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Overseas development: How UK firms ripped off the Third World

THE INEFFICIENCIES caused by tied aid deals are well catalogued:

n In 1996 a study by the Treasury and Deloitte & Touche Consulting Group found that UK companies had overcharged recipients of British aid by as much as 50 per cent for shovels and hoes, by around 30 per cent for vehicle spares, 25 per cent for buses and 27 per cent for water pumps. The companies were not named but the report concluded that the Third World countries receiving the aid would have got considerably better value for money buying goods and services locally.

n An evaluation of 16 UK water projects in Nepal in 1996 concluded that UK consultants were more interested in building inappropriate infrastructure than dealing with local issues. The price of the project soared by 46 per cent. This meant three of the largest schemes were never finished and five were dropped altogether.

n In 1992 a UK programme to build a diesel power station in Indonesia resulted in chaos when UK companies supplied incompatible technologies and engines that turned out to be inefficient and expensive to maintain.

n In 1984, pounds 65m in aid was given to the Indian Government to purchase Westland Helicopters for offshore oil rigs. A National Audit Office report concluded the helicopters were provided to support an ailing company rather than tackle poverty in India. In 1993 India was forced to sell the helicopters for scrap for pounds 900,000.

n A health project backed by the Department for International Development (DFID) in Malawi was plagued by problems because it was forced to source goods in the UK. On more than one occasion pregnancy tests were purchased in the UK which had passed their sell-by date when they reached Malawi.

n An Overseas Development Administration (now DFID) report in 1990 found that tied aid led to problems such as inadequate testing by British companies prior to shipping, poor specifications, late arrival of goods, inappropriate technology, operating problems and lack of technical expertise on the ground.