The project by Biwater to improve the drinking-water supply in 25 towns in Thailand is to be examined by the House of Commons Foreign Affairs Select Committee as part of its inquiry into overseas aid, including the Pergau dam 'aid for arms' affair.
Today, the committee is to question executives from Balfour Beatty and GEC, which won contracts to build the dam after Malaysia was promised pounds 234m of British aid.
Biwater, a privately owned company which donated pounds 73,000 to the Tory party between 1979 and 1992, has been one of the top four beneficiaries of Aid and Trade Provision (ATP) since it was introduced in 1978. Adrian White, Biwater's chairman and co-owner, is a member of the Overseas Projects Board, a Whitehall advisory group which influences aid and trade policy.
Both the Overseas Development Agency and Biwater refused to give any details of the cost or the amount of aid being sought. Biwater was previously negotiating to win a pounds 1.2bn water and irrigation project in Thailand in 1990 for which the ODA was reported to have offered pounds 350m in aid.
Three members of the foreign affairs committee told the Independent that the Biwater projects will be examined as part of the Pergau inquiry which is investigating whether the Government used aid for construction projects as a sweetener to secure orders for arms.
The committee is also investigating the use of the ATP budget - administered by the Department of Trade and Industry and the ODA. Five companies, including Biwater, have received 43 per cent of ATP's pounds 1.3bn. Three were generous supporters of the Tory party.
The DTI has approved aid for the Thai project and the ODA has agreed, even though it would not qualify under new rules announced last June by Baroness Chalker, the Minister for Overseas Development. These stated that funds should only support projects in poorer developing countries with an income below dollars 700, or pounds 450, per head of population. Thailand's income is dollars 1,570, about pounds 1,000.
The Independent has agreed to send the committee details of previous Biwater schemes. In 1984 a pounds 130m water-supply contract in Nigeria involving Biwater, which attracted dollars 141m (pounds 97m) in loans at very low interest rates from the British government, was criticised by a Nigerian judicial inquiry.
In his report, the judge said a payment of dollars 22m (pounds 15m) from the state water company had been made to Biwater without adequate bills to account for the work.
A spokesman for Biwater Group told the Independent: 'The judicial review and the critical comments were of the Nigerian state water board. Biwater was only called as a witness.
'Regarding the dollars 22m. There were misunderstandings regarding the post-handling charges that the cost of a piece of equipment was valued at. Biwater was fully exonerated by the (Nigerian) government when they reviewed the findings of the judicial review.'
The National Audit Office was critical of another water-supply project in Malaysia in 1986 which received a then record amount of pounds 60m from ATP.
Tom Clarke, Labour's overseas development spokesman, said: 'Like Pergau, this whole story raises questions about the use or abuse of Britain's overseas aid
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