Aid-and-trade warning issued nine years ago

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THE ACADEMIC whose memorandum supplied MPs with ammunition against Baroness Chalker yesterday has been warning for a decade of a danger of corruption and abuse inherent in linking trade deals to the overseas aid programme.

Professor John Toye, director of the Institute of Development Studies at Sussex University, first submitted a memorandum in 1985 to the Foreign Affairs Select Committee, after studying several deals under the Aid and Trade Provision (ATP).

The committee published a report in 1986-87, agreeing that the scheme was open to abuse and that aid should be shifted away from the programme. But nothing was done, and the Pergau negotiations began soon after. Professor Toye had studied six projects funded for the Overseas Development Administration in which the ATP was deployed.

He argued that the programme could not be simultaneously developmental and commercial, using the analogy that you cannot use the same fork to dig the garden and eat your supper.

The same committee, investigating again this year, wanted to know whether Professor Toye thought the situation had been 'cleaned up', and he was asked to submit another memorandum. He sent it the report which was quoted yesterday, and last week sent a copy of his evidence to Lady Chalker in advance of her appearance before the committee.

His memorandum included, as part of its evidence, a case from the early 1980s which he believes should have led to the rules being changed long before Pergau.

A British company, Willowbrook, supplied 50 buses to Zambia, but within four years only four remained operational. Willowbrook went into liquidation in 1984. It emerged that the company had made a contribution of pounds 50,000 to the Conservative Party, a fact only uncovered in the late 1980s by a television documentary.

Professor Toye's calculation that 55 per cent of the pounds 90m worth of annual contracts awarded under the ATP refers to the years up to 1990. Pergau, being so large, has altered the figures. He suggests a withdrawal by the UK from ATP contracts, either by negotiating with other countries who run similar schemes, or unilaterally.