The Bribery Case Of Export Credit Insurance
Are you in the pace of looking for the best meaning of Export Credit Insurance
? We all live in an age of great economic ambiguity. From the year 2006 to 2010, bankruptcy cases filed in federal courts for the fiscal year 2010 were up more than 113%. Take into consideration record idleness, troubled markets throughout Europe and quickly changing currency policies, and it's clear that businesses - especially those servicing foreign markets are facing new found risks. In this field, even the best of customer - those with the best of intentions and outstanding payment records can thrash about to meet their payments.Over the past, when a customer defaulted, the result was so simple: the customers' cash flow problem was now their own. Now more than ever, it's significant to protect your business from bad debt, chiefly if your business depends on a small number of customers for an important part of your revenue. Remarkably, many businesses are uninformed of credit insurance and how it can help their business by mitigating risk. Credit insurance, also known as accounts receivable insurance or business credit insurance, is an insurance product that protects businesses against awful debt. Export Credit Insurance is very vital for you to get the best deal in your dealings.
In simplest terms, if a business owns an export credit insurance policy, and one or more of your customers covered by the agreement defaults, the insurance policy will shell out. Typically, credit insurance agreements are structured to disburse an agreed percentage of an invoice or receivable that remains outstanding as a result of bankruptcy, insolvency or protracted default. In many cases, the insurance premiums are charged to the policy holder on a monthly basis and are premeditated as a percentage of sales or as a percentage of all outstanding receivables. For businesses, this simply means that policies may be tailored to your exceptional needs, selecting the customers that your wish to insure.
So, how Export Credit Insurance can help your business? There is no shortage of benefits to credit insurance comprising: the protection against bad debt, mainly against the potential devastating impact of one of your key customers defaulting on paying their debt. If your business is debt-financed, using credit insurance to look after your accounts receivable enables you to show more secure assets, frequently leading to an augmented borrowing capacity and reduced fees. For instance, in the case of international trade, credit insurance enables the exporter's bank to consider otherwise not entitled foreign receivables as collateral. It allows companies to more quickly expand their business into new and emerging markets in a safe and cost-effective mean.
Export Credit Insurance makes you smarter, enabling you to boost credit lines to existing customers, enter new markets or extend credit to new customers armed with the information you need to make clever, informed decisions, and credit insurance is greatly superior to letters of credit (L/Cs) in lowering the financial risk involved in international trade. Letters of credit are costly and a load to customers, freezing a portion of their credit. The global slump has driven once untouchable stalwarts to their knees and into bankruptcy courts, passing the buck to their suppliers, triggering an aching domino effect that can still be felt today.
For smart businesses who desire to navigate international markets with confidence, Export Credit Insurance is an invaluable financial instrument. As a result of campaigning by anti-corruption groups, attention has lately focused on the Export Guarantee Agencies of a number of Western countries. These agencies provide taxpayer backed insurance for domestic companies undertaking business in lofty risk areas abroad. In the total contract fee insured hidden bribes or semi legal fees and commission are enclosed. The unconcealed contradictions of the British official attitude to bribery overseas have been pointed out by the Corner house group. They have analyzed two suspect cases in detail in their recent report.
They summarize allegations of corruption and financial mismanagement surrounding two proposed hydropower schemes in East Africa. The UK ECGD provided financial backing for Knight Piesold initial consultancy role in the proposed Ewaso Ngiro (South) hydropower scheme in Kenya and was considering prop up for the proposed Bujagali Dam in Uganda. It is not within the dispatch of this report to prove the allegations, that role rests in a court of law. On the other hand, it is believed there is adequate reason to warrant further investigations into the possibility of financial mismanagement in quite a few aspects of the contract allocation for both the Ewaso Ngiro and Bujagali proposals. It is said to be that Export Credit Insurance is indispensable.
In the year 1992 a World Bank study team reported that initial feasibility studies by Knight Piesold were five times what such services would usually cost. They report that at least 15.3m had been paid up front to Knight Piesold even though the scheme or plan was not due to come on stream for another 10 years. The excessive cost of this contract together with the high level of up-front payments even before the viability study has been completed, raise fundamental questions about procurement practices and financial management. These findings positively raise concern over the operation of the UK matters that the British Government is beginning to recognize. Export Credit Insurance is their concern.
Under the criticism, they implemented new guidelines in September 2000. These entail all companies seeking to cover to sign a declaration that no person associated with the contract has been, or will be, involved in any Corrupt Activity either in the UK or elsewhere. Corner house consider that further criteria need to be introduced by the ECGD to deter corruption. The British experience is in no way exceptional and these contradictions are reflected in many of the Export Guarantee Agencies covered by this. The unlawful commission quotient of contracts can amount to 30%. Figures are hard to come by but a French secret service report said the official export credit insurance agency paid in bribes to foreign purchasers of protection equipment.
It is said to be that the good will that accompanied the 1997 Bribery Convention will not last ad infinitum. Perceptions that countries are not living up to their obligations/responsibilities under the Conventions will certainty weaken the agreement and lead to erosion of public confidence. Recuperating the momentum and enthusiasm of that initial achievement will go far to ensuring that it is not yet the end of the honeymoon. International dispute over good governance and best practice may work towards the best mechanism for investigating political and business dishonesty. Talking about Export Credit Insurance, you have to certainly know how important this is in order for you to know what moves you need to do.
There are many areas still in need of urgent reform. The OECD convention, which has been so effective in many ways, left loopholes. The need to stop companies using political donations to briber foreign officials has to be outlawed.
Some countries need to reform their laws so that extra-territorial offences are included and extradition is made easier.
Several International institutions have a long way to go. The World Bank and EU both need to carry out further reform to prevent bribery and corruption in programs they fund.
On a broader agenda more research needs to be done in the way defence contracts involving foreign countries are awarded. The US, Germany, France and Britain are among the biggest arms sellers in the world. They are extremely competitive. As these contracts usually involve an element of national government involvement are even more secretive than normal contracts. Yet the evidence we have indicates that there are still excessive commissions (bribes) paid in these deals.
The Cornerhouse Group rightly say that there is an urgent need to shift the focus of anti corruption measures. In seeking to explain corruption, most commentators tend to dwell on developing countries, not industrialised ones, on the bribe takers not the bribe givers. The intimate connection between corruption in the South and the institutional culture, bureaucratic practices and priorities of public and private institutions in the North is thus effectively obscured
Some campaigners suggest that the best deterrent for companies that have a propensity to bribery and corruption would be an international blacklist. The World Bank's current blacklist is a start but it really only deals with some very small fish. A blacklist that names and shames the big players, but more importantly prevents them obtain international contracts would be a forceful statement ? a landmark in the fight against bribery and corruption.
Other campaigners think that blacklists are often counterproductive. But the real deterrent for those who continue to bribe and corrupt is a real fear of detection and prison. The only way for the momentum of the anti-corruption movement to continue is by the installation of tough investigation and prosecution authorities. Many countries in Western Europe and North America are yet to show that they are willing to prosecute offenders. International Conventions have a effect but without real regulatory muscle they will whither away and die.
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