Call to halt export insurance for bribes

A FORMER senior Treasury official has called for the Export Credit Guarantee Department to stop providing British companies with insurance cover for bribes paid to win export contracts.

In a paper submitted to the current review of the ECGD - which insures exports to risky markets such as China, Indonesia and Russia - Huw Evans, a former Treasury deputy secretary, criticises it for giving too much support to exports for which there is little hope the bills will ever be paid.

Mr Evans wrote: "The value of exports covered by ECGD includes commissions - including bribes - paid to intermediaries. There is a high level of corruption in many of ECGD's main markets." The UK has already signed up to an OECD agreement to end the tax deductibility of bribes, so the fact that the ECGD still provides cover for bribes is a clear anomaly.

Mr Evans says the department, which reports to the Department of Trade and Industry, is too vulnerable to lobbying of ministers by companies and ought to be turned into an independent agency. Writing in a personal capacity, he pointed out that the Government had taken a lead in reducing the burden of Third World debt that excessive ECGD export support had helped create in the first place.

Other mistakes he listed include sizeable export credits to Iraq in the years before the Gulf War, when it was clear these could never be repaid; support for arms sales to Indonesia; and credits for the controversial Pergau dam project in Malaysia.

As a result the department had a cumulative cash deficit of pounds 2.8bn by March 1998. Its budget for credits to the so-called "amber zone" of riskiest countries has grown by two-fifths between 1993/94 and 1997/98 - an increase for which Mr Evans says there is "no justification".

He concludes that the department should become an agency with a responsibility to explain controversial decisions in public. The paper says: "Such an arrangement would remove ministers, and officials responsible to them, from day-to-day decision making."

The results of the DTI review of the ECGD are due to be published by the end of March.