Examination of Witnesses (Questions 160-164)
RT HON
IAN MCCARTNEY,
MINISTER FOR
TRADE, AND
ECGD OFFICIALS
14 JUNE 2006
Q160 Judy Mallaber: So how does that
mean that you plan to use the new audit procedures, the current
procedures? Does that mean that if you already have suspicion
of fraud you will not go and do an audit or do you expect to pick
up examples where there might be fraudulent behaviour through
going and doing the audits?
Mr Ridley: Well there is a bit
of both. We have in the final response made the audit rights random,
so that we do not need to show any reason to go and audit. We
would therefore pick audits at random. The likelihood is that,
if we have a suspicion, we would liaise with the criminal authorities
before we went in. If we did not have a suspicion before we went
in, but we acquired one as a result, then we would refer that
as well.
Q161 Judy Mallaber: What are the
chances, if you go in not knowing that it is suspicious, given
the five days' notice? Is there any chance at all you would be
able to find out in order to then get the investigatory bodies
to go or is it just a lost cause at that point?
Mr Ridley: There a supposition
there that there is necessarily something to find.
Q162 Judy Mallaber: We hope there
is not.
Mr Ridley: We should be going
in generally at random without suspicion. One would hope that
we would not acquire any whilst we were there. It is conceivable,
one has to concede, that if in fact, although we did not suspect
it, a company that we went in to look at had been guilty of criminal
activity, then the circumstances to which you refer might occur.
That is an unavoidable result of taking audit rights in the first
place on the part of a body which does not have criminal powers
and we cannot acquire the right to turn up in the early hours
of the morning with a search warrant.
Mr McCartney: It is also true
to say, we have a signed a memorandum of understanding with other
departments requiring us to notify allegations of bribery and
corruption to the Serious Fraud Office. Alongside that there are
the Ministry of Defence police and a range of other law enforcement
agencies where we would have no compunction, where suspicions
arose through audit or the receiving of information outside of
the audit, about passing these on.
Q163 Chairman: What would you do
if a company, rightly or wrongly, acquired a reputation of being
linked with bribery, allegations in the media for example? You
do not have any specific evidence, information, that you would
pass on to the investigatory authorities, but you have a responsibility
for making prudent decisions on behalf of taxpayers. How would
you deal with that? Do you not need a degree of investigatory
power to be able to address a problem like that?
Mr Weiss: Might I suggest that
when we say the audit rights are random, it is not necessarily
putting a pin in a piece of paper and saying "We will do
this case". We do decide whether there are particular companies,
perhaps a newish customer with whom we are not familiar, and we
might want perhaps to have that as a reason for an audit or perhaps,
as you say, an allegation. I am not saying these are the definite
conditions, but it is sort of deliberate in that we try to cover
the ground and cover a broad spread of our business with these
audits. Those may be the factors that would lead to a particular
choice of case to audit.
Q164 Chairman: Okay. Unless any of
my colleagues have any very final question, and it looks as though
they do not, Minister may I thank you and Mr Ridley and Mr Weiss
very much for your time this afternoon; it has been greatly appreciated.
We look forward to a plethora of memoranda winging in our direction,
some of which some of us might understand; Mike certainly will
as a lawyer. Seriously, thank you very much, we appreciate your
time and if we have any further questions, we shall write to you.
That has been very helpful indeed.
Mr McCartney: May I also thank
the Committee for bearing with me last week in rearranging this
because of my family circumstances. It was greatly appreciated.
I did not want to use that as a reason not to come before the
Committee. I should also let you know that John Weiss has informed
me today, rather recklessly it seems, that this is his last day
and he is going to take retirement. I am sure it is not down to
the question of the Committee; it was a pre-planned event.
Chairman: We wish you well, Mr Weiss.
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