Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. Fine. Okay. Perhaps someone else might want to ask about that. I will move on. The Department is obviously responsible for handing out huge amounts of money to selected projects. I suspect there will always be a temptation when money is being doled out for people to put their hands in the till, that always happens, I am afraid. It came to me as a bit of a surprise when I read in paragraph 3.12, which is on page 40—I will give you time to get there—"Monitoring visits by the Department to projects ..." was, and I quote from the paragraph, "patchy". I would have thought you would have rigorously had a look at these projects and checked all the projects to see if you were getting what you had paid for. Why did you not have a system in place which rigorously checked the projects?
  (Sir John Vereker) I believe we do have such a system, Mr Steinberg, but it does not rest primarily on the kind of interim reports which are asked for here. It rests on ensuring, first of all, that we fund reputable organisations who have put forward a robust proposal in detail with which we are satisfied.

  61. I am not for one moment suspecting the reputable organisation but there are sometimes people who are not reputable who work for such organisations.
  (Sir John Vereker) The first thing we do is we ensure we have a good proposition from a reputable organisation in which we have confidence. Secondly, we examine this carefully, take an appropriate decision at an appropriate level of delegated authority. Thirdly, we do ensure we get reports. Now we have been over already this question of reports. I have a list in front of me of the number of projects in each country, the number of reports we have got. As I say, the aggregate figure I have is that we have 93 per cent of these. If, Mr Steinberg, you are suggesting that in addition to that we should at this time have put a great deal of our effort and frankly I would have to say organisational effort on the part of the partners with whom we were working into producing interim reports as we went along, I think I would have to say that consideration of urgency and materiality have to be brought into account when you are running in a severe humanitarian crisis. Everybody's capacity at this time was stretched to and beyond the limit. To do one thing would have had an opportunity cost in not doing another.

  62. I am running out of time. The point is that when you did visit the project it says in 3.12 you recovered something like £16,000 in unspent grants. How did you know there was not a huge amount of money lying around not being spent? You would not know because you had not visited the project.
  (Sir John Vereker) As Dr Kapila has reminded us, in any case of an unspent grant our systems will recover it from the organisation concerned. The interesting thing I thought about this part of the report—Chapter 3 of the report—was that whenever the National Audit Office looked to see whether projects as described were actually there, whether equipment had been delivered, whether the money had been spent properly, they always found it had been. The dipstick tests showed that everything worked, under the circumstances, pretty well.

  63. I am obviously coming to an end here; I would have loved to have gone on. That is one example and then there is another example somewhere in the Report that springs to mind. You were sending out a huge amount of food and medical supplies and it was presumably getting to where it was supposed to have been, but you did not know that because you did not know whether it had been delivered. We hear stories, I do not know if they are true, of huge amounts of food going into the black market because it is pinched before it gets to the people that should have it. The fact of the matter is your Department did not even know that food had been delivered. I can understand that you want to do things quickly, get the food out and the projects out because people are suffering and dying. On the other hand, there should be mechanisms to make sure you are in a position that nobody can defraud you.
  (Sir John Vereker) I agree, Mr Steinberg, that we can structure more carefully the documentation which proves it and part of our standard operating procedures, in the light of this Report, in the light of this experience, will be to ensure that there is written documentation obtained when supplies reach the end user. That is important, I agree. However, nothing in this Report and nothing in our experience of this Kosovo crisis leads us to think that any of the supplies did not get to where they were supposed to get. If there is a weakness here it is the weakness of our failure to keep the documentation to prove it rather than any suggestion that it did not get there.

  64. I was not suggesting that.
  (Sir John Vereker) Every single dipstick test that anybody has done has shown that it did.

  Mr Steinberg: Thank you.

  Chairman: Andrew Love?

Mr Love

  65. Good afternoon, Sir John. I read the title of this and it is called Emergency Aid and we have heard a great deal about the humanitarian crisis. Before I get into questions can I ask you how much urgency there was in this operation because when we read through this Report the urgent nature of it was very much the reason things happened the way they did, but since the whole Kosovo crisis, you could say the crisis of Yugoslavia, unravelled over a very long time, how much urgency was there at the time of these events?
  (Sir John Vereker) The movement of population, Mr Love, after the beginning of NATO air action on 24 March, was of a scale which was unexpected by everybody concerned with this and it was, as the Report records, the largest movement of population in Europe and the worst humanitarian crisis we faced in Europe since the Second World War. It was, therefore, a matter of urgency. Those of us who saw the television pictures, or in the case of those on this side of the table witnessed it first-hand, the movement of population to the Blace holding camp on the North Macedonian border where huge numbers, up to a quarter of million people, had been displaced from normal working lives in the heart of Europe to be placed in atrocious conditions and conditions under which they undoubtedly would have died if people had not taken emergency action led us to treat this with great urgency. I do not however, Mr Love, conclude from that that it would have been right for us to ignore process, procedure and value for money. The Department cares deeply about all of those things.

  66. I want to come on to that. Let me run through. 24 March was the first signal of this unprecedented movement of people. On 29 March, according to the Report, the Department made available £10 million of humanitarian aid and then on 3 April they asked the Crown Agents to go in, if I can call it that. What discussions took place between 24 March and 3 April between the Department, the Crown Agents and others in relation to the possibility that they may have to go in? You did not just ring them up on 3 April and say, "Look, lads, you have got to go in," I assume.
  (Sir John Vereker) I will ask Dr Kapila to answer the question in a moment about when the first approach was made. To flesh out the picture a bit and to remind ourselves, the movement of population had built up over a period of a week or two after the bombing started. In the early stages, two things. First, we did not know how big it was going to be and we did not know if these were internally displaced people who were going to move around within Kosovo and be difficult to get at or whether they were going to come across the border. It was a major part of our activities whether the Macedonian authorities were going to let them in. We did not know very often until they arrived at the border. So there was much uncertainty in the early days. Secondly, although this hearing pre-supposes that we were the people looking after a quarter of million Kosovo refugees we are part of an international system and there is an international system, the United Nations High Commissioner for Refugees, which has first-line responsibility in crises such as these and it would be wrong for us—

  67. I understand the delicate discussions that had to take place about how serious this crisis was going to be and I fully accept that you had to go through that. What I am rather more interested in is what discussions took place between yourselves and the Crown Agents and others in relation to the possibility, which may have been far away at the beginning but soon became much closer, that there would need to be an involvement of the Department in what was happening in Kosovo?
  (Sir John Vereker) I think Dr Kapila is in the best position to answer that.
  (Dr Kapila) As soon as we realised on the 24th, or the following day, that the potential implications of the conflict would be a humanitarian crisis of undefined magnitude, we put in hand our normal contingency arrangements, which is to think amongst ourselves what are the likely scenarios and then to try and look at our own capabilities, that of our partners and consider at that moment in time which to mobilise. Within a day or so I was in touch with Alan saying, "Look, we are not quite sure what we are going to be doing in a few days' time but I think you had better start making plans. See what people there are around. It would be quite useful to have some of the people who worked with us in Bosnia because it is in the same region. Why don't you put into effect a contingency arrangement and get your people and stocks and supplies ready and I will get back to you when we need them." On 3 April we decided that we would activate this contingency arrangement and then the whole operation was launched. Between the 24th and the 3rd, essentially two things happened, contingency planning and defining for ourselves what was the best way to respond as part of an international effort.

  68. You would accept that if an international effort had to be mounted—although there were other partners who would inevitably take part and the UN would take a central role—because of Britain's position in relation to the whole activity prior to the humanitarian effort being necessary, you were likely to play a major role in that humanitarian effort?
  (Sir John Vereker) I think the short answer to that is yes but we did not expect the international system to be quite as overwhelmed as it was. The Report is appropriately delicately worded but people will remember that the scale was such that at first international organisations found themselves less able to respond flexibly and quickly than a bilateral agency is sometimes able to. Because we had contracts in place, experienced people available, and frankly a history of delegated decision-making, backed up by robust systems, we found it easier to deploy than our colleagues in the international organisations at first.

  69. There have been discussions all the way through this session about the relationship between the Department and the Crown Agents and whether or not contracts should have been in placed and whether or not there should have been greater flexibility. Without going back through all of that, at any time during discussions about the possibility that the Crown Agents would need to go in, did anyone think about whether or not the arrangements between the Department and the Crown Agents were adequate to cover you for that eventuality?
  (Sir John Vereker) Yes, indeed, and, Mr Love, it was a reassurance to know that at all times we had a contractual arrangement upon which we could rely. We always operated within that. You will no doubt want to interrogate the Crown Agents' team separately but I would expect them to have been very conscious of it too. This was a contractual relationship but it was one based on knowing each other reasonably well and knowing each other's capacity reasonably well.

  70. Can I just ask the Crown Agents whether at any time they raised the issue about the likely ending of their contract at the time when the discussions were going on about the possibility that you would be going into Kosovo and the likelihood that if you were in Kosovo you would be there for some considerable time?
  (Mr Matthews) Of course we did, Mr Love. We were within a few days of a contract expiry so it was clear to us that an extension of some sort would be required and that is what happened. If I could also supplement Dr Kapila's earlier remark about discussions prior to the crisis breaking. One of the remits of the emergency response team is to keep our fingers on the pulse of disasters worldwide. On 28 March I was in Islamabad heading for Tadzhikistan, for a different mission, I just happened to have CNN on in my room and saw that the Kosovo crisis appeared to be breaking, in fact, I saw the Secretary of State being interviewed. I then took the decision to turn round and return to Europe and within two days we were launching air lifts. So, to use the famous phrase from the Battle of the River Plate, "Anticipation got us there in time".

  71. I think you will find quite a lot of sceptics around this table. None of us predicted that the Soviet Union would collapse and I think we all recognise the inherent great difficulties there are in trying to detect what will happen internationally. If there is no implied criticism that you should have known earlier, it is not coming from me, I accept the difficulties there are in this area. All I am trying to find out is what pre-planning had gone into the possible eventuality that would reasonably flare up into an unprecedented humanitarian problem?
  (Sir John Vereker) Two answers to that, Mr Love. First, I am sorry to bang on about this contract but it is extremely important to us. This contract and its predecessor served us extremely well. It has ensured that we have arrangements in place which we can call down responding to an infinite array of possible crises. We have had to cope, have we not, with Monserrat, East Timor, Bosnia, Sierra Leone, Hurricane Mitch, you name it, and having this capacity on standby to call down is an absolutely vital part of our preparedness. Second, Mukesh?
  (Dr Kapila) If I have got Mr Love's question right about preparedness beforehand, certainly our thinking on these matters did not start on the 24th.

  72. Of course not, no.
  (Dr Kapila) Certainly I remember very well the discussions around the Department when the Rambouillet talks were going on, the concerns about whether or not they would fail and if they would fail what would be the implications of that. If they failed and there was a major crisis, which direction would the crisis head towards. We had very extensive discussions with some NGOs, I remember in fact chairing a meeting myself with the Department bringing British based NGOs working in Serbia into the Department to ask their advice on these matters, talking to the UN High Commissioner with our embassy, our mission in Geneva and so on, partly to try and prepare for these eventualities. In a sense when the 24th came there was a considerable amount of information not about the magnitude of the crisis, obviously that is unpredictable, but certainly the broad directions we might be wanting to head towards if this crisis kept on unfolding with the worst case scenario in mind.

  73. Let me come on to the air lift. I always remember there was a very famous personality in British aviation who made his money on the Berlin air lift because there were no other companies around and we had to use him. I wonder in preparation for the possible humanitarian effort that we would need to make in Kosovo, did no-one think about what planes would be available and whether there ought to have been greater competition to provide those services?
  (Sir John Vereker) If I may say so, with respect, I think that is a very reasonable question. I think hindsight shows us that air lift capacity and air space capacity was one of the constraints. I am not sure we could have done anything about it before. Let me just bring this to life a bit because this report talks about 54 air charters and that might give the impression of 54 separate occasions on which we chartered the planes to go from A to B. It was not really like that, what we were doing at any one time, we had an officer pretty well full time on this, was trying to ensure that a limited number of planes available—and there was only a limited number of heavy lift aeroplanes—flying goodness knows where, picking up supplies wherever they happened to be available at, as far as possible, maximum capacity so as to get value for money, and then negotiate a landing slot which had to be iterated through NATO in Brussels, who were bombing the place half the time, and the UN operation in Geneva which was supposedly controlling civilian air slot. This was a horrendously complicated and difficult task, there were many constraints. I guess—Dr Kapila may be able to flesh this out a bit—the critical constraints, as so often, were landing slots and air traffic control capacity in the airfields concerned.

  74. Rather than do that, because my time is effectively up, can I ask for a note on that particular issue.
  (Sir John Vereker) Sure[1].

  75. Finally, a couple of quick questions in relation to grant funding of various organisations. It says somewhere in the report that all the organisations you dealt with were either vetted by UN or other international agencies. Is that the case for every single one including the local agencies that you would use?
  (Sir John Vereker) Every single agency or organisation to whom we gave a grant will have provided a written justification including a description of their capacity. In the overwhelming number of cases we will have known something about them.

  76. The reason I ask is looking at the appendix, there was a number of local organisations.
  (Sir John Vereker) Sure.

  77. There has been quite a considerable concern since the Kosovo crisis about some of the activities of local people. I will not go any further, I do not want to give the impression Kosovo is full of drug dealers or people who are on the make but the reality is there has been some concern about that. Are you happy that none of the monies that you have disbursed in Kosovo have been used for other than the purposes for which you intended?
  (Dr Kapila) In practical terms you are quite right, there were a whole range of agencies working on the ground. The arrangements that were put into place with our own specialists in our field offices were to do detailed appraisals of those individuals. Common sense prevails in terms of the management of those. For example, I can remember vividly requiring some organisation under contract locally to provide some services to refugee camps. Now obviously we did not know these organisations from a long time ago but the services needed to be delivered. The way the local grant was handled would be that a sum of money would be advanced but not the whole grant, the service would be delivered, inspected by our own people on the ground and then the balance made over. There were cases where the quality of the service was not good enough or we found they were not giving us a reliable service in which case one would have terminated the grant. There were some projects which were therefore terminated because we were dissatisfied with the results and we moved on to something else.

Mr Rendel

  78. I would like to start on the emergency air lift, if I may go back into more detail over that and paragraphs 2.28 to 2.32. First of all, paragraph 2.28 talks about the way in which the contract with the two brokers was originally set up and they were selected apparently following a competitive tendering exercise. Do you know how many brokers were considered in that tendering exercise?
  (Dr Kapila) I believe there were at least two but I think there may have been three or four, I cannot recall now. We can certainly find that information.

  79. There must have been at least two, there were two chosen.
  (Dr Kapila) Yes. The market in brokers who provide this sort of service is not very extensive.

1   Note: See evidence, Appendix 1, page 117 (PAC 1999-2000/237). Back

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