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Aid to #Africa: Millions of pounds of aid money is at risk of falling into criminal hands, warn MPs January 30, 2015

Posted by OromianEconomist in Africa, Africa and debt, Aid to Africa, Corruption in Africa, Illicit financial outflows from Ethiopia, UK Aid Should Respect Rights.
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 Odaily telegraph

Millions of pounds of aid money is at risk of falling into criminal hands, warn MPs

Department for International Development’s oversight of foreign aid group was ‘unacceptably poor’, warn MPs

Holly Watt,  The Telegraph


Companies allegedly linked to African criminals, fraudsters and money launderers have been given tens of millions of pounds of taxpayers’ money, a report has found, as the full scale of the UK’s foreign aid folly emerged.

A further £27m was left in a bank account which had an interest rate of 0.016 per cent a year, according to the Public Accounts Committee.

The Private Infrastructure Development Group, an aid group set up by the Department for International Development which invests in projects in developing countries, also spent thousands of pounds on business class flights.

The report will raise further questions about the Government’s overseas aid budget, which has grown in recent years as ministers try to meet a commitment in the Coalition agreement to spend 0.7 per cent of the GDP on developing countries from 2013.

The UK government will have given PIDG £700million over the three years leading up to this March, meaning Britain has given around 70 per cent of the group’s income since it was set up.

However the report by the influential committee of MPs criticised the department’s management of the agency, saying DFID’s oversight of the group has been “unacceptably poor”.

In one case, PIDG’s Emerging Africa Infrastructure Fund invested almost £20million in a project designed to support the gas processing and distribution activities of Seven Energy, a Nigerian energy company.

“Seven Energy was named by the former Governor of the Central Bank of Nigeria in a 2014 investigation he conducted into the allegations of looting of Nigerian oil revenues,” noted the MPs.

PIDG’s Emerging Africa Infrastructure Fund also put almost £19 million into a power plant in the Ivory Coast, where a fellow investor was allegedly a notorious fraudster called James Ibori.

Ibori was jailed in 2012 for 13 years after admitting fraud of nearly £50million. The judge in his case said that the £50million figure could be “ludicrously low”, and that the amount pocketed by the former governor of Nigeria’s Delta state was “unquantified”.

Margaret Hodge, the chair of the Committee of Public Accounts, said that DFID’s oversight of the group had left it open to questions about the integrity of PIDG’s investments and some of the companies it partnered.

“Concerns were raised with us about the complex corporate structures that PIDG’s partners have sometimes established, making it difficult to be certain about the ownership of companies and creating a risk that those involved may have criminal connections,” she said.

PIDG operates around the world, in countries including Ivory Coast, the Democratic of Congo and Sierra Leone. Mrs Hodge said MPs accepted that these countries could be “challenging”, but that PIDG needed “much tougher scrutiny” from the department, which is headed by Justine Greening.

PIDG also left an average of £27million in a bank account for almost two years – earning interest of 0.016 per cent a year. The MPS said that the loss was likely to have been between £200,000 and £2million and said that the bank in question, SG Hambros, was likely to have made a financial return from the “idle” funds.

“We questioned how it had been possible for the Department, PIDG, and [SG Hambros] not to have been aware of this matter for 18 months,” stated the report.

DFID has been ordered to write to SG Hambros and demand a donation to charity working against Ebola in west Africa in return for the lost interest.

The foreign-aid quango also continued to allow staff to book fully flexible business class flights for two years after DFID ordered the group to “tighten up” its travel policy.

The National Audit Office found that between January 2011 and July 2014, PIDG employees booked 15 flights which cost more than £5,000 each, at a total cost in excess of £75,000.

“It is essential for public confidence in spending on overseas aid that the Department for International Development is able to demonstrate that UK taxpayers’ money is being used for its intended purpose – of helping the world’s poorest people – and not ending up in the wrong hands,” said Mrs Hodge.

“Every pound that is lost to fraud and corruption is a pound that could have been spent on educating a child, improving health systems or supporting economic development.”

Mary Creagh MP, Labour’s Shadow Development Secretary, attacked the government’s management of the agency.

“David Cameron promised value for money on aid but this report shows he has failed to deliver. The NAO and now the Public Accounts Committee have exposed that the Tory-led Government has been pouring hundreds of millions of pounds of taxpayers’ money into projects without checking where it went,” said Ms Creagh.

“Ministers have sat on their hands while Britain’s aid efforts have been undermined. If the Tories and Lib Dems don’t know where aid money is going then how can they measure if it is working?”

A DFID spokesman denied that PIDG had links to known criminals.

He said: “Britain’s investment in the Private Infrastructure Development Group (PIDG) has helped to create 200,000 jobs and driven £6.8billion of private investment into some of the world’s poorest countries, developing their economies and making them less dependent on aid.

“This PAC report suggests that UK funds are at risk of ending up in the wrong hands, citing alleged links between a convicted fraudster and a PIDG-backed company.

“These have been investigated thoroughly by the National Audit Office, as well as DFID and PIDG, and absolutely no evidence has been found to substantiate them.

“We already have strong oversight of PIDG’s activities and have recently clamped down on excessive travel rates. An independent review of their operations, backed by Britain, will ensure they continue to kick start growth in the developing world.”

DFID spending has attracted criticism over the years. Last year, the Independent Commission for Aid Impact so found that some British aid money was funding corruption abroad.

One development project in Nepal encouraged people to forge documents to gain grants while police stations in Nigeria linked to British aid were increasingly demanding bribes, the report discovered.

It also emerged that civil servants went on a £1billion spending spree in just eight weeks to hit the 0.7 per cent spending target.



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