[A-List] UK-Tanzania arms for aid scandal

["Keaney Michael" <Michael.Keaney@xxxxxx>]

Previously filed under "UK exports success", this episode is unlikely to
disappear for a little while yet, as even the World Bank is appalled by
the brazen corruption and hypocrisy surrounding the "sale" of an air
traffic control system to Tanzania. What's particularly interesting
about this is the exposure of linkages between the UK state apparatus
and Barclays Bank, together with BAE Systems of course.


Tanzania aviation deal 'a waste of money'

Tanzania air traffic control deal condemned as 'waste of money'

David Hencke, Charlotte Denny and Larry Elliott
Friday June 14, 2002
The Guardian

Tony Blair's personal backing for a sale of a British-made air traffic
control system to Tanzania, one of the world's poorest countries, will
be condemned by the World Bank in a stinging report which brands the
system as a complete waste of money.

Independent civil aviation experts, commissioned by the bank, conclude
that Tanzania could have bought an off-the-peg system for around a tenth
of the £28m price agreed with BAE Systems.

The experts at the International Civil Aviation Organisation (ICAO)
describe the air traffic control system as "dated technology" and warn
that it is primarily a military design which is not adequate for
civilian air traffic control use.

Mr Blair intervened personally in a heated cabinet row over the sale to
side with those ministers who argued that the 280 British jobs at stake
on the Isle of Wight were more important than the government's
international anti-poverty goals.

The World Bank's report vindicates the line taken by the international
development secretary, Clare Short, and the chancellor Gordon Brown, and
is certain to reopen the bitter cabinet infighting which marked the
decision to grant BAE an export licence late last year.

One senior World Bank source described the report as "pretty damning" in
its assessment of the system's value for money.

Norman Lamb, Liberal Democrat international development spokesman, who
has also been investigating the deal, said last night: "I have been told
that the International Civil Aviation Organisation report paints a
damning picture of this deal.

"A modern civilian air traffic control system can cost as little as $5m,
about 10% of the cost of the BAE system. It is no surprise that the
Tanzanian government have reacted with horror to the report and are
delaying its publication.

"The DTI, with the apparent support of the prime minister, has colluded
with British Aerospace and Barclays Bank in foisting an expensive and
unnecessary arms deal on the desperately poor people of Tanzania."

The bank is pressing for the full report to be released but is facing
strong opposition from the government in Dar es Salaam which is
desperate to avoid the humiliating public revelation that it has
squandered donor and taxpayers' money on an overpriced and obsolete
system.

Fearful that the report will lead to the bank suspending its lending
programme to his government, Tanzania's president, Benjamin Mkapa, has
appealed personally to Mr Blair for help in getting out of the BAE
contract.

Mr Mkapa believes BAE has sold his grindingly poor country an expensive
white elephant.

Ms Short who was furious at the cabinet decision, retaliated by
suspending Britain's aid to Tanzania, pending the results of the ICAO
review.

The international development secretary maintained that the purchase of
the air traffic control system risked Tanzania's commitment to
anti-poverty programmes.

Tanzania, which suspended payments to BAE while the civil aviation body
prepared its report, is believed to have already handed over more than
half of the purchase price. It resumed payments shortly after the
British government approved the export licence .

The report puts Mr Blair in a difficult position because it undermines
the argument used by Downing Street and BAE's supporters, the defence
secretary, Geoff Hoon, and the trade secretary, Patricia Hewitt, that
the project was a good deal for Tanzania.

Aid agencies said the civil aviation organisation's assessment had
confirmed their worst fears about the sale.

"This system not only reflects misplaced priorities but is a complete
waste of money," said Kevin Watkins, senior policy adviser at Oxfam.
"Clearly the British government has placed the interests of commercial
exporters before the interests of ordinary Tanzanians."

Mr Lamb is also pressing Barclays to explain why they agreed to
subsidise the deal with a rate of interest below commercial rates.

The Guardian understands that the ICAO report will say that the system
is more suitable for military purposes and that some of the radars are
not even suitable for civilian aircraft. Tanzania does not have an air
force.

The report also points out that future maintenance requirements could
impose a heavy burden on the country.