Leading Article: A dam waste of money

Share
Related Topics
MOST TAXPAYERS probably imagine that our small overseas aid budget of slightly less than pounds 2bn a year goes to very poor countries, where children are starving or suffering from disease, where clean water or adequate food production are lacking. They may be somewhat startled to discover that any money at all goes to Malaysia, a country that enjoys an annual growth rate of about 8 per cent, leads the world in producing electronic equipment and is well on the way to joining the South-East Asian 'economic tigers'. Far from being a candidate for compassion, Malaysia is frequently held up as an example of a dynamic, efficient, low-cost competitor that will put us out of work unless we cheerfully put in extra hours of labour, cease nagging for higher wages and stop fussing about health, safety and the environment.

So why did the British government pay pounds 234m from the overseas aid budget towards the cost of a pounds 400m scheme to build a hydro-electric power station and dam in Pergau, northern Malaysia? The bare facts are as follows. George (now Lord) Younger, then Secretary of State for Defence, agreed an outline deal in April 1988 that British firms would sell arms, including Tornado jets, to Malaysia. Margaret Thatcher visited Kuala Lumpur to sign the agreement with the Malaysian Prime Minister, Mahathir Mohamad, in September 1988. A few months later, the British government offered the Pergau aid package to the Malaysian government. The money went through early in 1991. Though Labour always smelt a rat, none of this occasioned much comment until the National Audit Office looked at the use of the aid money last year. It concluded that Pergau was a waste.

The suspicion is that Lord Younger or Baroness Thatcher or both told the Malaysians that, if they bought British arms, they would get the aid. The Economist reported last week that the amount of aid was even fixed as a certain percentage of the value of the arms deal. This would be of doubtful legality and of even more doubtful morality. Lady Thatcher has denied it. Lord Younger told the Independent last month however, that 'a verbal undertaking was given by somebody - not myself - to link the aid to the defence contract'. Whatever the reasons, the aid went through - with John Major, by then Prime Minister, giving the final go-ahead at a cabinet meeting in February 1991 - in the face of extraordinary behind-the-scenes opposition from civil servants and some ministers, including (as we report today) Chris Patten, at one time the overseas development minister.

The opposition was based on the view that, even if the people of Malaysia were deserving of British aid, it was far from clear that the dam would do them much good. The World Bank thought they would be better off with gas-fired electricity, providing cheaper power. The most senior civil servant at the British Overseas Development Administration, according to the audit office report, advised that giving money for Pergau was not consistent with using funds 'in a prudent and economic manner'. No member of the British government seems, at any stage, to have bothered arguing that the project had merit. Douglas Hurd, the Foreign Secretary, has merely observed that to cancel it 'would have been damaging to British companies and British exports'. Malaysia seems to have no corresponding sensitivities, even though it exports twice as much to Britain as we export to it. For example, it puts British and Hong Kong citizens to death for drug offences, despite appeals for clemency. It cancelled the order for Tornado jets. Though it put in another order for Hawk aircraft, no deliveries or payments have yet been made.

All this suggests that, once more, ministers have been bending the rules as they did when they sold arms to Iraq, this time adding a cavalier disregard for the proper use of public money to their usual disregard for assurances given to Parliament, and winning no particular advantage for Britain at the end of it all. It is a measure of our declining expectations that we are not greatly surprised. Ministers, it seems, will go to almost any lengths to placate Malaysia. What of the mysterious case of Lorrain Osman, a Hong Kong-based employee of a Malaysian state-owned bank? He was arrested in London, on suspicion of making unauthorised loans to a Hong Kong company called Carrian. A Malaysian minister was both a director of the bank and a major shareholder in Carrian. Why was Mr Osman held on remand in Pentonville prison for seven years (a record)? Is it possible, as the Independent suggested last week, that the British government was once more obliging Malaysian ministers by keeping Mr Osman out of Hong Kong where he might spill some unwelcome beans? It is time for ministers to give a full account of their relations with Dr Mahathir and his regime.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Tradewind Recruitment: Year 3 Primary Teacher

£100 - £150 per day: Tradewind Recruitment: Year 3 Teacher Birmingham Jan 2015...

Ashdown Group: Lead Web Developer (ASP.NET, C#) - City of London

£45000 - £50000 per annum + Excellent benefits: Ashdown Group: Lead Web Develo...

Tradewind Recruitment: Key Stage 2 Teacher Required in Grays

£21000 - £40000 per annum + Negotiable: Tradewind Recruitment: Key Stage 2 tea...

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Read Next
Kylie has helped to boost viewing figures for the talent show  

When an Aussie calls you a ‘bastard’, you know you’ve arrived

Howard Jacobson
The number of schools converting to academies in the primary sector has now overtaken those in the secondary sector – 2,299 to 1,884 (Getty)  

In its headlong rush to make a profit, our education system is in danger of ignoring its main purpose

Janet Street-Porter
Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee