Files on Pergau project withheld

SIX TOP SECRET files on the Pergau dam project are being withheld from public scrutiny, it was revealed last night.

Mark Lennox-Boyd, the junior foreign minister, said in a parliamentary answer to Alan Williams, MP for Swansea West, that the files were held at the Foreign Office in London.

They are marked 'not for NAO Eyes', a reference to the National Audit Office, the public spending watchdog.

It was the NAO that exposed the waste of pounds 234m of overseas aid on the project, which was apparently linked to the sale of exports, including arms, and the building of a special forces base in Malaysia.

The refusal to release the documents will fuel suspicion that Pergau was more than an ordinary aid project.

MPs have used parliamentary privilege to allege that bribes of pounds 35m were paid to local officials and also to members of the Malaysian royal family.

Attention is also focusing on the Government's behaviour in the case of Lorrain Osman, a Malaysian banker who claimed he was being persecuted by the Malaysian regime.

Two former Foreign Office ministers, Lord Caithness and Francis Maude, signed public interest immunity certificates in 1990 and 1992 to prevent the use in court of telexes between the Malaysian, British and Hong Kong governments, which Mr Osman's lawyers claimed were helpful to his case.

Mr Osman was chairman of the Hong Kong branch of Bank Bumiputra, the government-owned Malaysian bank.

Following a scandal at the bank, he was held, pending extradition to Hong Kong, in London. After spending more than seven years fighting extradition - he was Britain's longest ever remand prisoner - he was sent to Hong Kong in 1992 and was sentenced to one year's imprisonment.

The Government also disclosed it would not be publishing the crucial dissenting opinion about the granting of aid to Pergau from the then permanent secretary at the Overseas Development Administration to ministers. Instead, Mr Lennox-Boyd said the Foreign Office was preparing a 'full memorandum' for the Foreign Affairs Select Committee which is now looking into Pergau.

At a private meeting yesterday, the committee agreed to call Baroness Chalker, the overseas development minister and Douglas Hurd, the Foreign Secretary. Baroness Chalker is known to have shared her officials' opposition to the project.