Draft Asian Development Bank (Seventh Replenishment of the Asian Development Fund) Order 2001

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Mr. Michael Trend (Windsor): I congratulate my hon. Friend the Member for Hertford and Stortford (Mr. Wells) on an excellent speech. As always in such matters, he is superbly well informed. His contributions were heartfelt, and he stirred an interest in me that I did not know that I possessed. There will be a serious adverse effect when he is no longer here.

I have only two points to make. First, I do not know how our interests are looked after—a substantial sum of public money is involved. My hon. Friend referred to our directors, but what representation do we have in the bodies? What systems of monitoring ensure that the money is being spent correctly? Will the Minister tell me what the position is, and whether he is satisfied with current arrangements or wishes them to be reviewed?

My second point concerns the procedure around the order. I am not a conspiracy theorist—or only an amateur one, compared with the Minister—and I was alarmed to receive clerkly advice that the Committee might be concerned about

    ``being asked to approve a draft order which will enable the Secretary of State for International Development to make payments for obligations which do not yet exist.''

I was not concerned until I was told not to be, at which stage I began to get worried.

The procedure was apparently considered in 1989 by the Select Committee on Statutory Instruments in its sixth report. The Committee found

    ``no technical reason for the House not to approve the draft Order.''

That does not seem to be a ringing endorsement of the procedure, although perhaps it is just cool, clerkly language. Has the Minister had time to consider the procedure under which we are operating, and are he and his Department satisfied that this is the best way to deal with the disbursement of public funds in such cases?

10.37 am

Dr. Jenny Tonge (Richmond Park): I, too, shall be brief because it is not really possible to follow the hon. Member for Hertford and Stortford. He has such a wealth of experience that he knows more than most of us about such matters.

I had highlighted exactly the same section on procedure that the hon. Member for Windsor (Mr. Trend) mentioned. I love the sentence that says that something

    ``will enable us to deposit our instrument of contribution, which will in turn create an obligation.''

That deserves to be put on the record because I have no idea what it means.

Later in the same paragraph, the document says:

    ``We do not know its history''.

One has a horrible feeling that, since time immemorial, we have being depositing instruments of contribution to create an obligation, and no one knows why. That is a little worrying. As the hon. Gentleman said, we need to know that the procedure is totally bona fide and that we are not leaving ourselves open to something that we would not agree to if it were not wrapped up in such gobbledegook.

My concern is further prompted because the Chinese, who are a pretty inscrutable people, abstained. At the Asian development bank approval meeting—the donors' meeting—all voted in favour of the measure except the People's Republic of China. It abstained because, in its view, the donors' report contained proposals that deviated from the bank's mandate and violated the agreement establishing it. After listening to the hon. Member for Hertford and Stortford, I am quite interested to know, as we should, what the Chinese objections were. It would be interesting if their objections were similar to ours.

I endorse what has been said. Of course, the poverty focus is welcome. The new focus is in line with everything that the Department for International Development is saying. I also welcome the determination to ensure that the poorest people in India get a look-in from the Asian development bank. Even if Governments are moderately good, it is not always possible to help the poorest people in the country, who need to be helped.

Most important, I endorse what was said about anti-corruption measures. My two years on the Select Committee on International Development opened my eyes to that problem in a big way. The hon. Gentleman will agree that the experiences and stories that we heard in Bangladesh and India were quite extraordinary. The extent of corruption must be seen and heard about to be believed. It grieves me greatly to think that all the money that we have given over the years has been pouring into the pockets of very rich people on the Asian sub-continent.

We must therefore be assured that good and watertight procedures are put in place to prevent corruption. We had talks in Bangladesh with Transparency International. It also exists in the west and gave evidence to the Select Committee for its recent report. We must take corruption seriously, because money does not grow on trees—we have to work hard for it. It is our job as a Parliament to ensure that taxpayers' money is used in the right way and not wasted.

The hon. Gentleman gave the good example of the waste water management project in Thailand, which says everything about how such projects go wrong. It was in the wrong place, people were not consulted, the wrong people were involved and money was siphoned off into corrupt officials' pockets—all the problems that we are worried about with the Ilusu dam project. The same story pertains to it. We must ensure that the Asian development bank, and particularly our contributions to it, are not used for corrupt practices. I welcome the measure, but I ask the Minister to give us the assurances that we want.

10.42 am

Mr. Mullin: I shall do my best to reply to the range of points that have been made, starting with the thoughtful speech by the hon. Member for Hertford and Stortford. As he acknowledged, many of his points came from our document, so we are on the case. He said that he was deeply concerned at the lack of transparency of the regional banks in general, but he acknowledged that huge progress has been made and paid tribute to my predecessor, the name of whose constituency I shall not attempt to pronounce. I, too, pay tribute to the role that my predecessor and our officials have played in the progress achieved so far.

The hon. Gentleman mentioned problems such as lack of accountability and transparency, and duplication of effort. He said that some of the bank's past activities had been incoherent and unfocused and that it did not consult other donors. We acknowledge all those problems. Indeed, we identified them some time ago, and the bank's management is addressing them. Within three weeks of taking office, Mr. Tadao Chino, the new managing director, announced this change and the concentration on the poverty reduction focus. He has proceeded on that basis ever since. Obviously, that is quite a big ship to turn round, so I cannot make any great claims that everything is sorted. I can say only that we are alive to the problems, as is the management of the bank, and that we are doing all that we can to make the changes that every sensible person involved in the matter agrees are necessary.

It is true that a change away from big infrastructure programmes and towards social development is needed. The hon. Member for Hertford and Stortford mentioned investing in women's health and the education of girls, something that my right hon. Friend the Secretary of State has spoken about many times. Often the most effective intervention is to educate women. Once that has been done, there is a good chance of educating the next generation of women. It is also likely that those women will have children a little later in life, which will help in dealing with some of the other serious problems faced in the third world.

Any hon. Member who has visited Asia will know that women work rather harder, on the whole, and that they are rather more effective, at ground level, than most men. Among the bank's major tasks is decentralising. It has been rightly criticised as tending to be Manila-based and remote from many of the countries to which it has lent. That no doubt accounts for some of the difficulties and contradictions that have arisen over the years.

Decentralisation of course requires a change of culture among personnel. It will presumably also, in some cases, mean a change of personnel. A different mix will be needed. Experts on large infrastructure projects will not be the only people needed. People who know about governance, regulation and the social sector will be required. DFID is assisting with the reorganisation and is helping to provide some of the skills that everyone acknowledges are necessary.

The hon. Gentleman was not quite correct in suggesting that India and China have access to Asian development fund money. It is true that the bank has big programmes in China and India, but those are on ordinary capital resource terms—nearly market terms. They are not on concessional terms from the Asian development fund. We regret that. There are large concentrations of the poorest people in the world in India and China.

I said in my opening remarks that one of our objectives had not been achieved. The objective in question, for which we argued strongly, was the extension of funding to India from the Asian development fund. Regrettably, we were not able to persuade our American and Japanese colleagues. However, we still believe strongly that a country the size of India, with so many poor people—and which has made significant progress over the years—should have access to the funds, especially since concessional funds flow to other countries that one might argue are not as well qualified to receive them as India.

The hon. Gentleman mentioned the need to co-ordinate with other donors and to become involved in poverty reduction strategies. We wholly endorse that idea and we expect that it will happen as the bank decentralises. Inevitably, once bank officials are based in the regions and countries to which they are lending, they will mix and liase with other donors a great deal more than in the past. We believe that that process is under way.

The hon. Gentleman mentioned problems with the Bangladesh electricity programme, which he has previously raised with the Department. One of my officials wrote to him after the subject came up in evidence before his Select Committee. I cannot update him off the top of my head. Our well-oiled machine managed this morning, at very short notice, to recover that letter, dated 30 July 1999, but we were not able to contact our staff in Bangladesh to find out the latest situation. I undertake to do that and will send him a letter to update him.

Our fundamental objective is to make sure that the changed objectives of the bank are met, and we shall do our best to achieve that. We are encouraged by the appointment of Mr. Tadao Chino, and by the actions that he has taken almost from the moment he arrived. The hon. Member for Hertford and Stortford asked about the fact that a large percentage of the outstanding loans relates to Indonesia. So far as we are aware, there have been no defaults in Indonesia. He also asked about the Samut Prakarn waste water treatment plant, and raised some serious concerns about it. The bank's lending to Thailand has been on non-concessional terms, so that does not strictly come within the scope of today's discussion.

The bank's inspection committee is investigating complaints that have been made. Our alternate director is a member of that committee and we shall follow closely the results of the investigation. It is too early for me to prejudge it. The hon. Member for Maidenhead—[Interruption.] I beg the pardon of the hon. Member for Windsor—I knew it was somewhere very posh anyway. The hon. Gentleman asked about our representation.

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Prepared 26 April 2001