English legislation.

– Violation of the constitutional duty to publicize acts of government.

– Deprivation of information as a human right.

– The previous and precautionary implementation of Environmental Impact Studies and its evaluation processes with the due Public Hearings and the dictating of the Administrative Acts prior to the authorization of contracting of the work and the authorization of the conclusion of investment agreements and / Or indebtedness.

– Violation of the Public Accounting Law. (Arrogating thus the P.E. unconstitutionally own powers of the Legislative Power).

– Violation of the Public Works Law.

– The constitutional guarantees contained in Section II – Economic, Labor and Sustainable Development of the Provincial Constitution were ignored.

According to local media: “From a commission of five million dollars that the provincial state must pay for the operation, up to the costs not calculated of interest, expropriation of land for the work and other costs, contemplating also the implementation of increases Tributary to cover the payment of the credit, the economic questions to the norm are numerous. The first of these, in any case, is the amount of the credit: nobody understands very well how the entrerriano government arrived to calculate both works by more than 430 million dollars when Prosap had budgeted, some months before, less than 100 million” .

According to Jorge Daneri, a member of the M’biguá Foundation, a package of potential mega investments in the region is being formed which, in addition to the aqueducts, would include a hydroelectric dam project between the provinces of Corrientes and Santa Fe on the northern border Of Entre Ríos. According to Dr. Daneri, the mechanism is the same in all projects: there is no parliamentary debate on the projects, let alone in the provinces involved, therefore, the silence of federalism of social consultation and citizen consultation.

From FUNDEPS we have been working on the follow-up of the case of trunk gas pipelines in the province of Cordoba, which also have Chinese funding. Part of the process of approval and execution of this project, can be identified with what happened in Entre Ríos. The lack of transparency in certain issues such as the presentation and publication of the environmental impact study, sound an alarm with respect to environmental standards and DD.HH.

In addition, we consider it of special importance to highlight that the recent importance of the People’s Republic of China in terms of investments in infrastructure projects translates into a need for civil society to monitor the design, approval and implementation processes of these projects. The irregularities mentioned above are the result of policies that still lack transparency and are not part of a accountability paradigm.

More information

A Chinese Agreement

Entre Ríos: “with the pretext of building two aqueducts is to consummate a very large swindle”

Law of aqueducts: filed suit against the “scam” of Urribarri

Law of aqueducts: the Multisectorial will collect signatures to repeal the text

Mid Paraná Dam, aqueducts and China, the spring of hope

Contact

Gonzalo Roza, gon.roza@fundeps.org

Increasing Chinese role in development Financing for Latin America

The discussion in general terms about China´s financial Role in Latin America. On the other hand, the discussion in particular focuses on this phenomena in Argentina. 

De acuerdo a datos recientemente publicados por el Inter-American Dialogue, China sigue ampliando su rol como financiador de grandes proyectos en la región. Durante el 2015, el financiamiento chino a Latinoamérica fue mayor que el del Banco Mundial y el Banco Interamericano de Desarrollo sumados. El financiamiento chino sigue teniendo un fuerte foco en el sector extractivo y de infraestructura; desde 2005 China ha financiado proyectos de infraestructura por 40,3 mil millones de dólares y 70,2 mil millones en el sector energético.

En este contexto, Juan Carballo, Director Ejecutivo de FUNDEPS, participó de la mesa de diálogo que se realizó a fines de enero en Washington DC organizado por el Inter-American Dialogue. En este encuentro, representantes del sector público, privado y de la sociedad civil discutieron sobre las implicancias de esta creciente relevancia de China en la región en cuanto a los estándares sociales y ambientales de este financiamiento.

Desde FUNDEPS, se continuará monitoreando el perfil del financiamiento proveniente de fuentes chinas, los estándares socio-ambientales de estos proyectos y el respeto a la normativa de participación, acceso a la información y protección ambiental.

 

Más información:

Contacto:

Gonzalo Roza – Coordinador del Área de Gobernabilidad Global
gon.roza@fundeps.org