European Ombudsman
European Network of Ombudsmen
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30 November 2007
In 2006, the European Ombudsman's services participated in a number of events involving NGOs interested in the work of the European Investment Bank (EIB) and, in particular, its lending activities outside the EU (extra-EU lending(1)).
Many of the NGO participants knew that citizens and residents of the EU have the right to complain to the EO about maladministration by the EIB. However, there was little awareness of the EO's practice to investigate, on his own initiative, issues raised by complaints against the EIB that come from persons who are neither citizens nor residents of the EU.
In order to enhance knowledge of the EO's practice and to allow the European Parliament to express a view on it, the EO's Annual Report for 2006 included a paragraph stating that, subject to possible future resource constraints, the EO envisages using the own-initiative power whenever the only reason not to inquire into a complaint alleging maladministration by the EIB in its extra-EU lending is that the complainant is not a citizen or resident of the EU.
The European Parliament's Resolution of 25 October 2007 on the EO's Annual Report for 2006:
The same Resolution also invites the EO to consider concluding a Memorandum of Understanding with the EIB on the modalities of cooperation between the institutions as regards the exercise of the EO's powers to investigate complaints concerning instances of maladministration in the activities of the EIB.
It seems appropriate for a Memorandum of Understanding (MoU) to focus on inquiries concerning the EIB's extra-EU lending, both because the European Parliament's Resolution of 25 October 2007 only concerns such lending and because the EO's experience of dealing with complaints about the EIB's lending within the EU has not revealed problems that need to be dealt with in a MoU.
2.1 Efficiency, effectiveness and transparency
A MoU should have two objectives:
As regards the second objective, it should be noted that the EO's investigations form part of a larger EU framework of supervision of the EIB. Other institutions and bodies that supervise the EIB include, in particular, the Court of Justice, the Court of Auditors, the European Parliament, the European Data Protection Supervisor and the European Anti-Fraud Office (OLAF).
The second consideration is the need to avoid creating false expectations about the EO's role. This point has special importance because NGOs' thinking about the accountability of the EIB has been strongly influenced by the example of the World Bank's Inspection Panel ("the Panel"). The Panel's role, however, is fundamentally different from that of the EO.
2.2 The role of the Panel
A ccording to the World Bank's website (http://www.worldbank.org), the Panel was established, "for the purpose of providing people directly and adversely affected by a Bank-financed project with an independent forum through which they can request the Bank to act in accordance with its own policies and procedures" (emphasis added). The Panel reports and makes recommendations to the Board of Executive Directors. The Board decides not only what actions to take in response to the Panel's findings, but also which matters the Panel should investigate.
The Panel's methods of investigation include: (a) meetings with the requester, affected people, Bank staff, government officials and project authorities of the country where the project is located, and representatives of local and international non-governmental organizations; (b) holding public hearings in the project area; (c) visiting project sites; (d) requesting written or oral submissions on specific issues from the Requester, affected people, independent experts, government or project officials, Bank staff, or local or international non-governmental organizations; (e) hiring independent consultants to research specific issues relating to the Request.
From the above, it can be seen that the Panel combines two functions. First, it constitutes a forum in which the World Bank listens to, and engages with, persons affected by its activities. Second, it investigates and reports on the World Bank's compliance with its own policies and procedures.
Without in any way questioning the Panel's independence, it is also clear that the Panel constitutes a form of internal control: it is part of the Bank and reports to the Bank's management.
2.3 The role of the EO
In contrast to the Panel, the EO is an external control, whose reports are addressed to the European Parliament. A complaint to the EO is not a "request" to the EIB. Nor is it the EO's role to represent the EIB in relations with persons affected by its activities.
In this context, it is important to recall that Article 2.4 of the Statute of the Ombudsman(2) provides that a complaint must be "preceded by the appropriate administrative approaches to the institutions and bodies concerned"(3). Before making a complaint to the EO, a complainant should therefore have had recourse to the EIB's own internal mechanisms and procedures for listening to, and engaging with, persons who are affected by its activities.
The EO's inquiries concern maladministration. Maladministration is a broad concept that includes not only unlawful behaviour but also, for example, failure to act in accordance with established policies and procedures. However, in carrying out an inquiry into possible maladministration by the EIB in relation to a particular project funded by its extra-EU lending, the EO would not consider it appropriate to substitute his judgement for that of the EIB as regards any environmental, social and developmental questions that might arise. Rather, the EO would review whether the EIB had provided a consistent and reasonable explanation of its position in relation to the matters raised in the complaint.
In carrying out such a review, the EO's point of departure would be the EIB's record of how it had dealt with the matters raised in the complaint through its own internal mechanisms and procedures. That record would, of course, already be in the hands of the complainant, who would be expected to send a copy of it with the complaint, as well as an explanation of why the complainant contests the record, or the EIB's position as set out therein.
It would, therefore, be unnecessary for the EO to depart from his normal written inquiry procedure by organising meetings, holding public hearings, making site visits, or hiring consultants. (Insofar as the EIB itself uses such methods in order to listen to, and engage with, persons affected by its activities, the EO could review the EIB's compliance with its own policies and procedures in that regard.)
In light of the above, the preparation of a MoU would need to be based on a shared understanding by the EO and the EIB of:
As regards (i), it would be important for the MoU to be able to refer to a clearly defined internal procedure and to explain that the Ombudsman would normally
As regards (ii), the MoU should explain that the concept of maladministration includes both unlawful behaviour and failure to comply with established policies and procedures. In order to be sufficiently concrete, the MoU should also explain how to identify the relevant standards, or refer to another document which contains such an explanation.
The EO is already aware of the EIB's Environmental and Social Practices Handbook of September 2007. However, the Handbook refers to extra-EU lending only very briefly and in rather general terms, mentioning: (a) EU policy, principles, standards and practices, especially the requirements of EU legislation, for the protection of the environment, (b) national and relevant international environmental legislation and (c) "local conditions, such as affordability, local environmental conditions, international good practice etc." In order to make these general references more precise and concrete, it could be useful for the EIB to produce a more detailed user-friendly and accessible guide, focused specifically on extra-EU lending. To ensure transparency and good relations with relevant stakeholders, the EIB might consider publishing such a document in draft form and inviting comments and/or organising a public meeting, at which the EIB and the interested public could exchange views.
The EIB has already indicated to the Ombudsman (at a meeting in Strasbourg on 15 March 2007) its willingness in principle to agree a MoU.
The next step could be for the Ombudsman to write to the President of the EIB to explain the main elements of the above analysis and propose that discussions between the respective services take place on that basis, with a view to drafting a MoU.
IJH 30 November 2007
(1) The term "external lending" is normally used. The present document refers to "extra-EU lending" because the word "external" is used below as part of a different conceptual distinction.
(2) European Parliament decision 94/262 of 9 March 1994 on the regulations and general conditions governing the performance of the Ombudsman's duties, OJ 1994, L 113 p. 15.
(3) The EO applies this provision by analogy in considering whether to open an own-initiative inquiry into matters raised by a complaint.
