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Mr. Menzies Campbell (North-East Fife): It will be a waste of time.
Mr. Foulkes: Well, as the right hon. and learned Gentleman knows, I am a helpful cove so I will try again. I must tell the hon. Member for Richmond Park (Dr. Tonge) that there was ample opportunity to table amendments in Committee. Indeed, she will recall that we did not use one of the sittings that we were allocated. We were willing to hold another sitting to deal with any amendments, but no one took up the opportunity. I assure her that all her concerns, which we share and understand, are adequately covered in the Bill. I hope that she will accept that assurance and not press her point.
An amendment containing provision for an annual report was tabled in Committee and my right hon. Friend Secretary of State dealt with it extremely well. She explained that the CDC will be required by the Bill to make an annual report to the Secretary of State, who is required to make an annual report to Parliament. That can, if the Opposition wish, be debated in Opposition time or the Government can make time to debate it. The hon. Member for South-West Devon said that it would not be debated as a matter of course, but there is no guarantee either that a CDC annual report would be debated as a matter of course because provision for that is not included in the amendment.
The Select Committee also has powers. It has an effective Chairman and its members know what they are talking about. The Committee can, if it wishes, call the Secretary of State, or myself, or officials before it to ask questions about the CDC and its investment policies.
6.45 pm
Mr. Bowen Wells (Hertford and Stortford):
I thank the Minister for his kind remarks. Can he confirm that as the Government will always hold the golden share unless Parliament decides otherwise, the Select Committee will always have the power to call Ministers and officials in front of it to explain the policy that the CDC is adopting?
Mr. Foulkes:
The hon. Gentleman has, as usual, gone straight to the point and grasped it. The Select Committee will be able to do that.
The hon. Member for South-West Devon again gave the hypothetical example he gave in Committee that the CDC might invest only in the top three listed companies in Kenya, India and Zimbabwe. That is not likely, not only for developmental reasons but for good investment reasons. Any organisation in its right mind would not have such a portfolio and that is a totally unlikely scenario.
The Government have carefully considered what the CDC's development role should be and how it should be complementary to the role of others. The CDC's aim is to maximise the creation and long-term growth of viable businesses in developing countries, especially the poorest countries, to achieve attractive returns for shareholders and to implement ethical best practices. Practical measures to implement those are entrenched in the CDC constitution.
The hon. Member for South-West Devon referred to my contribution in Committee in which I described the relevant six elements. Then he took one and said that it was not enough. He took another and said that that one was not enough. He went through all six, but he failed to understand that it is the combination of all of them that will work. For example, the golden share will give the necessary rights over changes that a share of 25 per cent. might not be able to block. We are protected by the golden share, the investment policy and the business principles.
The hon. Member for South-West Devon also raised the question of whether the sectors in which the CDC invested would change over time. They are already changing to take account of the CDC's present obligations. For example, in India, the CDC has invested in the first private sector internet access provider. That will help business access information and generate new business opportunities related to the internet. In Africa, the CDC has invested in the expansion of cellular telecoms, which have a significant effect on business efficiency.
The CDC is investing in new areas, helping development and getting a good return, but it is not ignoring traditional sectors. For example, in Belize--a country that the Opposition know well, for reasons I will not go into--CDC Industries is in the process of completing a $40 million investment in the citrus industry. In Bolivia, the CDC has invested £3.8 million in Banco Sol, a micro-finance institution which finances 85,000 micro-enterprises in Bolivia. The CDC is helping development and getting a good return.
The hon. Member for South-West Devon also raised the question of the two directors and said, in a glib and superficial way, that two would not form a majority over 11. Even I can work that out. However, he did not say that the business principles committee will have four members and the Secretary of State's two nominees must be on it. The board of directors cannot change business
principles unless a majority of the business principles committee--at least three--agree. If the Secretary of State's nominees do not agree, a majority of three cannot be achieved. Even the hon. Gentleman can work that out.
I can tell my hon. Friend the Member for Linlithgow (Mr. Dalyell) that we do not envisage changing the role of the golden share or abandoning it. It gives power to stop change. The occasions that he mentioned happened under a Conservative Government. We are determined to use the golden share if the necessity arises, but we do not think that it will, because the CDC board that we envisage will want to operate on the investment and business principles that we have agreed with it.
Finally, on amendment No. 1, we can understand why it has been tabled, but it is not necessary. The mechanisms that we have set out will provide the proper protection. Parliament has a role. Unless Parliament agrees otherwise, the CDC is required to have an investment policy designed to achieve the objective of maximising both the creation of and the long-term growth of viable businesses in developing countries and of achieving attractive returns for shareholders. We have that power at the moment.
No change can be made to the investment policy, for example, without the approval of the majority of ordinary shareholders and the consent of the special shareholder, the Secretary of State. The investment policy therefore cannot be changed without her approval.
The method for changing the business principles is different, because the issues raised are different. Change to the business principles and policies can be made only by a majority of the board which, as I said earlier, is to include at least three of the four members of the business principles committee. The hon. Member for South-West Devon talked about belt and braces, and rather unkindly said that I am the sort of person who needs them. The Bill provides for two sets of both--or even three, given what I said to my hon. Friend the Member for Linlithgow. The matters that have been raised are adequately covered.
Dr. Tonge:
I am still worried that the CDC's--and the Minister's--trousers will fall down. The business principles are key to the success of the whole operation, yet they are less controlled than the investment policy. My earlier point was that it should be the other way around.
Mr. Foulkes:
I should certainly be acutely embarrassed if my trousers fell down. The CDC would be embarrassed if anything went wrong with the links between its investment policy and business principles. However, I urge the hon. Lady to consider the matter again. The investment policy is far more important, in the context about which she is worried, than the business principles.
Dr. Tonge:
The Bill states clearly that the investment policy is determined by the business principles, whereas the old CDC adopted a process of additionality.
Mr. Foulkes:
The matter has been explained, in Committee and again today. Of course all the elements are important in different ways, but they are deeply entrenched. We expect CDC's investments in all sectors to make a contribution to development and to achieve attractive returns. That will give us the best of both worlds, and I urge
Mr. Streeter:
The Minister is being uncharacteristically complacent. His belts do not fit and his braces are slack. The Bill contains a real risk that the developmental objectives of the company will be lost. The 50 years of careful and patient investment by the CDC and this country's taxpayers are being placed at risk by the Bill. The Minister is too complacent to accept that, and I urge the House to vote for the new clause.
Question put, That the clause be read a Second time:--
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