Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 180-185)



  180. Picking up somewhat on the area of co-operation with other countries, and I accept that it is extremely difficult to quantify one's achievements when you are one of a number of partners, what it is possible to do, of course, is to insist that the same rigorous criteria for the environmental impact assessments should be applied in any programme where the Department co-operates with another partner in a developing country. That is not the case at present. What I think I would certainly seek your assurance on is that the Department will look to making sure that is the case and that you are not hiding behind the fact that this is a project that is co-sponsored or that is delivered through another party. Clearly if one were constructing a road in this country a full EIA would be conducted and there are certain standards below which we will not fall. I am happy to say that when the Department is doing its own EIAs then often it will take account specifically of, as we mentioned, bio-diversity. Certainly in partnership it does not take control in that same way. I think we would like to see that assurance that you will impose those same standards even if you are working in partnership with somebody else.
  (Mr Chakrabarti) You have my assurance. What we have done in the service delivery agreement, which is below the public service agreement, is put in a specific target which is about developing guidance with our partners to try and convince them that this is the right way to go—to have an integrated strategy in the way we have been discussing now, using the OECD principles, which are excellent principles for the way in which we go about this, and using the OECD forum to drive this through, so we will carry on doing that.

  181. Finally, I wanted to give you the opportunity to develop more for the Committee some of the things that you began to speak to Mr Jenkins about and that is on issues of governance and the ways in which the Department is working with countries to ensure that governance is a major element of the programmes that you are putting into effect. It is really to give you the opportunity to expand on what you said on that because I think it is extremely important to our understanding of why aid is not, as it has done in the past, simply going into a black hole and why it is not getting sucked out into guns and to understand the ways in which the Department is seeking to control the flow by sorting out the procedures in the recipient countries.
  (Mr Chakrabarti) Governance, as I said earlier, is very, very crucial. We have taken this very seriously both on the international stage at the World Bank and with other donors. In every single country programme and every country I have seen on the ground and in every strategy paper, this crops up in all our discussions. I would expect us to make sure that we always have the safeguards in place so that none of our money is wasted through bad governance. We go through a lot of checks to do so. We start off by a thorough evaluation of public financial management systems and audit systems. We move on to make sure that the government we are going to work with has a credible programme of improvement. It is not enough to say, "We have got the systems, they are okay," they must be committed to improving them. Then we will look, where there are some risks left over, at whether the potential benefits of working with that government outweigh those risks and whether we have the safeguards in place to try and manage those risks. Often it is a risky business. Whatever we do in the Department we try and minimise risks that we can control.

  Mr Gardiner: I will leave it there.


  182. Thank you very much, Mr Gardiner. Mr Chakrabarti, you have been asked a series of questions about corruption. There is no reference directly to the siphoning off of funds and of course the National Audit Office have no audit evidence of that because it did not relate to this country. However, the Report has emphasised the importance of good governance particularly in 3.28. My own personal comment on this is that it beggars belief that a large part of our aid is not being siphoned off in corruption. This is obviously an important issue which the Committee will want to consider. You have resolutely failed to comment on it by saying you have no evidence. You may not be able to answer now but I want to push you further to prepare a note on this subject. I feel sure that you must have some evidence of very large sums we are handing over being siphoned off in corruption. It beggars belief that you do not have such evidence. If you do not, given what we know is going on in these countries, that is rather worrying.
  (Mr Chakrabarti) I can only provide you with the assurance I have already made about our internal audit systems, the national audits and the value-for-money checks, which have not come up with massive corruption—that I know of.

  183. Do you not have any personal view from your great experience in these areas? Are you not worried about it? Are you not worried that if your internal audits are not coming up with this evidence then there is some shortcoming in those internal audits? Is this not a matter of great concern to you?
  (Mr Chakrabarti) The internal audit people are first rate in our Department. It may be of some comfort that if they are not coming up with any large-scale evidence of corruption it tends to show that our systems are working very well. That is not to say the development effort of all donors does not have some corruption involved. I cannot speak for other donors but it does say that our £3.5 billion is well spent.

  184. Mr Steinberg asked some very good questions on aid to China and Russia. Here you have a fabulously rich country but there are hundreds of millions of people living in great poverty. Can I help you with your answer on that. Is it that it is not so much our aid to countries like China which can make much direct difference in terms of reducing poverty overall but that it can change attitudes in certain area in terms of good governance or policy making. Would that be a fair comment?
  (Mr Chakrabarti) Certainly in a place like China the demonstration effect helps to change policies and attitudes, but also working with people like the World Bank we have changed governments' policies in a number of areas over the years. We have been part of the opening up of China on economic policy which has obviously been of great benefit to the poor in China.

  185. Thank you very much, Mr Chakrabarti, for your first appearance before our Committee. Obviously it is a subject we are very interested in because it is of great importance. You have been asked a series of questions on PSAs but we still accept that what you are doing is very important. On a lighter note, may I say you are a great hero of mine because you are leading the battle for fathers who hold down very important jobs to spend more time with their families. Thank you for what you have done.
  (Mr Chakrabarti) Thank you. I see it is 6.15. I should be home already!

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