Five more aid projects under fire: Pergau controversy deepens as minister admits formula linked assistance to arms sales

AS THE Pergau Dam controversy intensified yesterday, it emerged that five other overseas aid projects, one of them in Malaysia, have been criticised by the National Audit Office, the public spending watchdog.

Details of the schemes, which received pounds 215m from the Overseas Development Administration (ODA), are tucked away in the appendix of a relatively obscure NAO report published in 1992. They provide evidence that the pounds 234m Pergau Dam contract in Malaysia was not the only occasion when the Government used aid to attract orders for exports, including arms.

Yesterday, the Government made the astonishing admission that it did originally agree to base any aid to Malaysia on a percentage of arms sales. In a parliamentary answer, Alastair Goodlad, the Foreign Office minister, said Lord Younger, the then Secretary of State for Defence, agreed to the use of such a formula in a protocol with Malaysia in March 1988. This formula was rescinded three months later.

Alan Williams, Labour MP for Swansea West, who obtained the answer, said: 'This destroys the Government's pretence. Not only was there a link between aid and arms sales - that link was even quantified in the March 1988 protocol.' Mr Williams accused Douglas Hurd, the Foreign Secretary, of being 'miserly with the truth' in Parliament. Last month, Mr Hurd said that the protocol included a reference to 'aid in support of non-military aspects'. He made no mention of the aid-arms percentage formula.

The 42-page NAO report was produced before the World Earth Summit in Rio de Janeiro, Brazil. In what could be a re-run of Pergau, its appendix shows the Government overruled ODA opposition and put political considerations first; and that money was spent on schemes of questionable aid merit. Four projects involved Balfour Beatty, the firm that is building Pergau.

The five other Pergau-type deals attacked by the NAO are:

Karachi Water. This Pakistan project cost pounds 335m, with pounds 8m coming from the ODA. Balfour Beatty acted as consultants. Work was due to begin in 1988 but at the time of the NAO report, it had not started.

Malaysia Rural Water Supply. This pounds 489m deal, including pounds 62m of ODA money, was signed in 1986, before Pergau and shortly after Malaysia declared an end to its official 'Buy British Last' policy. The huge project, entailing the installation of 134 water schemes nationwide, has been dogged by problems, said the NAO, caused mainly by lack of urgency on the part of the Malaysian authorities.

Victoria Dam. The ODA gave pounds 117m of aid to this Sri Lankan dam built by Balfour Beatty. The project 'suffered from a rushed planning stage and had not taken proper account of its likely consequences, in particular social and environmental problems,' the NAO said.

Samanalawewa Dam. Also in Sri Lanka and built by Balfour Beatty, this dam cost pounds 256m, including pounds 19m in aid. The ODA and Treasury, said the NAO, had 'reservations' about giving aid because Balfour Beatty had just built the Victoria Dam, which gave it an 'outstanding reference for securing further business'. Balfour Beatty, said the NAO, was the second largest user of the ODA's money and was receiving support for another dam project in Indonesia. The ODA and Treasury 'therefore questioned what additional advantage could be gained from further aid assistance'. They were overruled because 'it could lead to commercial and employment opportunities'.

Mini Hydro-Power Stations. These were built in the Philippines by Balfour Beatty at a cost of pounds 25m, with pounds 5m coming from the British taxpayer. While the ODA 'questioned the long-term developmental value . . . the Department of Trade and Industry also believed that although benefits were difficult to assess, long-term commercial business would arise'.

Start your day with The Independent, sign up for daily news emails
Life and Style
Fans line up at the AVNs, straining to capture a photo of their favourite star
life Tim Walker asks how much longer it can flesh out an existence
Life and Style
Every minute of every day, Twitter is awash with anger as we seek to let these organisations know precisely what we think of them
techWhen it comes to vitriol, no one on attracts our ire more than big businesses offering bad service
Professor David Nutt wants to change the way gravely ill patients are treated in Britain
people Why does a former Government tsar believe that mind-altering drugs have a place on prescription?
Norway’s ‘The Nordland Line – Minute by Minute, Season by Season’ continues the trend of slow TV
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Jonny Evans has pleaded not guilty to an FA charge for spitting at Papiss Cisse
Life and Style
Kate Moss will make a cameo appearance in David Walliams' The Boy in the Dress
The image released by the Salvation Army, using 'The Dress'
Liverpool defender Kolo Toure
football Defender could make history in the FA Cup, but African Cup of Nations win means he's already content
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Technical Presales Consultant - London - £65,000 OTE.

£65000 per annum: Ashdown Group: Technical Presales Engineer - central London ...

Recruitment Genius: Physiotherapist / Sports Therapist

£20000 - £50000 per annum: Recruitment Genius: A Physiotherapist / Sports Ther...

Recruitment Genius: Sales Executive / Advisor

£8 - £9 per hour: Recruitment Genius: Sales Executives / Advisors are required...

Recruitment Genius: Warehouse Operative

£14000 - £15000 per annum: Recruitment Genius: An opportunity has arisen for a...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable