The great foreign aid freeze

Published by The Mail on Sunday (18th December, 2016)

The Government has dramatically halted new contracts with British foreign aid contractors after The Mail on Sunday exposed dirty tricks in the industry.

Taxpayer-funded deals worth millions of pounds have been frozen after Ministers ordered a wide-ranging probe into the ‘poverty barons’ profiting from the aid business.

A damning letter to contractors from International Development Secretary Priti Patel warns firms that a top-level investigation has been launched into: How taxpayers’ money is spent overseas; Payments and expenses taken by fat cats; Huge profits earned from Government contracts.

The blistering letter, leaked to The Mail on Sunday, also warns of a clampdown on dodgy deals between contractors and Whitehall officials, along with investigations into firms’ tax affairs.

The astonishing move comes after we revealed one firm, Adam Smith International (ASI) – which handles almost half a billion pounds of British aid – obtained secret Department for International Development (DFID) papers while bidding for lucrative contracts.

The MoS also exposed the firm’s attempts to mislead MPs about the success of its projects.

The revelations were part of our campaign against waste fuelled by Westminster’s decision to spend 0.7 per cent of national income on aid.

Last night sources confirmed discussions over multi-million-pound deals had been cancelled after our exposés. Formal negotiations are expected to restart under tougher scrutiny in the new year.

‘We had to examine significant allegations against a major supplier but your allegations also raised wider issues of concern,’ said one government source.  ‘We could not sign anything off while this was going on.’

The source said ministers were determined to make clear it will not be ‘business as usual’ after the ‘pause’ in awarding and negotiating projects. Even urgent extensions to existing projects such as those in war zones are being intricately examined.

Ms Patel’s letter, sent last week to dozens of British foreign aid contractors, states: ‘We need to provide [taxpayers] with assurance that public money is being spent effectively and that our aid delivery partners apply the highest standards in transparency and ethical behaviour.

‘This has been brought into sharp relief by recent allegations in the media.’

She has given contractors 30 days to reveal the precise proportion of revenue coming from British taxpayers and provide ‘written evidence’ of how they comply with security and conflict of interest rules.

Ms Patel has also warned of more intense scrutiny of finances and relationships with Whitehall staff.

She wants to challenge the biggest firms and bring in more competition from smaller rivals to deliver British aid, which is due to double over the course of this decade to an astonishing £16 billion a year.

Several paragraphs in her letter warn suppliers of their obligation to tackle ‘fraudulent behaviour, unethical behaviour or breach of confidentiality’.

Ms Patel insists DFID ‘will be increasing our scrutiny of supplier spending’ with special focus on ensuring only ‘fair, reasonable rewards and profits’ for organisations.

In a clear sign of her anger over their behaviour, she adds that there will also be ‘open book breakdown of salaries, expenses, profit margins’ and other finances. Firms bidding for British contracts will also be forced to detail their tax status and payments after we exposed companies ramping up profits but not paying corporation tax.

The suspension of bid discussions and the subsequent letter followed the revelations two weeks ago of extraordinary dirty tricks by ASI, Britain’s biggest specialist aid contractor.

One manager circulated secret government papers he obtained, including one marked ‘Official Sensitive’, around senior staff with a note saying they could help on bids.

Leaked emails also exposed how the aid giant faked evidence to a parliamentary inquiry to promote the success of projects, provoking a separate investigation by MPs.

Yet the scale of DIFD’s challenge to control spending is highlighted by our latest disclosures today of charity chiefs cashing in on the aid boom, doling out huge salaries of up to £618,000 to senior executives.

David Miliband, the former Labour Foreign Secretary, pockets £530,922 a year for running a big US charity given millions of pounds in British aid.

DFID said last night that it aimed to increase scrutiny of spending by contractors, saying: ‘We expect the sector to adhere to the highest standards to achieve the best results for the world’s poorest and value for money for the British taxpayer.’

* In a separate move, DFID is to crack down on its £25 million a year aid to the Palestinian Authority after this newspaper revealed how Britain was assisting convicted terrorists and paying civil servants who have not worked for nine years.

Welcoming the move to ensure the aid goes ‘solely on vital health and education services’, Tory peer Lord Polak said: ‘The ability of the PA to abuse this funding to reward terror is significantly reduced.’

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