WRITTEN QUESTION E-1116/00 by Theresa Villiers (PPE-DE) to the Commission. European Bank of Reconstruction and Development and Russian companies.
Date: 2000-04-11
Institutions: European Parliament, Provisional data
Subjects: Community loan, EBRD, Russia, aid to undertakings

C 53 E/78

Official Journal of the European Communities

EN

20.2.2001

(2001/C 53 E/094)

WRITTEN QUESTION E-1116/00

by Theresa Villiers (PPE-DE) to the Commission

(11 April 2000)

Subject: European Bank of Reconstruction and Development and Russian companies

Is the Commission satisfied that the EBRD is staying within the confines of its own Agreement and

1.
Guidelines in its lending policy to Russian companies?

2. What checks are carried out to ensure that the EBRD stays within the confines of its own Agreement
and Guidelines in its lending policy to Russian companies?

Does the Commission have any plans to review the operation of the EBRD(cid:146)s Agreement and

3.
Guidelines for lending to Russian companies?

Has any evidence been drawn to its attention which shows that

4.
Guidelines have been breached in its lending to Russian companies?

the EBRD(cid:146)s Agreement and

5. What actions would it take if evidence were produced that the EBRD has breached its Agreement and
Guidelines in its lending to Russian companies?

Answer given by Mr Solbes Mira on behalf of the Commission

(9 June 2000)

1.
In its lending activities to individual countries or operations, or entities operating there, the European
Bank of reconstruction and development (EBRD) acts within the framework of the agreement establishing
the EBRD. Articles 1 and 2 of the agreement set out the purpose and functions of the EBRD and policies
established by the board of directors. Article 11.2 requires the board to confirm that such purposes and
functions are fully served in the EBRD activities in each country of operations.

This confirmation is established through the adoption of country strategies. Such country strategies are
adopted or updated on an annual basis, under the provisions of Article 11.2 of the agreement establishing
the EBRD. It reviews the EBRD operations and establishes operational priorities in the relevant countries.
These strategies are approved by the board of directors.

The EBRD is preparing the 2000 country strategy for the Russian Federation which is expected to be
submitted shortly to the board.

The EBRD is required to develop all its operational activities in Russia within the framework of the above
mentioned documents which are all consistent with the agreement establishing the EBRD. The Commi-
ssion, in its capacity as the representative of the Community in the EBRD board of directors, has, in close
co-ordination with Member States and the European Investment Bank (EIB) representatives, approved the
EBRD previous country strategies for Russia and has every reason to believe that the EBRD has so far
operated consistently in Russia. The Commission also refers in this respect to its response to Written
Question E-1665/99 by Mr Manisco (1).

2.
Chapter VI of the agreement establishing the EBRD prescribes the corporate governance structure of
the EBRD. In particular, Article 27(ii) provides that the board of directors shall (cid:145)establish policies and take
decisions concerning loans, guarantees, investments in equity capital, borrowing by the Bank, the furnish-
ing of technical assistance, and other operations of the Bank(cid:146). Clearly, such policies and decisions include
those affecting Russia. As a result, the board of directors maintains not only oversight of these activities
but direct control. Directors nominated by the Commission (on behalf of the Community), by the EIB and
by Member States sit on the board of directors of the EBRD.

In addition, to this corporate governance structure, Article 35(1) of the agreement establishing the EBRD
requires it to (cid:145)publish an annual report containing an audited statement of its accounts and shall circulate
to members at intervals of three months or less a summary statement of its financial position and profit
and loss statement showing the results of its operations.(cid:146) Article 35(3) requires that copies of all reports,
statements and publications made under this article be distributed to members. The 1999 annual report of
the EBRD was considered by the board of governors at its meeting in Riga in May 2000.

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Official Journal of the European Communities

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By approving the country strategy for the Russian Federation, the board of directors has, over time,
confirmed that operations in that country are consistent with the EBRD purpose and functions.

3.
As indicated in response to question 1, the EBRD is currently preparing the 2000 country strategy
for the Russian Federation. This exercise has included a special meeting of the EBRD executive committee
on 16 February 2000 and a board workshop on 5 April 2000 at which a paper summarising the key
issues for inclusion in the draft country strategy paper was discussed. Final approval by the board of
directors of the new Russia strategy is expected by end July 2000.

4.
In the reviews and assessments described in answer to Question 3, neither the board of governors,
the board of directors nor the President has concluded that any provision of the agreement establishing the
EBRD or any of the EBRD policies in its lending to Russian companies has been breached.

If evidence were brought to the Commission(cid:146)s attention that EBRD management had breached the
5.
EBRD agreed operating principles and policies in its lending to Russian companies, the matter would first
be concerted internally and with the other directors before being put forward to the appropriate fora
(notably the EBRD board of directors and,
its board of governors) for decisions on the
if necessary,
appropriate sanctions.

(1) OJ C 170 E, 20.6.2000, p. 68.

(2001/C 53 E/095)

WRITTEN QUESTION E-1118/00

by Luis Berenguer Fuster (PSE) to the Commission

(11 April 2000)

Subject: Mergers in the electricity sector

The Commission has recently expressed reservations regarding the Spanish authorities(cid:146) limited indepen-
dence as regards competition. This lack of independence is particularly apparent where mergers are
concerned, in which field the relevant procedure is carried out under the supervision of the Anti-Trust
Department (part of the Treasury). Cases are approved by the government itself, whilst the Anti-Trust
Tribunal merely issues a report.

According to sources within Spain(cid:146)s ruling party, HidrocantÆbrico shares are to be publicly offered for sale
to Uni(cid:243)n Fenosa. This would reduce competition in the electricity sector and would increase the power of
the third-largest operator in Spain. In addition there are rumours of a merger between Endesa, Fecsa and
Sevillana de Electricidad, although no application has been made to the Spanish competition authorities.

Under these circumstances the Spanish authorities are unlikely to exercise any control over mergers within
the electricity sector. Is the Commission therefore planning any action to control merger operations within
the Spanish electricity sector?

Answer given by Mr Monti on behalf of the Commission

(8 June 2000)

In its recommendation for the 2000 broad economic guidelines of the economic policies of the Member
States and the Community (1), the Commission stated that Spain should give priority to continuing the
1999 reform of the competition law and within this reform should give particular attention to reinforcing
the capacity of the independent competition authority to investigate cases.

The Commission is only entitled to control merger operations which have Community dimension in the
meaning of the Merger Regulation (2).