Examination of Witnesses (Questions 20-39)
MR GAVIN
HAYMAN
17 OCTOBER 2007
Q20 SIR
ROBERT SMITH:
Obviously tomorrow we have got the minister and it has taken a
long time before we have managed to get a minister to come to
us on this whole issue and we will be starting with a whole new
set-up by the Government. I wonder what your assessment is of
the benefits and/or risks of the way ministerial responsibilities
have been changed in the latest set-up on trade policy?
MR
HAYMAN: As it
pertains to our specialist area in terms of natural resources
in conflict I would say it is positive that DFID is having an
enhanced set of responsibilities but the challenge is to deal
with the raging disconnect we still see in government policy as
relating to natural resources, conflict and corruption. I am not
completely convinced that all the mechanisms are in place there.
If you look, for example, at natural resources in conflict, partly
as a result of prompting of the committee and everything else,
there have been some improvements in the OECD Guidelines procedures
but in terms of delivering on, say, the White Paper commitment
to address natural resources in conflict, I have seen a cross-Whitehall
committee that has been set up, then disbanded and set up again,
and there was someone in DFID who had a job description that implied
they should be doing that but they have just changed jobs to do
something else without really delivering on a coherent plan. I
would say in general there is still a challenge there about co-ordination
across Government.
Q21 SIR
ROBERT SMITH:
You are saying someone had a job description?
MR
HAYMAN: Yes.
Someone within DFID was leading the thinking. I think DFID are
very good at developing ideas but it is having the time and perhaps
the space to go away and speak to the different parties and looking
at how the Government might have longer range policies and provisions.
The problem is it looks like the person who was doing it has just
moved on to a new job and somebody new has come in again, so we
are back to square one.
Q22 SIR
ROBERT SMITH:
Someone new has come in but the job is still in being?
MR
HAYMAN: Yes,
and hopefully they will carry on filling the same job but it seems
a shame, having only just convened a cross-Whitehall committee
to start looking at the issues, that the person who is the focal
point immediately changes jobs. That seems to me to be a sign
of a lack of coherence and a lack of political will to address
this problem coherently.
Q23 SIR
ROBERT SMITH:
Do you have any concerns about the splitting of policy and promotion
and the fact that policy will now have a more potentially development
led approach but promotion will be quite detached?
MR
HAYMAN: I do.
Again, it is an issue of coherence. I will quote an example we
came across only the other day which was in Cambodia. As you know,
we have done quite detailed work there looking at the whole system
of corruption and concerns about the governance of the country
and the management of the forests, and also illegal land concessions
there being one of the key development challenges. DFID and others
have been quite good on being concerned about these issues but
then you have perhaps the country's largest illegal land concession
and a UK-based company called D1 Oils, which is a biofuels company,
possibly negotiating with the tycoon who was awarded that concession.
According to newspaper reports, you had the British Ambassador
joining the CEO of that company to go and see the concession and
perhaps speak to the tycoon involved. Business promotion there
has clearly, perhaps completely, cut across governance concerns
of a country like Cambodia.
Q24 SIR
ROBERT SMITH:
Would that have predated the new structure of Government anyway?
MR
HAYMAN: It is
happening while the new structure is being rearranged.
Q25 SIR
ROBERT SMITH:
Currently in play?
MR
HAYMAN: Yes.
It is a good example of the challenges between promotion and policy
and you have quite an obvious disconnect there where you have
an ambassador in a country that is plagued by corruption, and
corruption at the very highest levels, apparently disregarding,
I would say, advice in terms of trying to address that challenge
coherently and perhaps working on the promotion side of British
business but which actually undercuts long-term policy towards
a very fragile state.
Q26 JAMES
DUDDRIDGE: On the ground, maybe
in that specific example of Cambodia, what is the interaction
between the Ambassador, the local DFID office and the visiting
Minister? Does DFID carry enough punch in-country to make sure
that the Minister's agenda both physically and its point of focus
is a correct one representing the United Kingdom?
MR
HAYMAN: My experience
is DFID does not quite carry enough punch yet. A good example
of that might be the Extractive Industries Transparency Initiative
where DFID led on the negotiations of this international multi-stakeholder
initiative to promote transparency in the mining of oil and gas
from those countries, and it has been problematic but broadly
they have done a good job there, but the challenge there was getting
local ambassadors involved in the process. A good example would
be in a country like Kazakhstan where DFID may have had the agenda
to do that but were they briefing the ambassador properly such
that he could go and front for it? Again, when the ambassador
changed the transparency agenda seemed to have very much dropped
down. It is a question of consistency again.
Q27 CHAIRMAN:
Thank you for that. When we did our Conflict and Development
report, Global Witness was a very useful source of information
and gave formal evidence, as you know. We tried to follow it on
at the time but we had some difficulties with the minister, so
it has taken us rather a long time to get to this point. I will
perhaps remind you and then ask for your comment. As I recall,
the United Nations produced a list of companies which they said
allegedly may be engaged in conflict resources. Two of the companies
which were British which were identified in that were Alfred Knight
and Afrimex. We did take evidence from Afrimex who were refreshingly
frank in their evidence, although they wrote to try and redress
some of it. To be fair to them, they came and gave evidence. Alfred
Knight refused to do so effectively and did not do so. The Government,
even under this new arrangement, have said that no organisation
has provided evidence to justify a complaint or an investigation
into alleged activities which may be in breach of the OECD Guidelines.
Do you accept that response that the UN at least has made allegations
which it seems the Government did not follow up or, in your capacity,
are you satisfied that the Government did respond to those in
a proactive way?
MR
HAYMAN: We have
now submitted an OECD Guidelines complaint to the new procedures
and that has been accepted and the Government is now following
on with that complaint. If I remember right, at the time Mr Kotecha
admitted payments to the RCD[10]
Government directly in the committee meeting, to one of the most
brutal rebel groups involved in the civil war. Effectively we
took that forward as a complaint and the UK Government, after
some um-ing and ah-ing, has agreed to take that forward. As a
result of the revised procedures and the new National Contact
Points, I would say there has been a measure of improvement in
the Government's progress in that. I would go back to why the
Government did not pursue that to start off with. I think it was
a shambles because, if I am not mistaken, the answer as to why
the case was not pursued was simply that Afrimex had been there
for 30 or 40 years before the war broke out so, therefore, they
were not just a profiteer during the war, which is interesting
logic but clearly not coherent: it was the role they were playing
in the actual civil war that should have been the subject of focus.
It is still very much the fact that we have to present all the
evidence and do all the running and all the work. I would say
the Government lacks any kind of individual investigative capacity
itself and I am quite struck that in terms of the new procedures
it is still quite junior staff and not a full-time person doing
it for their entire job description, which I think is a problem.
If you read the new procedures, I think it is 0.2 of a person
in DFID, 0.2 of a person in FCO[11]
and 0.8 of a person in Business, Enterprise and Regulatory Reform.
Q28 ANN MCKECHIN:
Are they taking any direct evidence from the Serious Fraud Squad
or from any other police organisation about how they should conduct
an investigation?
MR
HAYMAN: Not
that we know of. There may be informally but there is nothing
in the Memorandum of Understanding that I have seen that deals
with the new procedures and seems to cover that, which would be
an obvious omission and something they should address. It is very
much that they are starting to find their feet. This is the first
complaint and, to be frank, we are using it as a test case.
Q29 CHAIRMAN:
We did ask Afrimex what their view of the OECD Guidelines was,
to which they said they had never heard of them. We also asked
what conversations the DTI had had with them, to which they said
there had been none. In the light of that, and your complaint,
do you think there is a case for the new National Contact Point
to look again particularly at those cases given what you say,
that they were not properly handled in the first place?
MR
HAYMAN: Absolutely,
and to investigate them actively rather than simply saying, "Here
we sit, come and bring us evidence if you can", I think that
is way too lazy given the seriousness of the allegations that
were made there and the brutality of the war that took place.
Q30 CHAIRMAN:
Taking Ms McKechin's point, do you think it should go to the National
Contact Point first or should it be referred to the police?
MR
HAYMAN: It will
be very interesting to see what actually comes out from our complaint
against Afrimex. The procedure was meant to run for three months
and it is going to hand down a judgment in February, which is
at least twice the length it should have been. The explanation
for that is Afrimex is only a very small company so it takes time.
I will be very interested to see what the actual guidance that
comes from the British Government is because it could be it makes
a general statement about companies in conflict zones or, alternatively,
it could simply say, "Afrimex is being behaving inappropriately
here, we condemn them in writing" and that is it and there
will be no sanctions or follow-ups. I do not want to prejudge
the process, as it were. What it does show is there is a crucial
need for clear and coherent guidance globally with perhaps the
UK taking a lead, building on the experience of Afrimex and elsewhere,
about what companies should and should not do in conflict zones.
There is no instrument that governs this at the moment. We have
just published a new briefing that is called Oil and Mining
in Violent Places. There is no global instrument that provides
clear guidance to companies on how to manage the risks and behaviour
in conflict zones, and in particular their interaction with rebel
and security forces from the government, and that is a problem.
It has to have two levels: not only clear guidance of what companies
should and should not do but also a requirement on companies to
provide certain transparency provisions so you can be assured
they are doing it properly externally. Those are two key challenges
that I think the Government have failed to live up to yet and
that is something I would put at the heart of their conflict and
resources policy.
Q31 CHAIRMAN:
You made a specific complaint under the OECD Guidelines about
Afrimex. Do you have a view at all about Alfred Knight?
MR
HAYMAN: We are
not experts in that particular case. We know Tricia Feeney of
Rights and Accountability in Development tried that one out. I
would say generally she has been disappointed with the Government's
response to that. Again, it would be characterised by the Government
being very passive rather than actively investigating the information.
One of the challenges there, if I am not mistaken, was that she
provided particular detailed evidence to the Fraud Squad and the
Serious Fraud Office and that did not get through to the National
Contact Point and elsewhere. Again, that slightly passive sense
of just waiting for information to be passed over seems to be
the issue there as well.
Q32 JOHN
BERCOW: In its evidence to the
Committee as part of our inquiry into Conflict and Development,
Global Witness argued strongly that the British Government should
take a lead at the UN to define conflict resources. In your judgment,
what progress is being made in reaching an internationally agreed
UN endorsed, if you like, definition of resources? Is the UK Government
doing enough to push for an agreed definition? If so, what is
the evidence and, if not, what ought it to be doing that it is
not doing?
MR
HAYMAN: I would
say the UK absolutely has not been taking a lead, it has been
absurdly passive to my mind and has been overtaken by the German
and the Belgian Governments. They had a debate in the Security
Council where the UK made vaguely supportive noises but, in fact,
the UK Government has been almost missing in action. It has been
friendly and making supportive noises across the UN but it is
very much letting others do the diplomatic running, taking the
lead and everything else, and I find that very disappointing.
It is very clear that the UN is not joined-up about addressing
natural resources in conflicts, be it defining the problem to
start off with or just sequencing its interventions in countries
that are affected by conflicts and natural resources in terms
of actually rebuilding the government's natural resources before
reopening the sector for business. The key thing would be to commission
a Secretary-General's report on the issue which would force different
parts of the UN to talk to each other: peacekeeping operations
talking to the Department of Political Affairs, and so on. That
has not happened. It should not be that difficult to do, the UK
is on all the relevant committees, be it the Security Council,
be it the General Assembly, be it, I think it is called, the Group
of 40, the peacekeeping operation part of the UN, and it has not
done anything on this as far as I can work out. I think that is
just lazy, quite frankly.
Q33 JOHN
BERCOW: "Absurdly passive,
missing in action, very disappointing and lazy". Mr Hayman,
these are very, very, very strong terms and I am extremely grateful
to you both for being so explicit in your criticism and, indeed,
for saying what ought to be done. You seem to have encapsulated
most of what one could possibly want. There is just one thing
on which I am going cheekily to probe you in view of your candour
so far. What is going on? Why has the Department been "absurdly
passive, missing in action, very disappointing", given that
the Government would, I think, in general terms sign up to the
importance of making progress in this field? In the end ministers
have to take responsibility, we know that, but is it poor staff
work, is it ministerial lethargy? Have ministers allowed other
matters to take their eyes off this particular ball? This seems
extraordinary, not least in the light of the forceful advocacy
of Global Witness, amongst others. I am trying, in a sense, to
get at why the passivity.
MR
HAYMAN: I just
want to dwell for a moment on two examples of the starkest elements
of disconnect as to why I used quite strong language there. There
are two examples that are quite fundamental. One is Sierra Leone,
and there you have the Peace Building Commission, the new part
of the UN that is meant to deal with post-conflict reconstruction.
Sierra Leone is the absolute epitome of a conflict resource during
the war with conflict diamonds, of course. The UK is the single
largest bilateral donor to Sierra Leone, the EU is the biggest
donor, but the Peace Building Commission are not looking at natural
resources and that is a startling omission; hence my strong language.
Another very good example is DRC[12]
where you have at the moment a mining concession review going
on, again the UK is the largest bilateral donor, very aware in
terms of being sensitised, not least through endless meetings
we have had with DFID, the FCO and others, about the issue of
natural resources in conflict there; incredibly though the concession
review is being pushed through very fast without adequate provisions
and in quite an unclear and not very transparent way. If you get
that wrong the DRC's mining sector will be a mess forever more.
These are crucial tests on the ground and in both cases the ball
has been dropped. The UK should have an awful lot of leverage
to help pick that ball up but so far it has not happened. That
is why I am using quite clear language. In terms of what is happening,
I am at somewhat of a loss to say exactly why. The high level
political messaging on policy seems to be that we should be concerned
about natural resources and that it is clearly a key factor in
the risk of instability and yet in reality, for the people on
the ground, maybe there are other priorities that are snowing
them under or it is part of their job they feel unable to deal
with, there is clearly not adequate, advice, resources and support
given to people, or maybe it is seen as politically too intractable
in those countries. I would ascribe generally from our dialogue
with the UK Government that there is a sense in which it thinks,
"Let's have an election; let's deal with that first and not
worry about the governance, we will sort that out once an election
has taken place that is legitimate". The sequencing tends
to be "Let's tackle the elections. Let's have free and fair
elections first and then we can deal with the resource governance
of the sector", but I would say you have got to deal with
both of them at the same time. This is a very messy, complicated
business but you have got to have parallel tracks of work going
on otherwise you end up with the new government saying, "Great,
we will attract new business" and the sector has not been
reformed and the same brutalities emerge again. That was exactly
what we found on our recent field visit in Sierra Leone. We found
large scale mining operations going on and people were being marginalised,
dispossessed and really quite angry about not seeing the economic
benefits. There is clearly a disconnect there. I am at a bit of
a loss to say why, although part of it may be that the natural
resources portfolio often goes to quite junior staff members,
and I think that this has been a problem with the conflict and
resource policy. They are very nice people but it is new, fast-stream
graduates who are dealing with this and they do not have perhaps
the diplomatic and bureaucratic ability to be able to push other
people, manoeuvre obstacles out of the way and to join-up British
Government policies.
JOHN BERCOW:
One of the benefits of your giving evidence to us is that your
very clear and forcefully expressed views can be conveyed to the
new ministerial team, and we have to hope that with that new ministerial
team in place some of the words you have uttered will be heard
and heeded. Thank you very much indeed.
Q34 JAMES
DUDDRIDGE: Could one of the reasons
be the disconnect between the Foreign Office and DFID, the Foreign
Office wanting fast free and fair elections and to move on, and
DFID taking a much longer term development view? It has always
surprised me that the good governance work happens in DFID rather
than the Foreign Office where perhaps there are particularly some
of the governmental relations.
MR
HAYMAN: Yes,
I think that is a very key point. Thank you, I would totally agree
with that. It has been my experience certainly that DFID are always,
"What could the long-term policies be on conflict and resources".
When you get to the FCO they are like, "Well, we are not
doing too much at the UN at the moment. We are already trying
to push all the terrorism stuff through and we cannot deal with
this issue of conflict and resources as well". There seems
to be an issue there for sure. I am quite struck by another example
of the disconnect. If you deal with a country like China and natural
resource governance in China and Chinese companies operating abroad,
there was a relatively junior staff person in DFID who had the
job of going to the Chinese Government to get them into the Extractive
Industries Transparency Initiative and there is no way a twenty-something
junior staff member of DFID is going to get traction with the
Chinese Government. The US sent the Deputy Assistant Secretary
over. It is quite clear that DFID does not always have the muscle
to be able to do this. That is not to criticise DFID for at least
trying but the FCO has to be alongside pushing in the same way
and we do not tend to see that happening in practice.
Q35 CHAIRMAN:
Perhaps we can come back to you and talk about China before we
go next year. You mentioned the mining review in DRC and you mentioned
Sierra Leone. When we were looking at conflict in the DRC, and
it is fair to put this on the record, major British mining companies
were not involved in the DRC and the general attitude was, "It
is corrupt. It is not possible to operate there with any kind
of standards, therefore we do not go there", so we did not
have an issue that was identified. If they are reviewing the mining
concessions at this time are there British companies or international
companies with British connections now looking to move into the
DRC under these new arrangements? Is your concern that we might
be moving into a situation where reputable companies could be
moving into an area where the arrangements are not directly—
MR
HAYMAN: Completely,
yes. That is precisely my concern. We are certainly aware of very
large mining companies listed in London which are interested in
moving into DRC who have actively invited us in to ask what the
risks are, so they are assessing the situation.
Q36 CHAIRMAN:
They are taking advice from you?
MR
HAYMAN: They
are sensible enough to call in various different people to try
and get the lie of the land and see what works or does not work.
My concern would be that this is one of the key challenges for
DRC and, again, an issue for the British Government to help the
government steer a sensible course would be that you have the
mining concession review going on, all the mining contracts are
being looked at within about three to four months by a series
of government officials who have full-time day jobs as well, so
where is their support? If you look at the process of reviewing
one contract with Mittal in Liberia, which was signed by the transitional
government, that took a group of people three months to look at
by itself, so that gives you some idea of the sheer weight that
is on this committee's shoulders. Meanwhile, you have large mining
companies lining to get up in DRC while this process is going
on and perhaps negotiating with the government. The coherence
of the contract reviews and the advice the government will receive
from that and the way it restructures the sector is going to be
crucial and it is a mess at the moment.
Q37 CHAIRMAN:
So taking Mr Bercow's point, that is another reason why it is
really important that under this new arrangement the British Government
takes a much more proactive view about what it expects from British
companies or international companies operating out of the UK?
MR
HAYMAN: Absolutely.
Q38 JAMES
DUDDRIDGE: Taking you back to
the Extractive Industries Transparency Initiative, my understanding
is that is only being implemented by about 25 or 26 countries
at the moment. What chance is there that it will become the benchmark
for all countries, and specifically is there a possibility of
a UN Resolution on the initiative?
MR
HAYMAN: The
UN General Assembly Resolution endorsing EITI as a principle of
business is absolutely crucial. That is one example where the
UK has been cheerleading for it and it is an example where they
have perhaps been a bit more active. Certainly DFID has been pushing
this, although again, interestingly, the FCO were like, "Well,
we are trying not to push too many resolutions this year,"
so there is a bit of a disconnect there. If I could draw a parallel
from the Kimberley Process which we are involved in, it was getting
a General Assembly Resolution for the Kimberley Process that gave
it the imprimatur of world support. Our information from Chinese
academics is that it would be crucial, to get Chinese endorsement
of the principles, to get a General Assembly Resolution, so I
would flag that up as a very important development. A friends
group has been set up to push this idea of a General Assembly
Resolution, and I think the UK is part of that.
Q39 JAMES
DUDDRIDGE: A what group?
MR
HAYMAN: A friends
group. I think Azerbaijan is launching the idea of a General Assembly
Resolution. The British Government has been talking about it for
quite a while now, perhaps one and a half to two years, and it
is only just starting to emerge, so I would like to see some rapid
progress on that, and that is something I hope the Minister would
actually go to the General Assembly and help push for a Resolution
on.
10 Rally for Congolese Democracy (RCD) Back
11
Foreign and Commonwealth Office (FCO) Back
12
Democratic Republic of Congo (DRC) Back
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