Gazela Bridge Rehabilitation

Complaint

In September 2009 the Centre of Ecology and Sustainable Development (CEKOR) and CEE Bankwatch Network submitted a complaint to the EIB Complaints Mechanism (EIB-CM) concerning the EIB's compliance with its transparency and social standards in the Gazela Bridge Rehabilitation project in Serbia.

As regards the EIB's compliance with its transparency standards, the complainants challenged the EIB competent services' refusal to disclose the social conditions of the Finance Contract and alleged that the EIB had failed to reply to their request for additional information concerning the Resettlement Action Plan (RAP).

Concerning the EIB's compliance with its social standards, the complainants argued that the EIB would have failed to comply with the loan appraisal procedures. In particular, they took the view that the EIB's appraisal of the direct social impact of the project lacked essential information and alleged that the EIB did not obtain, and thus endorse, the RAP before approving the loan for the project in stake nor had it given its clearance before the resettlement process took place. Finally, the complainants deemed that the EIB monitoring procedures for the resettlement process were not properly implemented.

EIB-CM Action

On the basis of the raised allegations, the EIB-CM conducted a full compliance review.

Conclusions and Recommendations

As regards the disclosure of the social conditions for disbursement contained in the Finance Contract, it appears that no irregularity was committed by the EIB’s competent services.

As regards the refusal of disclosure of the RAP, the CM takes note of the fact that after the initial rejection of the application on the basis of the invoked protection of the internal decision-making, the complainant was provided with the requested document. In this regard, the efforts made by the EIB’s competent services in liaison and negotiation with the Serbian authorities regarding the disclosure have lead to the settlement of the issue raised by the complainant.

As regards the compliance with the EIB Policies and Procedures concerning social matters, the CM takes note that, although the appropriate condition (establishment of a RAP to be endorsed by the EIB as condition for first disbursement and undertaking of public consultation) was identified in the Appraisal Report of 27 March 2007 and in the proposal of the Management Committee to the Board of Directors, none of these documents contains any documental evidence of an appropriate identification of the social issues at stake, which would have supported appropriate solution throughout the project cycle. The CM considers that a more thorough social assessment of the project would have provided added value when discussing the content of the RAP with the Serbian authorities and would have facilitated the work of the promoter to attain a satisfactory RAP.

As regards the compliance with Guidance note 1, the non-availability of an approved RAP at the time of the approval by the Board of Directors does not constitute an instance of maladministration insofar as such approval did not constitute derogation but simply postponed the evaluation of the RAP to a subsequent step of the project cycle i.e. the request for disbursement. As the borrower's failure to honour such undertaking constituted a condition for cancellation or suspension of the loan, the prior assessment of the RAP before any financial assistance had been provided by the EIB was still ensured.

The EIB-CM closed the case with several recommendations:

1. An appropriate and detailed Action Plan properly addressing the improvement housing and related conditions and livelihood restoration should be:

• Established on the basis of detailed and on-site audit assessments;
• Discussed with the Project Affected People;
• Agreed by the Serbian authorities;
• Approved by the EIB, in line with its standards and guidelines.

2. The implementation of the most urgent actions, required to bring current temporary housing and related conditions (including access to education) to a standard accepted by the EIB, should be implemented as soon as possible;

3. The next disbursement should take place only after fulfilment of such conditions is confirmed by an audit in a manner acceptable to the Bank;

4. Contractual clauses should be put in place to allow the EIB to fully recall the loan in case of failure to comply with these conditions before end of 2010.

The CM, in collaboration with the relevant EIB services, will participate in the monitoring audit to assess compliance before next disbursement and ensure follow-up on further developments and implementation of above recommendations no later than 12 and 24 months after after the submission of the present conclusions report.

European Ombudsman

The complainants informed the EIB that the same complaint had been simultaneously lodged with the European Ombudsman (EO) due to the urgency and seriousness of the situation. Within the framework of the inter-institutional co-ordination between the EIB and the EO, on 26 October 2009 the EO secretariat informed the CM of the fact that the complaint against the EIB had been declared inadmissible.