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The Secretary of State quickly glossed over allegations about the bribery of the middle man and
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the assertion that $12 million had been paid into a Swiss bank account. Will he tell us what the Government are doing to try to trace the money? Are we in discussions with the Swiss bank, or officials in Lichtenstein, to try to trace it, and have we asked for the account to be frozen?

We are a signatory to the EU code of conduct on arms exports, which obliges the Government to assess whether an export would undermine economic stability or hamper sustainable development in a recipient country. The Secretary of State said that Tanzania was doing awfully well, that it was now less dependent on foreign aid and that things had never been better. He put a very positive spin on the way in which Tanzania is moving. He has been to many African countries recently and he knows the huge financial constraints on those countries. I reiterate again that Tanzania is one of the poorest countries in the world. Having seen the way in which people live in north Tanzania, I agree with the right hon. Member for Birmingham, Ladywood that the EU code of conduct has been broken because the Tanzanian economy must have been affected by the sheer size of the contract.

I was concerned by the President of South Africa’s comments to the international press, in which he implied that the United Kingdom was getting involved in all sorts of shady business deals. Our country is held in great esteem around the world, and historically we have had a tremendous reputation for being honourable.

Adam Afriyie (Windsor) (Con): My hon. Friend has moved on to the issue of morality and the ethical base for not blocking the decision to allow the sale. Does he share my alarm about the way in which the Government announced that they would have an ethical foreign policy, and then allowed the deal to go ahead?

Daniel Kawczynski: Yes, and I referred to that earlier in my speech. I totally believe that the decision goes against the Government’s ethical foreign policy.

I conclude with one last comment on a matter that was raised by Liberal Democrat Members—the involvement of Barclays bank, which financed the deal. We hear that we in Britain are constantly being overcharged by banks, and I believe that that is partly to do with the amount of foreign debt that banks write off. If Tanzania ever reneges on the £28 million loan, it will be interesting to see whether the British taxpayer ends up footing the Bill.

9.26 pm

Norman Lamb (North Norfolk) (LD): I am pleased that this debate is taking place. In the last Parliament, when the export licence was being granted, I spent a lot of time researching the deal, and a lot of time in correspondence with the right hon. Member for Birmingham, Ladywood (Clare Short). The Conservative spokesman, the hon. Member for Sutton Coldfield (Mr. Mitchell), is absolutely right: the Prime Minister should be held to account for what happened in the case that we are discussing, particularly bearing in mind what the right hon. Lady has said. My great sadness is that the right time to hold the Government to account was the time when the export licence was being granted, and I believe that the House failed in that respect.

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I reached the view that the deal was a scandal, and that the decision to grant an export licence was scandalous. At the time, I was sufficiently concerned about the matter to write to the police, urging them to instigate a criminal investigation, but they refused, so it was a surprise to be contacted by the Serious Fraud Office some three months ago, and to be told that it was investigating the deal, although I was pleased to hear that the investigation was taking place.

Let us consider the basic facts and remind ourselves why the deal was so scandalous. As we have heard, Tanzania is one of the poorest countries in the world. Back in 1997, when the Ministry of Defence was, unbeknown to DFID, giving the deal the preliminary green light under the F680 procedure, Tanzania’s external debt was $7.6 billion and its per-capita gross national product was $220. Yet a British company sold a military air traffic control system to a country without an air force worthy of the name, at a staggering cost of $40 million. Recent allegations in The Guardian suggest that $12 million was paid to a middleman—that is 30 per cent. of the contract price. The International Civil Aviation Organisation, a UN body, stated that the equipment was

The final report, to which the Secretary of State referred, has not been published, and it is up to the Tanzanian Government to decide whether it should be published.

Clare Short: I really do not think that that is right. The report was commissioned by the World Bank, so it must be the property of the World Bank. If the UK Government wished to press the World Bank to publish it, it probably could be published.

Norman Lamb: I am grateful to the right hon. Lady for that intervention, but at the time, I was told that the decision was the responsibility of the Tanzanian Government. In his winding-up speech, will the Minister give a commitment that he will do everything possible to publish that report, which was described to me by a World Bank official as a bombshell? It is overwhelmingly in the public interest for that report to be published.

May I concentrate on the Government’s role in the affair? Why on earth did they sanction the sale, which is surely indefensible, inexcusable and wholly contrary to the criteria to which they committed themselves? The Secretary of State criticised the Conservatives for not having any criteria at all, and that was a fair and just criticism. However, is it any better to introduce criteria which the Government then ignored? If, as he suggested, criterion 8 is not sufficient to block such an export, it must be amended to ensure that in future such a deal cannot proceed.

On the financing of the deal, Tanzania could not simply borrow on a commercial basis. Because it was part of the HIPC initiative, it had to satisfy the International Monetary Fund that the Barclays loan was arranged at a concessional rate. The IMF confirmed that the financing package

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it is interesting to hear of Barclays making a grant—

That was known to the Government when the export licence was granted.

Why was Barclays so generous? I challenged the bank on several occasions, but I did not receive any answers. The World Bank representative with whom I established contact confirmed that he had never encountered a commercial organisation that subsidised the purchase of military equipment by a very poor country. It does not make sense. Was it simply an act of generosity? Did it have anything to do with the fact that Barclays secured a banking licence in Tanzania in October 2000? Did the fact that Barclays held shares in BAE have anything to do with it? Barclays should be held to account for its role in the affair. I want banks to behave with a sense of corporate social responsibility, as that is the ultimate example of a business ignoring and evading that responsibility.

Did the then Secretary of State for Trade and Industry, the right hon. Member for Leicester, West (Ms Hewitt), know of these bizarre financing arrangements when she granted the export licence in December 2002? I suspect from the speech of the right hon. Member for Birmingham, Ladywood that the right hon. Member for Leicester, West knew of those precise concerns when she decided to grant the licence, so she, too, should be held to account. Did she know of the allegations of impropriety—I suspect that the answer is yes—and was that taken into account? We need to know the answers.

In the aftermath of the totally unacceptable decision to halt the SFO inquiry into the al-Yamamah contract, it is imperative that that investigation and the offshoot investigations into BAE are brought to a proper conclusion without political interference. If we are to start to rebuild this country’s reputation for adherence to the rule of law in these matters it is essential that those investigations are completed. The Government’s utter hypocrisy in lecturing Africa about good governance while behaving in that way is quite stunning. Who on earth will listen to us lecturing about good governance if that is all that is left of our foreign policy with an ethical dimension?

May I conclude with an open letter to the British Government from the “Consortium of Concerned Tanzanians International”, which calls on the British Government to intervene? It wants an independent inquiry in Tanzania—one should be held here, too—and it puts its case in graphic terms:

That deal was conducted by a British company, and it was sanctioned by the British Government. We owe it to the Tanzanian people to establish the truth of this scandal.

9.34 pm

Mark Simmonds (Boston and Skegness) (Con): The debate has been informed, detailed, intriguing and
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illuminating, shining a light into many dark recesses, particularly of Downing street. The debate was opened by my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell), the shadow Secretary of State who in an intelligent speech gave a forensic analysis highlighting with skill the divisions, the frictions and the tensions at the heart of Government. He detailed a series of questions that remain unanswered, highlighting our concern about developmental progress in Tanzania, the significance of the UK contribution, and the importance of transparency between the UK and Tanzania and the other African countries with which the UK has a donor relationship.

That was followed by the Secretary of State who, in his usually measured and eloquent way, touched lightly on all the issues surrounding the debate. It was clearly a carefully constructed speech, but no assurance was given that the requisite reports would be published.

The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): My right hon. Friend’s speeches are always carefully constructed.

Mark Simmonds: The Secretary of State’s speech was not unusually carefully constructed, as the Minister says. The right hon. Gentleman gave no guarantee that pressure would be put on the World Bank to publish the report, although the right hon. Member for Birmingham, Ladywood (Clare Short) said that that would, in her view, be possible.

However, the Secretary of State was right to identify three of the important issues, the first being the export licensing process and criterion 8. He stated that there had been one refusal from the DTI under criterion 8, but it was interesting to hear from the hon. Member for Kingswood (Roger Berry) that the France-UK score was 45:1. I hope the Minister for Science and Innovation will explain why the score is so out of kilter if we are all supposedly applying criterion 8 in exactly the same way across the European Union.

We accept that complex judgments are involved, but nothing that the Secretary of State said today justified the poor decision that was taken. He spoke about what is being done now, after the decision in 2001. In all his responses to interventions, it was clear that he was opposed to the deal, supporting his Secretary of State at the time and, I suspect, supporting the civil servants in the excellent Department for International Development.

The hon. Member for Hornsey and Wood Green (Lynne Featherstone) rightly emphasised the UK’s excellent reputation in the world, the importance of maintaining that reputation, and the damage that can be done by transactions such as the one in question. She spoke about the universal recognition across the House of the importance of fighting corruption, and agreed that we must continue to do all we can. In his efforts to fight corruption in Africa and around the world, the Secretary of State will find that the Opposition strongly support that aim.

The hon. Lady stressed the necessity for the Minister to give the House an assurance from the Dispatch Box that the Serious Fraud Office will have the
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Government’s full co-operation and the necessary resources to continue the investigation as thoroughly and expeditiously as possible.

The contribution from the hon. Member for Kingswood was extremely well informed and interesting. As a member of the Quadripartite Committee, he has inside information, much of which is confidential. That came across well in his knowledgeable contribution. He said that he was not convinced by the merits of the Government decision. That is a significant remark from a member of the Quadripartite Committee. If I understood correctly, he was not alone in reaching that conclusion. It was the unanimous decision of the Quadripartite Committee.

The hon. Gentleman pointed out the odd timing of the decision, a matter to which I shall return, and spoke in some detail about the systems that we should have in place for export licences. It is intriguing that the Foreign and Commonwealth Office took 18 months to reply to the Committee’s letter and that when it came, the reply contained nothing more than members of the Committee already knew, which some would argue was an ideal parliamentary answer. The Committee has a reputation for the highest probity and discretion. The fact that the Government refused to provide the necessary information further fuels the suspicion surrounding the transaction.

We heard an excellent speech from my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), drawing on his experience during the time he spent in Tanzania. It was an articulate contribution made with great clarity and intellectual rigour. He asked what was known at the time that the decision was made. He made it clear that it was primarily a military system. No UK Minister has ever denied that, unless the Minister is about to rise to the Dispatch Box and claim for the first time that it was not. I hope that my right hon. Friend was wrong in one element of his conclusions, because what happened with this particular transaction must not set a precedent for the future. He summed up the debate very well when he said that the Secretary of State had been defending the indefensible.

The hon. Member for Tamworth (Mr. Jenkins) made a brief contribution in which he rightly highlighted the influence of China in Africa—although I am not sure what relevance that has to this debate.

We then heard a very powerful and passionate speech by the right hon. Member for Birmingham, Ladywood, who was Secretary of State at the time when the decision was made. Her views on this are well documented. She deserves enormous credit for her consistent and dedicated fight against corruption and for her consistent advocacy of people in the developing world. She has been a fervent champion for the cause of alleviating poverty. I hope that if she happens to leave this place she will continue her passion for helping people who are less fortunate than those of us in this House this evening.

The right hon. Lady rightly stressed the fact that many lessons must be learned from this episode. She pointed out the relationship between a HIPC procedure and a concessional loan, which brings in the question of Barclays bank, and noted the interesting fact about the European Investment Bank offering
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cheaper, more up-to-date technology—a significant factor in categorising this deal as dubious and squalid.

The right hon. Lady was right to correct the hon. Member for City of York (Hugh Bayley) to ensure that the House understood that increasing UK aid contributes to the cost of servicing the debt to purchase a system the export licence for which was approved by this Government despite significant controversy and disagreement within the Cabinet.

My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), who also drew on his time in Tanzania, rightly referred to the significant levels of poverty that still exist there. He emphasised the role of the right hon. Member for Leicester, West (Ms Hewitt), who was Secretary of State for Trade and Industry at the time, and expressed a desire to see her brought to this Chamber to explain and to answer questions on the decisions that she took, very controversially, some time ago.

My hon. Friend was also right to highlight his concern, which is shared by Members on both sides of the House, about the President of South Africa’s comments on the United Kingdom’s current position.

We then heard from the hon. Member for North Norfolk (Norman Lamb), who deserves to be congratulated on consistently pursuing this issue with vigour and not giving up. He provided a detailed analysis and synthesis of the issues surrounding the export licence. He rightly observed that Tanzania is one of the poorest countries in the world and that criterion 8 was ignored and overridden. He highlighted the Barclays transaction, which is highly suspicious, and the interrelationships that exist between Barclays bank and the British defence industry. He deserves credit for the consistent way in which he has pursued this controversial issue.

When the export licence was approved in 2001, life expectancy in Tanzania was just 45, 2 million people were infected with HIV, only 50 per cent. of the population had access to clean water and sanitation, and 51 per cent. of the population lived below the poverty line. It was in that context that the Prime Minister pushed the deal through the Cabinet, not only against the protestations of fellow Cabinet members but in the face of criticism from the World Bank and the United Nations, fierce opposition from British non-governmental organisations, and pleading from some in Tanzania itself. The International Civil Aviation Organisation described the system as

and the World Bank labelled it as the “wrong system”.

Despite the Secretary of State’s comments about Tanzania making progress since that time—we congratulate the people of Tanzania on that—he is wrong to say that further progress could not have been made if that country had had the ability to use the resources purely for alleviating poverty, and to use those from the donor community for the purposes for which they were originally intended rather than for funding debt to buy military and civil systems that the Tanzanian people did not need.

Mr. Spellar: Which system does the hon. Gentleman believe that the Tanzanian Government should have bought? Where would it have been made?

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