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Aid And Trade Provision

Volume 178: debated on Wednesday 24 October 1990

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To ask the Secretary of State for Foreign and Commonwealth Affairs how many applications for aid and trade provision funds to support contracts between developing countries and General Electric Company, Plessey, Northern Engineering Industries, BICC and Trafalgar House have been refused since 1979.

Since aid and trade provision funds first became available in 1977, a total of 169 applications have been formally considered from the five companies named. These have led to 133 offers of aid; six applications are still under consideration. Of the 30 remaining cases, our records do not distinguish between those which were refused, and those which fell away for other reasons.

To ask the Secretary of State for Foreign and Commonwealth Affairs in how many aid and trade provision supported projects since 1979, the minimum test of developmental soundness was not carried out by the Overseas Development Administration.

Since 1979 all aid and trade provision supported projects have been assessed to provide a reasonable assurance of the soundness of the investment.

To ask the Secretary of State for Foreign and Commonwealth Affairs (1) how many internal, confidential, Overseas Development Administration evaluations of aid and trade provision projects contain references to excess profit margins, above departmental profit margin guidelines;(2) how many published Overseas Development Administration evaluations of aid and trade provision projects contain references to excess profit margins, above departmental profit margin guidelines;(3) in how many internal, confidential, Overseas Development Administration evaluations of aid and trade provision projects profit margins are considered;(4) in how many published Overseas Development Administration evaluations of aid and trade provision projects profit margins are considered.

For negotiated contracts, value-for-money checks, which are undertaken before the provision of ATP funds is agreed, include consideration of anticipated profit margins. Two of the ATP projects that have been evaluated involved contracts awarded in 1978 and 1982 prior to the introduction of value-for-money checks; the evaluations considered anticipated profit margins in these cases and concluded that these were not excessive.

To ask the Secretary of State for Foreign and Commonwealth Affairs (1) how many internal, confidential Overseas Development Administration evaluations of aid and trade provision projects include references to corrupt practices;(2) how many published Overseas Development Administration evaluations of aid and trade provision projects include references to corrupt practices.

In one evaluation report of an ATP-financed project there is a reference to allegations of undue influence in relation to the arrangements made for the consideration of competing bids by a tender committee. The contract was awarded to the firm making the lowest-priced bid.

To ask the Secretary of State for Foreign and Commonwealth Affairs (1) if he will give details of Overseas Development Administration guidelines on profit margins used in evaluating applications for aid and trade provision funding;(2) whether applicants for aid and trade provision grants must state the profit margins expected by British contractors when applying for funds;(3) whether consideration is given to the level of profit margins when a contract between a British company and a developing country Government is considered for a grant from the aid and trade provision.

There are no general guidelines on profit margins for assessing applications by companies for ATP assistance made available to developing country Governments to help them finance overseas projects. Companies are not required to state their expected profit margin when applying for ATP assistance. In general, value for money in all aid-funded projects is sought by means of competitive tendering for contracts. In the case of a negotiated contract, in the absence of competition, we undertake a detailed value-for-money check of the proposed contract price, including an assessment of the anticipated profit margin.

To ask the Secretary of State for Foreign and Commonwealth Affairs whether allocations of aid and trade provision funds include contributions towards commission payments.

An ATP grant helps finance a proportion of the total contract price for the purpose of providing only the eligible goods and services specified in the contract. Payments are made in accordance with the terms of the ATP aid agreement between Her Majesty's Government and the recipient Government and of the contract.

To ask the Secretary of State for Foreign and Commonwealth Affairs whether consideration is given to the amount of commission payments when a contract between a British company and a developing country is considered for a grant from the aid and trade provision.

In the case of a negotiated contract between a British firm and a developing-country Government, where competitive bidding has not taken place, the detailed value-for-money check scrutinises all components of the contract price, including any agents' fees.

To ask the Secretary of State for Foreign and Commonwealth Affairs whether, in the allocation of aid and trade provision funds to contracts between British companies and developing countries, consideration is given to contributions made by British companies to British political parties.

To ask the Secretary of State for Foreign and Commonwealth Affairs on what date aid and trade provision funds were offered for the Pergau hydro-electric project in Malaysia; what is the value of the grant offered; what is the value of the total contract; and when the first instalment of aid is likely to be released.

I refer the hon. Lady to the reply I gave her on 22 October, at column 25.