Bemused MPs ponder pounds 83m exports write-off

ONE OF the biggest write-offs of public money was laid before incredulous MPs in all its glory yesterday.

Members of the Commons Public Accounts Committee listened with a mixture of wonder, bewilderment and, at times, anger as Brian Willott, chief executive of the Government's Export Credits Guarantee Department, tried to explain how exporters had been overpaid by at least pounds 83m.

The words 'at least' are important because Mr Willott admitted he did not know the final bill. Nor, it seems, will he ever know. One reason for his ignorance, he disclosed, is that, as a matter of policy, his staff destroy all individual case files that lie dormant for two years. This happened routinely despite a law which states that legal claims can be brought within six years in England and five in Scotland.

If that was not bad enough, it was the way the mistakes were made that left MPs gasping. Simply put, it was a case of the left hand not knowing what the right was doing - or, in this case, the Cardiff ECGD office operating to different criteria from their colleagues in London. Both offices insured losses incurred by exporters but Cardiff was more generous in its payments than London, which stuck to the contractual entitlement.

The bulk of the pounds 83m was paid in the past six years, with exporters to Nigeria being the main beneficiaries. Some pounds 56m went to a fortunate 800 United Kingdom companies dealing with that country.

It was only a review of the department's information technology systems that revealed the discrepancy. Legal opinion was sought, but the Government, in the shape of Michael Heseltine, President of the Board of Trade, decided that to try to recover the money would prove too costly and difficult.

MPs wanted to know how the error - described by Robert Sheldon, chairman of the committee as 'a very sorry story' - came to arise and who, exactly, was responsible. Mr Willott, who took over at ECGD in 1992, said that disciplinary proceedings may be brought against one person. To the confusion of MPs, he later said that a number of people may be brought to book.

He would not name them publicly, say where they worked or what they did. He also refused to concede that a long time had elapsed since the error was first discovered in August 1992, and the institution of any disciplinary measures.

Asked if the Cardiff and London offices had not been handled by the same internal auditor, who should have discovered what was going on, Mr Willott replied they were run separately. The head of internal audit, whom he did not name, was a link between the two but he was no longer with ECGD.

As for legal advice, ECGD has now dispensed with the services of the DTI's own in-house solicitors, preferring to hire outside counsel. Again, though, the DTI's people were not held responsible.

After an hour or so of Whitehall obfuscation at its best, Michael Hall, MP for Warrington South, said that he did not feel as though the committee was being told the full story. There was much nodding around the room, but not, notably, from Mr Willott.