The Government's Export Credit Guarantee Department lost pounds 24.4m last year as a direct result of an order from ministers to insure deals with Russia that would normally have been rejected as too risky.
As a result, the ECGD has insisted on separating out in its accounts the effects of politically motivated export credit decisions that it would not have made on its own.
The ECGD has won agreement to publish a separate trading account for "guarantees issued, on the written instruction of ministers, which ECGD's accounting officer had advised did not meet normal underwriting criteria."
The accounting innovation, which makes the costs of political decisions transparent for the first time, is with the full agreement of John Bourn, the Comptroller and Auditor General.
In a report attached to the ECGD accounts, Mr Bourn says that Brian Willott, the ECGD chief executive, had advised ministers that written instructions for the Russian guarantees were necessary.
Under ministerial instruction, $800m (pounds 523m) of export credit and investment insurance facilities have been made available to Russia, a move announced in 1992. But the first three deals, worth pounds 167m, did not come to fruition until the last financial year.
Another two deals worth pounds 20m have been agreed since the year end and more are expected. Ministers have also announced a pounds 50m export guarantee programme for Jordan which will come into the same category.
The separate account shows that the ECGD received a premium of pounds 16.2m to insure the pounds 167m Russian deals. But using its standard assessment of the riskiness of dealing with Russia, the ECGD made an immediate provision of pounds 39.8m to cover the likelihood that it will be forced to pay up on the insurance - representing almost a quarter of the contract total.
This resulted in a loss after administration and other expenses of pounds 24.4m.Reuse content