Examination of Witnesses (Questions 100
- 119)
WEDNESDAY 28 JUNE 2000
SIR JOHN
VEREKER KCB, DR
MUKESH KAPILA,
MR DAVID
SANDS SMITH,
MR PETER
BERRY AND
MR ALAN
MATTHEWS
100. I understand that. It seems odd you set
up a system under which you would do that. You then chose not
to do that and yet on one occasion you chose to do it in order
to test the market. There seems an inconsistency in your action.
(Sir John Vereker) I agree. The puzzling thing is
why we did it on one occasion. I draw attention to the arrangement
we now have which is with a single contract for these broking
services. We have implicitly concluded it is really not sensible
to have two brokers working for us in competition. We have a competition
which is the best broker. The confusing thing is this broker is
two people but it is a single contract[6].
101. You appear to have chosen this on the basis
of one test of the market on one occasion.
(Sir John Vereker) No, I think it is just the most
straightforward way of doing it.
(Dr Kapila) The currently active contract was tendered
for in the normal way we do these things. There is a tender, people
are allowed to bid, an assessment is made, and so on.
102. Still at five per cent and you are still
going to—
(Dr Kapila) The five per cent, yes, that is same.
(Sir John Vereker) We do not want to run a competition
every time unnecessarily. That would be laborious.
103. Can we go to Paragraph 3.12 at Page 41
of the Report. I understand that on one occasion when you visited
the project you did discover there was some unspent grant which
presumably has now been recovered, £16,000 worth. What guarantee
can you give us that there are not any other unspent grants lying
around that have not yet been recovered?
(Sir John Vereker) Every time that we issue a grant
agreement it is a condition that there is a project completion
report provided to us at the end by the entity, agency or organisation
concerned which requires an accounting of the grants we have given
them. If there is any unspent amount it will have to be returned
to us.
104. You have had all those reports back?
(Sir John Vereker) As to 93 per cent, as I say when
I checked this morning, and some of them are still ongoing. I
can assure the Committee I am very confident that if we give grants
for specified purposes to these organisations and there are unspent
balances we will get them back, yes.
105. Can we turn then to paragraph 4.4, and
we have already discussed this at quite some length but I have
one or two further questions to ask about this question of the
accounts and why the money was left. We are told that the balance
at the month end did not fall at any point below £2.7, do
you have any feel for what the average balance was in these accounts
all put together?
(Sir John Vereker) I think the Crown Agents may be
able to give you some help on this.
106. Do you know the answer?
(Sir John Vereker) I do not know the answer. Do you
know, Mr Berry?
(Mr Berry) There is a figure of £2.2 million
as an average balance, Mr Rendel.
107. In fact the month end figure—
(Mr Berry)—happened to be higher.
108. Every single month end figure was higher
than the average balance altogether. That sounds extraordinarily
unlikely, I am not saying it is impossible.
(Mr Berry) It does sound extraordinarily unlikely.
109. Extraordinarily unlikely.
(Mr Berry) It is nevertheless possible.
110. It is possible and you are confident of
that?
(Mr Berry) Yes.
111. Okay. According to paragraph 4.5, figure
11, there were some times when it took some time to get a balance
returned, unused balance returned, and we are told by the NAO
report just at the end of 4.4 that you are now taking steps to
make the appropriate adjustments to make sure you get these back
rather quickly. Could you tell us a bit more what those steps
are?
(Sir John Vereker) Yes. I think the technology of
banking is helping us here. Crown Agents will speak for themselves
but CAFSL—Crown Agents Financial Services Limited—are
creating an online system which will enable us to monitor accounts
much more closely. I have had a discussion also with my finance
director about whether in the light of this report, and the concerns
expressed in it, even though I am still rather robust on the need
for liquidity in the system, we might not be able to reduce the
level of balances if we ran with fewer accounts. It is not crystal
clear to me, notwithstanding that these were all very different
purposes, since they were all at CAFSL, why it was necessary to
keep the accounts distinct, therefore probably have higher balances.
Although I am not telling the Committee we have done this, I am
telling the Committee we are actively considering whether we might
not on a future occasion be able to run with fewer accounts and
put the levels down.
Mr Rendel: One final question. Later on in paragraphs
4.16 and 4.17 you talk about what happens to some of your equipment
at the end of the stage when perhaps it is no longer needed. Obviously
you decided to give some away and some you decided to sell for
some reason. It would be interesting to know how you make that
difference, and in particular how are you going to deal with the
new resource accounting that is now being introduced? Clearly
some of the resources which you purchased in order to provide
emergency aid are immediately used up, given away to other organisations
or whatever, some remain within your own control. Some will end
up then being given away, some will end up being sold. Have you
decided how you are going to account for all that under resource
accounting?
Mr Steinberg
112. No!
(Sir John Vereker) I think that is a terribly unfair
question from the Public Accounts Committee. In our resource accounts
the treatment of capital assets provided under the programme is
different from capital assets on the Department's account. I need
my finance director here to answer your question and I am very
happy to get him to answer it.
Mr Rendel
113. Perhaps he can send a note in afterwards[7].
(Sir John Vereker) All I can tell you
about the equipment referred to in paragraph 4.17 is that we did
a full physical audit of all this equipment in September 1999
and took what I believe to be a rational decision about the disposal,
and we will have proper records of that. I am very happy to drop
you a line about the treatment for resource accounting purposes.
I believe that it is not affected by it but I will want to check
that.
Chairman: We cannot wait to see it. Mr Alan
Williams?
Mr Williams
114. I think nearly all the detailed questions
have been asked, just one or two broad brush questions, if I may.
Like my colleagues I accept the extraordinary difficulties of
the situation you are working in. In September 1998 I heard the
United Nations Commissioner at a Non Governmental Conference in
Washington deploring the slow response there was from some member
countries at that stage. Looking back, what would you say is the
most avoidable mistake perhaps we made? When I say "mistake"
I do not mean this in a condemnatory sense, we are looking to
the future and things that can be avoided, we are not looking
for fall guys or things in the past. What is the thing you wish
perhaps you had done differently? I do not know who would be the
appropriate person to answer that. Sir John, shall we start with
you?
(Sir John Vereker) I need to think about that just
for a second, Mr Williams.
115. Of course.
(Sir John Vereker) Looking back on it, the hardest
period for us was the early period when it was very unclear what
was going to happen in terms of the movement of population and
very unclear who was going to deal with it. What we have not talked
about much this afternoon is this question of who was going to
be responsible. With the advantage of hindsight, I would want
the international system to be a little bit clearer about who
does what. This is a constant endeavour on the part of the Department,
and Dr Kapila in particular, to ensure that the United Nations
system, the Office of Co-ordination of Humanitarian Affairs, the
UN High Commissioner for Refugees, the European Commission's ECHO
Humanitarian Organisation and bilaterals such as ourselves are
properly prepared and properly communicating. In the early days
of this crisis the system was—I have used the word before
and I am not ashamed to repeat it—overwhelmed. We were basically
it for a while. I think looking back on it we want to have a more
joined up international system. I would like to ask Dr Kapila
what he thinks because he and I lived through this for 76 days
without going home. What did you think?
(Dr Kapila) I think, to add to what Sir John said,
reflecting back on the amount of energy and effort we had to put
in into making assessments, we were constantly trying to work
out what was happening and the significance of what was happening.
I am speaking here on the humanitarian side. In other words, where
were the people, how many people were inside Kosovo, was there
or was there not substantial numbers internally displaced and
so on. It seemed to me, certainly, considering the number of other
Governments and number of other organisations that must surely
also have been engaging on the same question, we were not as good
as we could have been collectively, internationally, to have some
type of more authoritative centralised assessment of these types
of questions. If you achieve that you would at least have a common
basis on which to work.
116. Yes.
(Dr Kapila) If you cannot achieve that then clearly
you have fragmentation of response. Subsequent to that we are
putting quite a lot of effort in our dialogue with the UN system
with both the UN Secretariat in New York on the political side
and in Geneva on the humanitarian side to set up basically more
information technology based exchange systems. There I think technology
will also probably help us in the months ahead.
117. In fact, you take me where I was going
next. It is very helpful because it does follow logically on.
Looking at the list of organisations involved—bear in mind
you were being flooded by events, with movement that one anticipated
of the population in places where they were not anticipating—you
had this large number of organisations and the impression which
comes over is that co-ordination was not the strongest point of
the Allies collective response. There must therefore have been
duplication and a degree of wastefulness and lack of prioritisation
of effort. Is that being too condemnatory?
(Sir John Vereker) Of course it was not perfect, Mr
Williams.
118. No one expects that.
(Sir John Vereker) But it was not quite as bad as
that and looking back on it I think the reason was that a lot
of delivery capacity in the early days was military. If you glance
at the picture on the front of the NAO Report this is, I believe,
the Blace camp in Northern Macedonia. This is a camp. You are
looking at DfID supplied tents erected by the British military.
They are drinking water from DfID-supplied bowsers, probably operated
by the British military. They are using latrines dug by the British
military. They are eating bread baked in a bakery funded by DfID,
maybe the military did not do that, but maybe the initial ration
packs came from the military. What I am saying is that co-ordination
was very much who had the capacity on the ground for labour and
in the early days our colleagues, the contractors in ELMT, provided
the systems and supplies and all that but the actual labour, putting
up the camp in the case of Blace, was done by the British MoD,
by KFOR, and in other camps it was done by others. The co-ordination
therefore was not quite that bad. It was a little bit earlier
it fell down. Where it really fell down, as we all remember, was
where people were trapped on the border of Macedonia and it was
raining and it was awful. We could not get them across and Milosevic
would not let them back. We simply did not know what to do. It
was dreadful.
119. It sounds rather strange to read in black
and white that the Memorandum of Understanding with each of the
air charter companies had been allowed to lapse in December 1997
when it was so apparent that something major was about to happen,
not necessarily identifying the scale of it. How on earth could
we have allowed that to happen?
(Sir John Vereker) Again, Mr Williams, I am not excusing
ourselves. I think it would have been better if it had not. But
we did at that time not expect that we would be again involved
in direct airlift operations of the kind we had run in and out
of Sarajevo which was what that earlier contract was for. We thought
that we would largely be responding to international appeals from
international organisations who themselves would be running air
charters. The World Food Programme did exactly that and very effectively.
What we discovered in the early stages of this operation was that
the task was too great for the international system and for our
colleagues in UNHCR in particular and we had practically to do
it ourselves. At that point it would have been better to have
a contract. I still want to persuade the Committee that the fact
we did not have a contract did not prove a problem. We were able
to extend it by oral agreement. It still required competitive
tendering for the actual charters and the commission fee was standard
so there was no loss of value for money or control.
6 Note: See evidence, Appendix 1, page 118 (PAC 1999-2000/237). Back
7
Note: See evidence, Appendix 1, page 118 (PAC 1999-2000/237). Back
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