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8.14 pm

Lynne Featherstone (Hornsey and Wood Green) (LD): Liberal Democrat Members welcome this important debate on the sale of a radar system to Tanzania. There is a stench arising from this deal, just as there is from the al-Yamamah contract. Strangely, however, the Conservatives make no mention in their motion of BAE Systems as the alleged briber. The motion is narrowly defined and seems to seek to confine the debate to Tanzania. I have to assume that that is to avoid their hopelessly compromised position on the Saudi Arabian case.

Mr. Kevan Jones: Will the hon. Lady give way?

Lynne Featherstone: I will give way a couple of times, but we are very pushed for time.

Mr. Jones: The hon. Lady has made the very serious accusation that BAE Systems has used bribery. Is she going to produce some evidence of that in the course of the debate or leave it to the police?

Lynne Featherstone: I think that I said “alleged” bribery.

Clare Short: I should say to the House that the police came to see me and said that they have documents showing that it was bribery.

Lynne Featherstone: I thank the right hon. Lady for that very helpful intervention. I was being careful with my words but now, thanks to her, I can perhaps drop the “alleged”.

First, I wish to put on the record the extraordinary work of my hon. Friend the Member for North Norfolk (Norman Lamb), whose pursuit of these matters has shone a light into what appears to be an extremely murky world. In an Adjournment debate on 25 June 2002, he laid out the case in detail with clarity and chilling accuracy. I will not repeat the history of that case, because it is already read into the record.

There is a moral imperative here. If we are to retain any influence, reputation or credibility in world affairs, we must be squeaky clean ourselves. Despite the Secretary of State’s defence of the decision to grant an export licence, somewhere between the Government, BAE and Barclays—perhaps all three—our reputation worldwide has been left in tatters. How can we tell other countries to live up to their obligations when $12 million lies in a Swiss bank account as testimony to corruption and bribery in those deals?

At this particular time in history, when the world is moving, albeit slowly and painfully—as are we, as the Secretary of State said—to tackle defence contract corruption and is striving to introduce transparency, it is vital that the Government answer to their part in what seems to be a very nasty business. While the Serious Fraud Office must pursue its investigations without fear or favour, it is also right that these matters should come before this House.

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David Taylor: Will the hon. Lady give way?

Lynne Featherstone: For the last time, because hon. Friends wish to speak.

David Taylor: The SFO obviously has to work within the code of practice of Crown prosecutors, which allows for the abandonment of cases in the national interest. Does the hon. Lady think that the national interest is less likely to be cited in cases involving countries with a national income per head of $400 a year than in countries with a national income per head of about £12,000 a year, as can be the case in oil-rich regimes such as Saudi Arabia?

Lynne Featherstone rose—

Mr. Deputy Speaker: Order. I sense a tendency to move further from the bounds of the motion, which the hon. Lady herself said has been expressed in narrow terms. That being said, that is the motion before the House.

Lynne Featherstone: The hon. Member for North-West Leicestershire (David Taylor) made a valid and interesting point.

There are three strands to this scandal that I want the Government to account for tonight. The Secretary of State covered some of the ground, but not all. The first concerns the supply of a military air traffic system to one of the poorest countries in the world. One thing that the Secretary of State did not mention was whether he had had discussions with Tanzania as to the fact that only one third of the country would be covered by the system that it was purchasing. The system has been widely criticised, so I want the Government to clarify what questions they asked about the supply of such a system to the poorest of poor countries—as other hon. Members have said, a country to which we were sending aid. Was the actual need for a system discussed? Did the Government advise the Tanzanian Government about the appropriateness of such a system?

Secondly, the allegations of corruption about the sale need to be tackled more thoroughly. The investigation into the air traffic control contract in Tanzania raises questions about the Government’s integrity. Granting an export licence for the military air traffic control system is a scandal. Selling such a system, which costs millions of dollars, to one of the most heavily indebted countries is also a scandal. The Tanzanian air traffic control system deal flies in the face of all that we claim that we want to achieve in aiding poor countries.

One part of the Government has been providing debt relief on the ground that Tanzania’s debt was unsustainable, while another part of the Government appeared to encourage the same country to take on £28 million of debt for an air traffic control system that did not work for a military area that covers only one third of the country.

As the hon. Member for Sutton Coldfield (Mr. Mitchell) said, the International Civil Aviation Organisation put the case plainly. It stated:

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The World Bank and the International Monetary Fund estimated that a suitable system would cost between $5 million and $10 million.

What comprised the Tanzanian air force? As we have heard, it is small. How many military planes did it have? Did the Government ask that question at the time? Were the Government aware of a disparity between the size and sophistication of the system that Tanzania was purchasing and its needs? Even if the Tanzanian Government needed the system, were discussions held in which our Government pointed out that it was not the most appropriate system?

There are many questions about the funding of the sale. On 15 May 2002, the then Secretary of State for International Development said in Parliament:

If that was the case, surely it was fraud. In 2002, my hon. Friend the Member for North Norfolk referred to “being told” that bungs were paid to oil the wheels of the deal; we now know that there were $12 million bungs. What did the Government know? Did they know anything about it? Did they know at the time? If not, when did they know?

The Government have tried to assure us time and again, and stated that they promote responsible business conduct. Only last Wednesday, in answer to my hon. Friend the Member for Cheltenham (Martin Horwood), the Secretary of State for International Development spoke about the UK anti-corruption plan, and how the Government intend to promote responsible business conduct in developing countries and support international efforts to fight corruption. I am sure that hon. Members of all parties would support that.

Moreover—and astonishingly—the Secretary of State, as champion of combating corruption, stated that he was not consulted about the decision to drop the investigation into BAE and the deal in Saudi Arabia. Will he be consulted about the issues that surround the Tanzanian deal? The Secretary of State replied on Wednesday that he thought the case had no relevance to DFID, but the Department’s White Paper, “Making governance work for the poor”, makes it extremely clear that it has.

Of course the BAE Eurofighter sale, which we are not discussing this evening, has a strong connection with the sale of a radar system to Tanzania because both appear to come from the same questionable background. Both issues have a connection to DFID. Has the Secretary of State for International Development been consulted about the Tanzanian case? What was discussed with DFID about supplying such an extravagant system to a country into which we were and are still pouring aid? What role will DFID play in the investigation?

The whole mess runs the risk of undermining the Prime Minister’s commitment to poverty reduction in Africa. Corruption is a key element in economic
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underperformance and a major obstacle to development and alleviating poverty. The Secretary of State said:

We now know where the account is—Switzerland.

The diversion of funds through corrupt practices undermines attempts by Tanzanians to achieve higher levels of economic, social, and environmental welfare. Although I welcome the Secretary of State’s comments about improvements in Tanzania, we must be above suspicion in our dealings. A key plank in our international development strategy must be combating corruption overseas. We are already bound by the United Nations convention against corruption and the OECD convention on combating bribery of foreign public officials in international business transactions. We encourage other countries to adopt and enforce those laws. We need to encourage our Government to implement them.

The modus operandi of BAE Systems and its predecessor companies in Tanzania, South Africa, Chile or Saudi Arabia consistently appears to go against the principles in those international conventions. The DFID White Paper states that corruption damages economic growth by increasing the cost of doing business. It siphons off resources that should go into public services and undermines the accountability of political leaders and officials to their citizens.

The Attorney-General ran a coach and horses through those rightly high aspirations when he decided to stop the investigation. The example of BAE in Tanzania shows that the Government are preaching, but perhaps not practising what they preach. Did No.10 force the licence for the Tanzania deal through the Cabinet, as has been reported? That is a crucial question.

Thirdly, let us consider the investigation by the Serious Fraud Office, which should be commended on its determination to investigate the sale of a military air traffic control system to Tanzania. It is extraordinary to Liberal Democrat Members that that export licence was granted. How can we tell other countries to live up to their obligations when our name is being dragged through the international mud? To do so would be rank hypocrisy.

Hugh Bayley: Will the hon. Lady give way?

Lynne Featherstone: No, I shall not because hon. Members of all parties wish to speak.

The Serious Fraud Office must now be free to investigate. We must restore decency and transparency to Government. Lord Goldsmith stated last week that he told the director of the Serious Fraud Office that he
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should vigorously pursue current investigations, including several other cases against BAE. He also assured the House of Lords:

I should be grateful if the Minister for Science and Innovation confirmed that extra resources will be given to the SFO to deal properly with the investigation.

We need to erase the stain on our reputation. Apart from our continuing loss of the moral high ground, it damages our reputation and ability to attract business. Let us hope that the Government and the investigation will eventually enable us, once again, to be looked up to as an example of good practice and good behaviour.

Several hon. Members rose—

Mr. Deputy Speaker: Order. I must remind the House that there is a 12-minute limit on Back-Bench speeches, and that it operates from now on.

8.28 pm

Roger Berry (Kingswood) (Lab): This is an interesting debate. It is the first time ever that I can recall the Conservatives asking for time to debate arms export policy. However, they are a little out of date in selecting a topic that was a matter of debate in other quarters five years ago. I know the views of some of the Conservative defence team, because they have served on the Quadripartite Committee, and if they heard some of the comments made here tonight, they would not be too pleased.

I want to focus on the serious matter before the House. I have served as Chair of the Quadripartite Committee since 2001. The first report that we produced, in July 2002, looked in detail at the specific case of the export of military air traffic control systems to Tanzania, and the implications of the case in relation to the application of criterion 8. The hon. Member for Sutton Coldfield (Mr. Mitchell) clearly drew on that report in his speech. I want to concentrate on those two issues.

I do not believe that the House ought to speculate on the outcome of the Serious Fraud Office investigation. My view has always been that all such investigations should be allowed to continue their course until the appropriate time when a decision is made whether to prosecute or not. I am sorry that certain hon. Members have speculated wildly in the debate about matters that we cannot resolve here tonight. Nor should we try to do so; let us concentrate on Government policy. That is the purpose of Opposition day debates, and this one is about Tanzania and criterion 8.

I shall not repeat at length the points that have already been raised in relation to these matters, but I want to tell the House how the Quadripartite Committee felt about the issues, which we discussed at some length. We identified a number of causes for concern. Personally, I was not convinced by the wisdom of the Government’s decision, but I want accurately to reflect the specific concerns that were raised, and the Committee’s final view. Our report stated:

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The World Bank, prior to approving HIPC—heavily indebted poor countries—debt relief for Tanzania in that same month, noted that Tanzania had undertaken to reconsider the suitability of the air traffic control system.

Criterion 8 requires the Government specifically to take into account information from the World Bank. Our Committee therefore made the obvious comment, that

The criticism there is clear: there were ongoing discussions involving the World Bank about the system, and the decisions to grant the two licences were made before there had been time to consider the outcome of those discussions.

When the Government gave evidence to the Committee, reference was made to the fact that Tanzania was, self-evidently, a sovereign state. The point was made that it therefore had the right to decide what air traffic control system it wanted to buy. That is absolutely true, but the debate is not about what system it should or should not buy. That has nothing to do with us. The question is: what military air traffic control system we should or should not license for export? That is our decision, and that is why criterion 8 exists. Why would criterion 8 exist in the first place, if the European Union did not feel that it should take into account the impact of such decisions on sustainable development, notwithstanding the fact that Tanzania is a sovereign state that has the right to buy whatever equipment it can?

A third criticism—and the final one that I shall mention, given the time—is that when the Quadripartite Committee investigated this matter, we were assured that a serious cost-benefit analysis had been undertaken. We asked the Government for a copy of it on 27 March 2002. We eventually received a reply 18 months later, on 28 August 2003. The letter from the Foreign and Commonwealth Office stated:

as they would, given that they had 18 months in which to do so.

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