Clique makes millions from aid: Five companies led by Tory loyalists pick up half the cash - System hurts countries most in need

A HANDFUL of leading building and engineering companies with close links to the Government and the Conservative Party have been the main beneficiaries of Britain's industrial overseas aid programme, picking up nearly half of the pounds 1.4bn dispensed since 1978.

Directors of five companies sit on the little known Whitehall committees which form and direct overseas aid policy on large construction projects.

The pattern of links between these companies and the Government aid machine adds weight to claims by pressure groups that countries wanting British aid are helped if they buy British goods in return - arms in particular. A breakdown of recent overseas aid payments shows that countries that can afford to buy British are far more likely to be beneficiaries than the poorest nations, in most need of the aid.

Labour last night called for an inquiry into how appointments to the trade board and committees are made and it will raise the 'scandalous' aid issue in the Commons. Tom Clarke, the party's overseas aid spokesman, said: 'There are too many links with the arms industry and the Tory party for comfort. A full inquiry should be mounted into the way taxpayers' money has been used through the aid budget for the benefit of a small number of people.'

The companies with an inside track on aid are led by Balfour Beatty, the joint contractor on the Pergau dam project in Malaysia. Its parent company, BICC, has since 1980 given pounds 90,000 to Aims for Industry, British United Industrialists and the Economic League - all right-wing groups closely allied to the Tory party.

Over the same period, Balfour Beatty received 21 per cent - nearly pounds 300m - of the Overseas Development Administration's Aid and Trade Provision, which is used to help win future British export orders.

The select group of companies also includes GEC, Amec, Biwater and Davy. Among them, these five have taken 42.5 per cent of the pounds 1.37bn aid and trade budget since 1978. During that period, GEC has given at least pounds 100,000 to the Tory party.

All five companies are represented on two powerful Government policy groups, the British Overseas Trade Board and the Overseas Projects Board. The Duke of Kent, a director of BICC, Balfour Beatty's parent company, is vice-chairman of the trade board. A spokesman for the Duke said yesterday: 'He has no comment to make.'

Between them, the trade and projects boards determine Britain's exports and aid and trade policy. The project board's job, says an official circular, is to provide 'expert advice to DTI (Department of Trade and Industry) ministers and their officials on issues affecting UK industry's ability to compete effectively for major project business overseas.'

Its terms of reference go further: 'To provide a means of achieving closer communication between industry and government in respect of major project business; to give industry a voice in the formulation of Government policy in relation to major overseas projects; to advise the projects and export policy division of the DTI on the provision of assistance under . . . the Aid and Trade Provision.'

Its chairman is Sir Alan Cockshaw, the head of Amec. He is also a member of the overseas trade board.

Administration of the aid and trade scheme has been criticised by pressure groups. They maintain the money has been misdirected away from the poorest countries to those which can afford to buy our goods, especially our military weapons.

Andrew Lees, campaigns director for Friends of the Earth, said that the aid and trade scheme 'operates like a cosy cartel or private club whose members benefit from taxpayers' subsidies which, while lucrative to those companies, are actually of questionable aid and economic benefit'.

Michael Meacher, Labour's open government spokesman, said that after criticisms of the honours system and the way appointments to quangos were made, this was a new discovery. 'There has not been much evidence of patronage through companies. The fact that many of these contracts are often awarded without competition makes it doubly scandalous.'

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