Report criticises Pergau

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THE TOP official who protested that the Pergau dam scheme in Malaysia was 'an abuse' of the British overseas aid programme will receive ringing public endorsement from a powerful Commons committee later this week.

In a rare display of support for a Government official, the cross-party Public Accounts Committee will applaud the behaviour of Sir Tim Lankester, former Permanent Secretary of the Overseas Development Administration (ODA), and question the reasoning of his political masters, who included Lady Thatcher when Prime Minister and the present Foreign Secretary, Douglas Hurd.

On Wednesday, the committee, which monitors the spending of public money, will publish its long-awaited report into the awarding of pounds 234m in aid for the Pergau dam. Normally the PAC condemns civil servants for being lax with the public purse strings.

But on this occasion, said a committee insider, it will have nothing but praise for Sir Tim, who currently heads the Department of Education and who only sanctioned the Pergau money after asking Mr Hurd for a direct order.

Sir Tim, who said to Mr Hurd in 1991 that the project was expensive and poor value for money but was overruled, told the committee in January he thought Pergau was 'an abuse of the aid programme'.

Sources close to the committee predicted its report will add to the Government's difficulties over the aid grant, already condemned as unnecessary and a waste by the National Audit Office, the public spending watchdog.

While the committee's report will not examine whether aid was used as a sweetener to persuade the Malaysians to buy British arms, it will focus on the objections by the ODA to so much of the aid and trade provision budget being swallowed by the dam.

The report was discussed at a two-hour evening session of the committee last week, with Tory members keen to try to avoid explicit criticism of Mr Major or Mr Hurd. They were successful, but the report is so laudatory of Sir Tim and the ODA, which resisted the expenditure, that strong implied censure was inevitable. One source said it was one of the 'hardest hitting' of such documents he could remember.

At the same time the Tories were more relaxed about attacking Mrs Thatcher and were anxious to portray Mr Major as having had no choice but to ratify, in April 1991, her earlier decision to give aid for Pergau.

One of the crucial sections in the report deals with the way the assessment of the project was rushed through ahead of a visit to London and a private meeting with Mrs Thatcher by Dr Mahathir Mohamad, the Malaysian Prime Minister. Ministers have always insisted that to go back on Mrs Thatcher's verbal promise would have caused enormous loss of face.

The committee makes the point that alternatives were not explored, that gas-fired power was cheaper than hydro-electric and that Pergau will add pounds 100m to Malaysian electricity bills. Questions are also raised over the apparent lack of scrutiny of the sudden leap in the project's price by more than pounds 80m.

Wednesday's report also asks whether it was satisfactory for the department of Trade and Industry to have so much influence over the aid allocation process, with DTI officials suggesting possible schemes to the ODA.

Reference is also made to the refusal of the Government to hand over documents helpful for the work of the NAO and the PAC - something all the members, even Tory ones, regard as sacrosanct.

The report will cap an awkward couple of days for the Government, with executives from Balfour Beatty and Cementation, the two companies building the dam, and GEC, which sold arms to Malaysia, being quizzed by the Commons Foreign Affairs committee on Tuesday.