Guidance

What UKEF considers in your application form

Updated 26 November 2021

1. Processes

Whereas potential applicants can approach UK Export Finance (UKEF) to discuss whether they may be able to receive support, formal consideration is based upon your application form.

The information provided on the application form enables UKEF to consider what types of assessment are appropriate and is the starting point for its decisions on which assessments are relevant. The possible types of assessment include whether:

• the support requested falls within UKEF’s statutory powers
• giving that support would, considering the premium UKEF would charge, constitute an acceptable financial risk to the taxpayer
• the environmental, social and human rights (ESHR) risks and impacts of the case are acceptable
• the debt sustainability of the lending is satisfactory
• the support may be given in the light of UKEF’s policies regarding bribery and corruption

2. Factors

Financial

The assessment of financial risk will vary greatly, depending on the type of support needed and the extent to which detailed investigations are required into the viability of the project.

Financial assessment and ESHR risk management are largely independent. While there may be circumstances where ESHR issues could have a direct impact on financial risk, the ESHR impact considerations are usually considered in a parallel process in order for support to be given.

Ethical

1) In accordance with its Mission and Principles Statement, UKEF abides by factors included in documents published by the OECD. Hereafter referred to as “the International Documents”, they are as follows:

• ESHR risk management – the revised Council Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (“the Common Approaches”)
• Sustainable Lending – Principles and Guidelines to Promote Sustainable Lending Practices and the Provision of Official Export Credits to Low Income Countries (“the Lending Principles”)
• Bribery and Corruption – the OECD Council Recommendation on Bribery and Officially Supported Export Credits (“the Bribery Recommendation”)

2) In order to implement its Mission and Principles Statement in this regard, UKEF’s policy is to follow the provisions of those International Documents in the way set out in this guidance of Processes and Factors.

3) In ESHR risk management, UKEF will consider the risks and impacts of cases it is being asked to consider as set out in the department’s policy on ESHR due diligence and monitoring.

4) A flow-chart that sets out the main processes by which UKEF typically considers the ESHR risks and impacts of cases, and a note on Human Rights and Social Risks and Impacts can be found within our Environmental, Social and Human Rights policy pages. Note these are updated versions of those found in previous revisions of this document.

5) UKEF does not review defence exports that are governed by the UK export licensing regime.

6) We take account of climate change within our decision-making processes for all our products in a manner proportionate to the risks and impacts associated with the projects and our support.

7) For Debt Sustainability, where the Lending Principles suggest that it should, UKEF will assess whether an export needing support is appropriate in the context of it representing a sustainable debt for the country concerned. In doing so, UKEF will liaise as appropriate with other government departments.

8) An assessment will be undertaken where goods and services are supplied to an overseas public sector buyer for civil purposes. Where the buyer is in the private sector, the main consideration is the risk of debt migration to the public sector. In the case of defence exports, an export licence is generally required, as previously mentioned above.

9) Assessments of the sustainability of a debt are likely to include, but may not always be restricted to:

• whether the project is a priority of social and economic development and has been appropriately approved by the buyer
• whether the amount and tenor of the proposed new debt is consistent with the country’s debt sustainability analysis under the World Bank/IMF Debt Sustainability Framework
• whether the amount and tenor of the proposed new debt complies with any limit set in the country’s IMF and/or IDA program
• whether the export contract price represents value for money where there has not been a competitive tender

Anti-Bribery and Corruption Procedures

10) While UKEF abides by the Bribery Recommendation, the following should be noted:

• UKEF procedures and the rationale for them are set out in the Final Response (“the Final Response”) to the Public Consultation on the department’s anti-bribery and corruption procedures which concluded in 2006
• UKEF makes reasonable enquiries about corruption before granting support
• For that purpose, UKEF always asks that applicants should disclose the matters referred to at paragraph 1(e) of the Bribery Recommendation in relation to the use of agents
• The details of the contractual powers and pre-contractual representations in UKEF standard forms enabling it to have financial recourse to applicants, should transactions prove to have been tainted by bribery and corruption, are to be found in UKEF’s standard contracts and, in particular, in those appended to the Final Response
• Guidance notes in relation to the definition of “Consortium Partner”, “Administrative Sanction” and “Administrative Measure”, being terms in UKEF application forms with particular relevance to anti-bribery and corruption measures, are appended to UKEF’s standard application form which can be found on UKEF’s website

11) Certain differences to UKEF’s standard manner of operation of its anti-bribery and corruption procedures apply to circumstances where:

• a British exporter has a contract of export with a foreign purchaser (“the subcontract”)
• the foreign purchaser has a further contract of export from their country incorporating the British supply (the “head contract”)
• the foreign purchaser is supported by the ECA of their country (the “Lead ECA”)
• UKEF reinsures the Lead ECA in relation to the British share of the head contract

12) These variations do not apply where UKEF reinsures or otherwise supports a foreign ECA in respect of the value of the British contract where the British contract is directly made with the end purchaser.

13) In cases where the Lead ECA is an OECD member, UKEF’s enquiries will be restricted to assessing the adequacy of the Lead ECA’s recourse rights. Further, enquiries will be limited to obtaining satisfactory recourse from the Lead ECA to UKEF when bribery and corruption has occurred. UKEF will, subject to the situation described in the subsequent points, continue to apply its procedures to the subcontract.

14) In relation to such a subcontract, UKEF will exercise discretion in balancing the demands of rigour and of workability in the application of its standard anti-bribery and corruption procedures.

15) No assumptions should be made that UKEF will not apply its standard procedures in full simply by virtue of the fact that the British export is being made to a foreign purchaser who will incorporate the product in a further sale onward.

16) The discretion provides for alterations to standard procedures principally in circumstances where there are multiple subcontracts to the same foreign seller, where some or all of which are of relatively low value.