A government committee has called for the UK’s export credit agency (ECA) to adopt a strict code of ethics.

An all-party parliamentary inquiry (APPI) found that UK Export Finance (UKEF) should apply human rights and environmental standards to all projects and transactions it participates in. Currently, UKEF doesn’t conduct any such screening for transactions of £10mn or less, or for those with a tenor of fewer than two years.

UKEF – known as Export Credits Guarantee Department (ECGD) until last year – guarantees loans to overseas buyers, so that they can purchase British exports. It also makes direct loans for the same purpose.

Prominent in the report – which took evidence from UKEF’s clients, the British Exporters Association, international ECAs and charities such as Amnesty International and Jubilee Debt Campaign – are the succession of arms deals for which UKEF and its predecessor provided financial support. These include a £49mn loan made to Zimbabwean prime minister Robert Mugabe to buy a fleet of fighter jets and police Land Rovers.

The report also criticised the agency for the amount of third world debt it owns. It is owed £2.35bn by sovereign governments on debts they have previously defaulted on, many of which were accrued under previous regimes, including those of Saddam Hussein and General Suharto. The debts include £682mn from Sudan, £412mn from Indonesia £283 from Iraq, and £197 from Zimbabwe.

The committee did, however, acknowledge the role ECAs have in supporting trade. Writing in the Huffington Post, committee chair Lisa Nandy MP says: “While many of these agencies, including UKEF, have attracted opposition from human rights organisations for supporting heavy footprint business sectors most commonly associated with human rights violations, the UK cannot afford to ignore the potential use of export credits to enable British companies to compete abroad. This is especially true in times of major financial disruption where private sector finance is lacking. The challenge is to ensure these agencies operate to acceptable ethical standards.”

Nobody from UKEF was available to speak to GTR, however in a written statement, a spokesperson says: “UKEF abides by international agreements that apply to the operations of export credit agencies, including those on anti-bribery, environmental, human rights and social impacts, and sustainable lending. The report recognises that UKEF performs a vital function and allows many UK businesses to win export contracts. We will now consider the findings of the report in detail.”