Belgium: Questions asked about the working practices of the Belgian Investment Company for Developing Countries (BIO)

The findings of an investigation conducted by Belgian daily newspaper Le Soir in late February 2012 (“Public aid vanishes into tax havens” ) have aroused a great deal of public debate both in Belgium and abroad. According to the newspaper’s investigation, the Belgian Investment Company for Developing Countries (BIO), which is 84% owned by the Belgian state, “has invested some €151.7 million in 36 investment funds domiciled in 11 jurisdictions”, in particular financial centres such as Mauritius and the Cayman Islands.

According to Le Soir, “most of these funds speculate on high-growth SMEs in emerging economies. In some cases, the main business of these companies is not what you might expect: a five-star hotel in Nigeria, a private clinic for medical tourists in Tunisia, a Costa Rican factory producing powdered soda for Burger King, and so on”. [1]

According to BIO itself, the company’s most significant contribution to development is “the creation of sustainable jobs to safeguard against poverty and promote development” [2] . BIO even pledges to guarantee workers better pay than that offered by other companies in the same sector in its partner countries: a very commendable objective and one which is in line with the ILO’s Decent Work Agenda. However, BIO’s actual achievements over the past few years are much more questionable, as was highlighted in a recent report criticising the company. Entitled “Enterprise against poverty?”, the report concludes: “In 2010, BIO created 3,000 additional jobs at a total cost of €107 million, meaning that each additional job cost €35,000” [3].

Against a backdrop of austerity and swingeing cuts in public spending in Europe, where many cooperation actors are working hard to make aid ever more efficient, the contradictions here are glaring.

Three Belgian trade unions, CSC/ACV, FGTB/ABVV and CGSLB/ACLVB, have therefore written to the country’s new Minister for Cooperation, calling for urgent root-and-branch reform of BIO with a focus on transparency, sustainable development and decent work.

Following Le Soir’s investigation, BIO justified its channelling of funds via tax havens, saying that this was not illegal and that “the World Bank, via its investment branch, in particular the International Finance Corporation and its offshoots, the European Investment Bank, other multilateral organisations, the African Development Bank, the Asian Investment Bank, all major names in the world of development finance, use the same types of intermediary structure, structured in the same way” [4] .

The Minister for Development Cooperation has now promised to change the law to ensure stringent monitoring and introduce tougher cooperation criteria that reflect policy coherence.

To be continued...

Article provided by Thomas Miessen, ACV - CSC