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David Taylor: I am grateful to the Secretary of State. Will he confirm that in the murky world of international arms deals, 1 per cent. commission is generally regarded as appropriate, and the Export Credits Guarantee Department automatically regard any commission of more than 5 to 10 per cent. as ultra-questionable?
Hilary Benn: That is my understanding of the approach adopted by the ECGD, which was not involved, as the House will know, in this particular case. However, because those allegations were made about the deal, it is right and proper that they should be investigated.
seriously undermine the economy or seriously hamper the sustainable development of the recipient country.
The export licensing process also involves consideration of conflict, human rights and other issues, but criterion 8 is most relevant to this particular case. The Government take their responsibilities on arms export licensing very seriously, and they considered the application of the criterion carefully when the licence for the air traffic control system for Tanzania was considered. The issue was thoroughly discussed by the Departments involved and, in the end, the Secretary of State for Trade and Industry concluded that the licence should be approved. That is not to say that there were no concerns about the system and its suitabilitythere clearly were, as the World Bank and the ICAO reports made clearbut the test of criterion 8 is whether it is likely seriously to undermine the economy and sustainable development. The Government at the time judged that it would not do so and, looking back from this vantage point, it would be hard to argue that it did.
Mr. David Heath (Somerton and Frome) (LD): There is not a criterion requiring the applicant to be a fit and proper person to hold a licence, but operative provision 10 of the EU code of conduct allows the Government to take other factors into account. In the light of what has been revealed about the general working practices of BAE Systems in a number of recent cases, is it still the Governments view that BAE is an appropriate recipient of a licence?
Hilary Benn: Every licence application, as the hon. Gentleman will be aware, is considered on its merits at the time. If the Government operated any other system we would be rightly criticised. Each licence has to be considered on its own merits.
Daniel Kawczynski: The Secretary of State said that such a deal would not impinge dramatically on the economy of Tanzania, but that is not correct. The countrys entire gross domestic product is only $10 billion, so £28 million is a huge sum. If we spent that percentage of our economy overnight on such a project it would have serious ramifications for the economy.
Hilary Benn: If the right hon. Gentleman will allow me to respond first to the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), I will gladly give way to him, before trying to make progress.
Mr. Lilley: I am grateful to the Secretary of State for giving way, and I apologise for trying to intervene on him before he had done my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) the courtesy of answering his question.
the least diversion of human and economic resources
Our engineers prescribed the system which we required. We put the contract out to tender, four companies competed and we got BAe Systems delivering to our specification. This is the system we wanted.
Norman Lamb: The argument is that criterion 8 should have ruled out the sale of the system because it seriously hampers the sustainable development of the country. I would argue that for a country heavily in debt, that must be the case, but if the right hon. Gentleman argues to the contrary, is he saying that criterion 8 needs to be amended? Surely the conclusion must be that it is wrong to grant an export licence for the sale of an inappropriate system that was not fit for purpose.
Hilary Benn: Criterion 8 does not exactly say that. There will be an opportunity to review the Export Control Act 2002 during the year, and the House has the opportunity this evening to debate the issue, as we are doing. We should always reflect on experience. In the end, the Government weighed these matters up and reached a view that the test in criterion 8 was not met. However, there are lessons to be learned, and I shall come on to those. I know that many Members are anxious to speak and I should like to make progress.
First, there was a need for clearer guidance within Whitehall. We have now agreed guidance for officials when they look at the impact of proposed arms exports on a recipient country. The principle that sustainable development must be taken into account in licensing decisions was enshrined in the Export Control Act 2002, which is one of the toughest licensing systems in the world. The House should recognise that. DFID continues to play an active part in the licensing process. The Export Control Act is due for review this year. The Department of Trade and Industry will lead the process, consulting widely with other Departments, Parliament and civil society. One important area that we will look at is the activities of arms brokers, how well the current controls are working and whether they need to be strengthened.
The second question that we need to ask ourselves is how we continue to ensure, as a major exporter of defence equipment and as a major international donor, that UK arms exports do not undermine development. That is what we are concerned about. We know that excessive spending on arms can divert money away from health and education, and irresponsible transfers can be used to ignite violence.
Nevertheless, all countries have a right to provide for their legitimate defence and security needs, and those of their citizens. For that they need suitable equipment, and few developing countries have the means to manufacture that equipment. Most are dependent on arms imports. In the circumstances, what we can do is to have the right framework for taking decisions about UK licensing decisions, but to recognise that that is not good enough if other countries do not follow the same approach. That is why the UK has been leading the campaign for an international agreement, in the shape of an arms trade treaty, which would benefit everyone and which would also have the power to stop arms transfers that fuel violent conflict, particularly in the worlds poorest countries.
Hilary Benn: As the hon. Gentleman knows, extra-territoriality currently applies to certain brokering activities abroad relatingfrom memoryto weapons of mass destruction, instruments of torture and brokering that contravenes international arms embargoes. At the time we said that we wanted to see how the new arrangements worked. Part of the purpose of the review of the legislation is to give the House the opportunity to reflect on that. If the world did more to control the flow of small arms and light weapons, which are principally responsible for the terrible death toll in developing countries, I am sure the whole House would welcome that.
On the allegations of corruption, I am, of course, aware of them but as I said, I cannot comment on the details of an ongoing SFO inquiry. However, I can assure the House that the Government are co-operating fully, and that the Tanzanian authorities have also extended full co-operation, indicating their seriousness in trying to combat corruption.
As in many low income countries, there is corruption in Tanzania, but progress has been made in combating it and in improving accountability. Tanzania is currently one of the top rated low income countries in the World Banks country policy and institutional assessment, and Tanzanians surveyed in 2006 felt that corruption in their country was declining.
Susan Kramer (Richmond Park) (LD): The right hon. Gentleman has said in the past that where there is corruptionI cannot quote his words exactlythere is someone who accepts the bribe and a party that offers the bribe, who is equally culpable. Does he agree that any instance where the UK Government are seen to accept corruption by the briber undermines any attempt to deal with corruption in any country?
Hilary Benn: We do not accept corruption. That is the very reason that we passed legislationnot legislation that we found on the statute book in 1997 when we came into officeto make bribing a foreign official a criminal offence in this country.
Daniel Kawczynski: How would the right hon. Gentleman react to the recent comments from President Mbeki of South Africa, who alleges that we have been involved in corruption, so we are on a less sound footing for having a go at African countries that are involved in corruption?
Hilary Benn: I do not know who the hon. Gentleman means when he says we, but if he is talking about the Government, I emphatically reject the charge that has been made. What I would say to people who have made commentI must be careful here, in view of the strictures on referring to itis that one decision in relation to one case does not make a Government policy. In a moment I shall point out some of the things that we are doing to tackle the problem of corruption arising out of the legislation that we have passed.
Mr. Jones: I am grateful to my right hon. Friend. Does he agree that there is confusion about the Governments role, and that some hon. Members think that the Government were involved in the negotiation of the deal between the Tanzanian Government and BAE Systems? The role of the Government was to grant the export licence.
Hilary Benn: My hon. Friend is right. As I explained to the House, that was indeed the role of the Government. The decision to purchase was the Government of Tanzanias. The decision to sell was BAEs.
The hon. Member for Sutton Coldfield rightly drew attention to the impact of an increasingly independent media in Tanzania, which has highlighted a number of alleged cases. That will see the fight against corruption
in Tanzania intensify and gather pace in 2007. The Government of Tanzania will table new, strengthened anti-corruption legislation before the next Session of Parliament. Parliament is also considering a draft Freedom of Information Act.
The Government of Tanzania have just launched the second phase of their national anti-corruption strategy. That sits alongside the public sector reforms currently under way, which President Kikwete spoke about during his recent visit, and which have steadily improved the accountability of Government and the services that they provide to their citizens. These reforms are supported by DFID. I pay tribute to the right hon. Member for Birmingham, Ladywood for her work in that regard.
Reforms include public service pay reform, streamlining planning and budgeting, and increasing accountability. Tax reforms have increased revenue in Tanzania. It is encouraging that Tanzania has managed to lift tax revenues from 11 per cent. of gross domestic product in 2000 to 14 per cent. in 2005. Public financial management reform has improved expenditure control, allocating resources to sectors in line with national plans, and strengthening auditing and procurement. That reduces opportunities for corrupt practice.
Reforming procurement is particularly important in a case such as the one under discussion. The solution to concerns about the suitability of equipment, value for money, affordability or potential corruption is for countries to have sufficient capacity and their own procedures in place to deal with these matters themselves. That is the solution. In the case of Tanzania, these reforms are important individually, but they also complement one another in bringing about a transformation of the public service as a wholeone that is better able to deliver for citizens and in which the Government are held to account. In Tanzania, we are seeing increasing demands from citizens in rural areas for greater sanctions against local officials who misuse resources. We are seeing demands for schools, clinics, water and roads. We have seen increased public demand for accountability. The hon. Member for Sutton Coldfield mentioned the recent demonstration about the radar purchase, in particular, that was organised by Opposition parties in Dar es Salaam. The media have covered the issue, and civil society has added its voice to calls for a thorough investigation. All that demonstrates that in the case of Tanzania, pressure to investigate allegations of corruption in such cases is domestic as well as international. We should welcome that.
On international action, the UK has ratified the UN convention against corruption and promoted the very successful extractive industries transparency initiative. We are setting up the governance and transparency fund to help those working to improve transparency, we have established the international corruption group, and we are taking on additional police officers working with the City of London and Metropolitan police. Why? It is to increase our capacity to investigate bribery, corruption and money laundering.
Pete Wishart: Are not the Government in danger of losing some of their legitimacy in lecturing African countries about corruption when the Prime Ministers own chief fundraiser is being questioned about perverting the course of justice?
We have also had some successes. In one case, we returned funds to Nigeria that were brought into the UK in a suitcase. In another, thanks to the legislation that we put on to the statute book and the swift work of the police, to whom I pay tribute, in freezing assets that had been purchased with money that had come from Nigeria, the courts ruled just before Christmas that some of those assets could be sold so that the funds could be returned to the people of Nigeria.
I want to turn to the impact of all this on Tanzania. While the concerns about the cost of the system were not sufficient to warrant refusal of the licence under criterion 8, as a donor we were concerned about the wisdom of the purchase and expressed those concerns to the Tanzanian Government, particularly as regards governance and financial management. It was the right hon. Member for Birmingham, Ladywood who did so. Having discussed all this with the Government, and having received assurances that they would not proceed with purchase of the second phase of the system, we continued with our aid programme. UK aid to Tanzania has doubled from £60 million to £120 million over the past four years and will continue to increase in future.
With the help of aid from Britain and other donors, Tanzania has made very impressive progress in its efforts to reduce poverty in recent years. Spending on health and education has increased significantly, and spending on defence as a proportion of the Governments budget has declined. Dependence on donors has fallen from 49 per cent. of the Governments budget in 2005-06 to just 41 per cent. this year. Picking up the points made by the hon. Member for Sutton Coldfield about the difference that our development programme makes, we are seeing results. There are 8 million children in primary school in Tanzania todayup from 4 million in 2000. The goal of universal primary education is within touching distance, with an enrolment rate of 96 per cent. Infant mortality, which was stubbornly high in the 1990s, fell by a third in the five years to 2004. Child malnutrition has fallen. Malaria treatment and prevention has improved, and immunisation rates are high. Of course, there is much still to do, but there has been real progress in improving the lives of poor people.
I have tried to set out the background to the case and the process by which decisions were taken at the time. There are lessons to be learned, and the review of the 2002 Act will allow us to do so. But in the end, the real solution, as we set out in the White Paper, is for us to work with developing countries to enable them to
take the right decisions. These decisions should be taken by those who are ultimately responsiblethe Governments and peoples of the countries themselves.
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