European Investment Bank
European Investment Bank (EIB) President Werner Hoyer presents the bank's annual results during a news conference in Brussels Reuters

The European Investment Bank, which gives loans and grants using taxpayers' money, acted wrongly when it refused to disclose details of alleged tax evasion by mining giant Glencore, the EU's watchdog has ruled.

The EIB failed to disclose the results of its own investigation into the allegations surrounding a mining project in Zambia to which it lent $50m (£32m) in 2005.

The mine in question is owned by Mopani Copper Mines, which in itself is 73.1% owned by Glencore, one of the world's largest commodity trading houses.

A leaked 2009 document from accountancy firm Grant Thornton suggested that Glencore had helped its subsidiary avoid tax payments totalling tens of millions of pounds and had "resisted the pilot audit at every stage". Swiss-based Glencore has denied the allegations.

EIB's full investigation details not published

The EIB completed its own investigation in 2011 but refused to publish the full details. A complaint by non-governmental organisation Christian Aid into the lack of disclosure led EU Ombudsman Emily O'Reilly to open her own inquiry. She has now ruled "the EIB did not comply with the deadlines set out in its Transparency Policy".

It is striking that, on the basis of this update, the public has still no knowledge whatsoever about any of the main findings of the EIB's investigation
- Emily O'Reilly

She urged the EIB to make the investigation public and said that its failure to respect its own transparency policy is an instance of maladministration.

A spokesperson for the Ombudsman told IBTimes UK that while the recommendations are not binding, "European institutions usually do comply with them because they're based on sound and fair arguments".

The EIB's response to the NGOs' requests was a statement, which included the following: "Given that the EIB no longer has any contractual relation with Mopani/Glencore, and that these matters concern Mopani/Glencore's relations with the Zambian authorities, the bank has not taken any further view on this and considers this case as closed."

However, O'Reilly is scathing in her assessment of its approach, noting that "the update published on the EIB's website says very little about the outcome of the investigation. In fact, the update does not contain any information on the findings of the Inspectorate General's investigation into the allegations of tax evasion by MCM/Glencore".

She continues: "It is striking that, on the basis of this update, the public has still no knowledge whatsoever about any of the main findings of the EIB's investigation. Thus this update cannot be considered as a summary of the investigation report."

Lender and guarantor on infrastructure projects worth billions

The EIB is one of the cornerstones of new European Commission President Jean-Claude Juncker's economic strategies. It will be the lender and guarantor on billions of euros worth of infrastructure projects that are designed to kick-start the struggling eurozone economy.

In 2012, it had a total subscribed capital base of some €232bn – all of which is contributed from the public purses of member state governments.

Xavier Sol, the director of Counter Balance – one of the NGOs pressing for an investigation, said: "A public bank should operate in the most transparent way possible. The management's refusal to make the investigation public shows the EIB is not ready to act accordingly without external pressure.

"Recently the bank was ranked one of the most opaque multilateral lenders in the world and the ongoing revision of its transparency policy is seen as a further slide towards secrecy. We hope the Ombudsman's ruling sends out a clear message that this is not the way to go."

The EIB has been given until 31 March 2015 to respond to the recommendations.