Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. I understand that. It seems odd you set up a system under which you would do that. You then chose not to do that and yet on one occasion you chose to do it in order to test the market. There seems an inconsistency in your action.
  (Sir John Vereker) I agree. The puzzling thing is why we did it on one occasion. I draw attention to the arrangement we now have which is with a single contract for these broking services. We have implicitly concluded it is really not sensible to have two brokers working for us in competition. We have a competition which is the best broker. The confusing thing is this broker is two people but it is a single contract[6].

  101. You appear to have chosen this on the basis of one test of the market on one occasion.
  (Sir John Vereker) No, I think it is just the most straightforward way of doing it.
  (Dr Kapila) The currently active contract was tendered for in the normal way we do these things. There is a tender, people are allowed to bid, an assessment is made, and so on.

  102. Still at five per cent and you are still going to—
  (Dr Kapila) The five per cent, yes, that is same.
  (Sir John Vereker) We do not want to run a competition every time unnecessarily. That would be laborious.

  103. Can we go to Paragraph 3.12 at Page 41 of the Report. I understand that on one occasion when you visited the project you did discover there was some unspent grant which presumably has now been recovered, £16,000 worth. What guarantee can you give us that there are not any other unspent grants lying around that have not yet been recovered?
  (Sir John Vereker) Every time that we issue a grant agreement it is a condition that there is a project completion report provided to us at the end by the entity, agency or organisation concerned which requires an accounting of the grants we have given them. If there is any unspent amount it will have to be returned to us.

  104. You have had all those reports back?
  (Sir John Vereker) As to 93 per cent, as I say when I checked this morning, and some of them are still ongoing. I can assure the Committee I am very confident that if we give grants for specified purposes to these organisations and there are unspent balances we will get them back, yes.

  105. Can we turn then to paragraph 4.4, and we have already discussed this at quite some length but I have one or two further questions to ask about this question of the accounts and why the money was left. We are told that the balance at the month end did not fall at any point below £2.7, do you have any feel for what the average balance was in these accounts all put together?
  (Sir John Vereker) I think the Crown Agents may be able to give you some help on this.

  106. Do you know the answer?
  (Sir John Vereker) I do not know the answer. Do you know, Mr Berry?
  (Mr Berry) There is a figure of £2.2 million as an average balance, Mr Rendel.

  107. In fact the month end figure—
  (Mr Berry)—happened to be higher.

  108. Every single month end figure was higher than the average balance altogether. That sounds extraordinarily unlikely, I am not saying it is impossible.
  (Mr Berry) It does sound extraordinarily unlikely.

  109. Extraordinarily unlikely.
  (Mr Berry) It is nevertheless possible.

  110. It is possible and you are confident of that?
  (Mr Berry) Yes.

  111. Okay. According to paragraph 4.5, figure 11, there were some times when it took some time to get a balance returned, unused balance returned, and we are told by the NAO report just at the end of 4.4 that you are now taking steps to make the appropriate adjustments to make sure you get these back rather quickly. Could you tell us a bit more what those steps are?
  (Sir John Vereker) Yes. I think the technology of banking is helping us here. Crown Agents will speak for themselves but CAFSL—Crown Agents Financial Services Limited—are creating an online system which will enable us to monitor accounts much more closely. I have had a discussion also with my finance director about whether in the light of this report, and the concerns expressed in it, even though I am still rather robust on the need for liquidity in the system, we might not be able to reduce the level of balances if we ran with fewer accounts. It is not crystal clear to me, notwithstanding that these were all very different purposes, since they were all at CAFSL, why it was necessary to keep the accounts distinct, therefore probably have higher balances. Although I am not telling the Committee we have done this, I am telling the Committee we are actively considering whether we might not on a future occasion be able to run with fewer accounts and put the levels down.

  Mr Rendel: One final question. Later on in paragraphs 4.16 and 4.17 you talk about what happens to some of your equipment at the end of the stage when perhaps it is no longer needed. Obviously you decided to give some away and some you decided to sell for some reason. It would be interesting to know how you make that difference, and in particular how are you going to deal with the new resource accounting that is now being introduced? Clearly some of the resources which you purchased in order to provide emergency aid are immediately used up, given away to other organisations or whatever, some remain within your own control. Some will end up then being given away, some will end up being sold. Have you decided how you are going to account for all that under resource accounting?

Mr Steinberg

  112. No!
  (Sir John Vereker) I think that is a terribly unfair question from the Public Accounts Committee. In our resource accounts the treatment of capital assets provided under the programme is different from capital assets on the Department's account. I need my finance director here to answer your question and I am very happy to get him to answer it.

Mr Rendel

  113. Perhaps he can send a note in afterwards[7].

  (Sir John Vereker) All I can tell you about the equipment referred to in paragraph 4.17 is that we did a full physical audit of all this equipment in September 1999 and took what I believe to be a rational decision about the disposal, and we will have proper records of that. I am very happy to drop you a line about the treatment for resource accounting purposes. I believe that it is not affected by it but I will want to check that.

  Chairman: We cannot wait to see it. Mr Alan Williams?

Mr Williams

  114. I think nearly all the detailed questions have been asked, just one or two broad brush questions, if I may. Like my colleagues I accept the extraordinary difficulties of the situation you are working in. In September 1998 I heard the United Nations Commissioner at a Non Governmental Conference in Washington deploring the slow response there was from some member countries at that stage. Looking back, what would you say is the most avoidable mistake perhaps we made? When I say "mistake" I do not mean this in a condemnatory sense, we are looking to the future and things that can be avoided, we are not looking for fall guys or things in the past. What is the thing you wish perhaps you had done differently? I do not know who would be the appropriate person to answer that. Sir John, shall we start with you?
  (Sir John Vereker) I need to think about that just for a second, Mr Williams.

  115. Of course.
  (Sir John Vereker) Looking back on it, the hardest period for us was the early period when it was very unclear what was going to happen in terms of the movement of population and very unclear who was going to deal with it. What we have not talked about much this afternoon is this question of who was going to be responsible. With the advantage of hindsight, I would want the international system to be a little bit clearer about who does what. This is a constant endeavour on the part of the Department, and Dr Kapila in particular, to ensure that the United Nations system, the Office of Co-ordination of Humanitarian Affairs, the UN High Commissioner for Refugees, the European Commission's ECHO Humanitarian Organisation and bilaterals such as ourselves are properly prepared and properly communicating. In the early days of this crisis the system was—I have used the word before and I am not ashamed to repeat it—overwhelmed. We were basically it for a while. I think looking back on it we want to have a more joined up international system. I would like to ask Dr Kapila what he thinks because he and I lived through this for 76 days without going home. What did you think?
  (Dr Kapila) I think, to add to what Sir John said, reflecting back on the amount of energy and effort we had to put in into making assessments, we were constantly trying to work out what was happening and the significance of what was happening. I am speaking here on the humanitarian side. In other words, where were the people, how many people were inside Kosovo, was there or was there not substantial numbers internally displaced and so on. It seemed to me, certainly, considering the number of other Governments and number of other organisations that must surely also have been engaging on the same question, we were not as good as we could have been collectively, internationally, to have some type of more authoritative centralised assessment of these types of questions. If you achieve that you would at least have a common basis on which to work.

  116. Yes.
  (Dr Kapila) If you cannot achieve that then clearly you have fragmentation of response. Subsequent to that we are putting quite a lot of effort in our dialogue with the UN system with both the UN Secretariat in New York on the political side and in Geneva on the humanitarian side to set up basically more information technology based exchange systems. There I think technology will also probably help us in the months ahead.

  117. In fact, you take me where I was going next. It is very helpful because it does follow logically on. Looking at the list of organisations involved—bear in mind you were being flooded by events, with movement that one anticipated of the population in places where they were not anticipating—you had this large number of organisations and the impression which comes over is that co-ordination was not the strongest point of the Allies collective response. There must therefore have been duplication and a degree of wastefulness and lack of prioritisation of effort. Is that being too condemnatory?
  (Sir John Vereker) Of course it was not perfect, Mr Williams.

  118. No one expects that.
  (Sir John Vereker) But it was not quite as bad as that and looking back on it I think the reason was that a lot of delivery capacity in the early days was military. If you glance at the picture on the front of the NAO Report this is, I believe, the Blace camp in Northern Macedonia. This is a camp. You are looking at DfID supplied tents erected by the British military. They are drinking water from DfID-supplied bowsers, probably operated by the British military. They are using latrines dug by the British military. They are eating bread baked in a bakery funded by DfID, maybe the military did not do that, but maybe the initial ration packs came from the military. What I am saying is that co-ordination was very much who had the capacity on the ground for labour and in the early days our colleagues, the contractors in ELMT, provided the systems and supplies and all that but the actual labour, putting up the camp in the case of Blace, was done by the British MoD, by KFOR, and in other camps it was done by others. The co-ordination therefore was not quite that bad. It was a little bit earlier it fell down. Where it really fell down, as we all remember, was where people were trapped on the border of Macedonia and it was raining and it was awful. We could not get them across and Milosevic would not let them back. We simply did not know what to do. It was dreadful.

  119. It sounds rather strange to read in black and white that the Memorandum of Understanding with each of the air charter companies had been allowed to lapse in December 1997 when it was so apparent that something major was about to happen, not necessarily identifying the scale of it. How on earth could we have allowed that to happen?
  (Sir John Vereker) Again, Mr Williams, I am not excusing ourselves. I think it would have been better if it had not. But we did at that time not expect that we would be again involved in direct airlift operations of the kind we had run in and out of Sarajevo which was what that earlier contract was for. We thought that we would largely be responding to international appeals from international organisations who themselves would be running air charters. The World Food Programme did exactly that and very effectively. What we discovered in the early stages of this operation was that the task was too great for the international system and for our colleagues in UNHCR in particular and we had practically to do it ourselves. At that point it would have been better to have a contract. I still want to persuade the Committee that the fact we did not have a contract did not prove a problem. We were able to extend it by oral agreement. It still required competitive tendering for the actual charters and the commission fee was standard so there was no loss of value for money or control.

6   Note: See evidence, Appendix 1, page 118 (PAC 1999-2000/237). Back

7   Note: See evidence, Appendix 1, page 118 (PAC 1999-2000/237). Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 14 February 2001