EFIC fail: Support for  Adani opens  legal and political risks  | RenewEconomy

EFIC fail: Support for  Adani opens  legal and political risks 

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Funding Adani coal mine would expose Export Finance and Insurance Corporation to significant legal and political, report finds. 

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adani carmichaelA new report by Environmental Justice Australia finds that if Australia’s export credit agency, EFIC, funds Adani’s controversial Carmichael coal mine, it would expose EFIC’s directors to significant legal and political risk.

The  Export Finance and Insurance Corporation (EFIC) has met regularly Adani  and reportedly decided to provide  concessional  support to a company in Adani’s supply chain.

EFIC told Senate Estimates on 1 June 2018 that the relevant transaction was not proceeding “at the moment”.

However,  neither EFIC nor the Federal Trade Minister, Steven  Ciobo, have ruled out supporting Adani or its associates for the Carmichael project.

EFIC has been in the news again this week when it was revealed that Minister Ciobo last year overturned a ban on government-backed loans to domestic mining operations without consulting his department.

EJA’s new analysis finds EFIC support  for  the Carmichael project would likely breach e EFIC board’s  duties and be beyond the Trade Minister’s powers.

The beneficiaries of EFIC support are exposed to the significant risk of legal challenge and changing political whims.

Trade Minister Ciobo has the power to direct EFIC to support Adani’s project via the National Interest Account for unlimited taxpayer support. But such a direction must not be unreasonable. The project must  be commercially viable, in the national interest and in the public interest.

EFIC’s board is subject to stricter obligations than the directors of Australian companies. Legislation requires them to act ethically and as well as with care and diligence.

The analysis finds that financial and environmental considerations surrounding Adani’s massive Carmichael thermal coal mine would likely persuade a court that neither EFIC’s board nor the Trade Minister would be acting within the law, if material support was provided by EFIC.  Such decisions are open to legal challenge.

Then there is the political reality that the Federal  opposition has ruled out public  financial  support for Adani. Any direction by Minister  Ciobo  should be quickly overturned by a future  Labor  Finance  Minister, who would be bound  to honour  the party’s promise of no taxpayer money for Adani.

Australia’s Constitution empowers the parliament of the day to cancel EFIC contracts and prevent payouts of guarantees and insurance.

EJA’s analysis also reveals EFIC has failed to provide the public its Board’s assessment of the Adani related project it has already  assessed, in apparent contravention of section 9 of the Export Finance and Insurance Corporation Act.

The Board’s assessment must be made public irrespective of whether the project is proceeding. Disclosure of the assessment is the first step for the public to keep EFIC’s Board accountable for decisions to support  onshore  resource and related infrastructure projects.

Minister  Ciobo  defied the Productivity Commission’s finding that EFIC support was not justified for those projects and changed EFIC’s Statement of Expectations in September 2017.

There are many inherent risks to EFIC providing financial support to Adani. They materialise now for all transactions and are real and significant.

David Barnden is a senior lawyer at Environmental Justice Australia

Bankers – and Adani’s business associates – should be aware of the substantial legal and political risks as significant community opposition to Adani’s coal project continues to grow.

Josh Meadows is the media and communications officer for Environmental Justice Australia

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  1. Joe 2 years ago

    Don’t The COALition get it yet…the Adani Mega Coalmine is electoral, environmental and financial POISON.

    • RobertO 2 years ago

      Hi Joe, No they are a bunch of ostriches whom have buried their collective heads in the sand. The sooner they are gone the better for all the world (let alone Australia).

    • rob 2 years ago

      Please please please let them support it…..and watch the outcome! Bastards

  2. Ken Dyer 2 years ago

    EFIC are idiots

    • Joe 2 years ago

      Yeah, but its OUR money with the COALition idiots pulling the strings.

  3. Tim Buckley 2 years ago

    And here I was thinking Australians paid their tax to help Australia – not to bail out a foreign tax haven based coal billionaire! EFIC’s timely disclosure and transparency requirements are close to zero, I wonder if and when this will come out in public??

  4. Robert Comerford 2 years ago

    And the only difference between the two major parties is that Labor will have it go ahead but without taxpayer funding? Yeah ,right and I have never heard of fossil fuel rebates in this country!
    Bill Shorten showed his true colours when asked a direct question on Q&A last night.
    Labor is just as committed to stuffing our planet as the LNP.

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