Overseas development: Byers' misgivings over controversial dam revealed

STEPHEN BYERS, the Secretary of State for Trade and Industry, was embroiled in fresh controversy over British funding of Turkey's Ilisu Dam yesterday when it emerged he had been highly critical of a department he now heads for its involvement in similar schemes.

Mr Byers, in charge of the Export Credits Guarantee Department, is expected to give the go-ahead to the dam project by authorising pounds 200m worth of insurance to the British companies taking part. But when he was in opposition, he raised serious concerns about potential conflicts of interest in the department, pointing out that it was closely advised by the very companies that then benefited from the ECGD's financial support.

Last week The Independent on Sunday revealed that the Prime Minister wants British firms to press ahead with building the Ilisu Dam, despite international opposition, with the deal underwritten by the ECGD.

Mr Byers is being urged to provide pounds 200m of backing to a consortium led by Balfour Beatty in the form of an export credit guarantee. This means that the consortium is certain to be paid even if the Turkish government defaults.

But the Secretary of State is understood to have grave reservations over the dam which, if built, would drive thousands of Kurds from their homes in the south-east of Turkey. His criticism of the credits guarantee system has been seized on by opponents of the dam who say its construction would chiefly benefit large corporations.

Balfour Beatty was one of those companies represented on the 10-strong ECGD advisory council in 1995 when Mr Byers raised the issue. Another was the Weir Group. Viscount Weir, a co-founder of the Weir Group, an engineering company, is also chairman of BICC plc, the parent company of Balfour Beatty.

At the time, official figures showed Balfour Beatty had been involved in three ECGD contracts since joining the advisory council, while the Weir Group had picked up two. Neither company currently has representatives on the ECGD advisory council.

Critics of the Ilisu Dam on the river Tigris, near Turkey's border with Syria and Iraq, say it will drown one of the world's oldest towns and risk starting a new war in the Middle East.

When Mr Byers queried the structure of the ECGD in 1995, he stressed he was not suggesting any wrongdoing by any of the council members. But he said the overlap between companies which benefited from the work of the ECGD and those with members on the advisory committee "must be a cause for concern".

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