UK development agencies under fire for "wasteful" policies

by Katie Nguyen | Katie_Nguyen1 | Thomson Reuters Foundation
Thursday, 29 January 2015 00:01 GMT

A UK aid label is attached to a box containing kitchen sets, stored at a UK aid Disaster Response Centre at Kemble Airport, southern England, on August 14, 2014. REUTERS/Stefan Wermuth

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British aid wasted by poor management and on travel, including 15 flights that together cost more than 75,000 pounds

LONDON, Jan 29 (Thomson Reuters Foundation) - British aid given to an agency investing in infrastructure projects in poor nations has been wasted on travel and by poor financial management and action is needed to ensure taxpayer money is not wasted, a parliamentary watchdog said on Thursday.

The Private Infrastructure Development Group (PIDG) was founded in 2002 by the Department for International Development (DFID) and three other donors to drum up private investment in projects ranging from water and sanitation to hydropower and agriculture, the watchdog said.

The Public Accounts Committee, responsible for scrutinising government spending, said DFID money accounted for 88 percent of PIDG's funding in 2013 and DFID's total contribution was expected to reach 860 million pounds ($1.31 billion) by 2017.

One of the committee's criticisms was that PIDG's travel policy had, until last July, allowed staff to fly business class of flights of more than four hours.

According to the National Audit Office, between January 2011 and July 2014 PIDG employees booked 15 flights which together cost more than 75,000 pounds, the committee said.

It also expressed concern about poor governance.

"We recognise that PIDG operates in countries where standards of governance can be challenging. However the Department's oversight of PIDG has been unacceptably poor and has left it open to questions about the integrity of PIDG's investments and some of the companies with which it works," said Public Accounts Committee chairwoman Margaret Hodge.

"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 in a statement.

The watchdog said it had questioned DFID and PIDG, which has backed projects in Nigeria, Senegal, the Philippines, Cambodia and other countries, on alleged links between investments funded by PIDG and firms associated with "criminal fraudsters".

According to the watchdog, DFID and PIDG said that the fund manager for two of PIDG's facilities had never been part owned by a company with links to James Ibori, a former governor of Nigeria's Delta State, but they had given no evidence for this.

Ibori was jailed in Britain in 2012 for 13 years after pleading guilty to 10 counts of fraud and money laundering worth 50 million pounds ($76 million).

DFID defended its funding of PIDG, saying it had helped to create 200,000 jobs and driven 6.8 billion pounds of private investment into some of the world's poorest countries.

"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," a DFID spokesman said in a statement.

"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."

DFID also said it had recently clamped down on "excessive travel rates", adding that under PIDG's new policy staff can go business class only on flights of at least five hours.

PIDG said it was working with DFID "to ensure the highest standards of integrity, accountability and transparency".

"There is no evidence that any money has been lost to fraud and corruption. Nor is there a direct link between any PIDG company and Mr Ibori," a PIDG spokesman said in a statement emailed to the Thomson Reuters Foundation.

The watchdog also said DFID's "poor oversight" of PIDG allowed money to "sit idle" in a bank account rather than funding projects - an average of 27 million pounds between January 2012 and February 2014.

"It is essential for public confidence in spending on overseas aid that the Department (DFID) 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," Hodge said.

"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," she added.

($1 = 0.6588 pounds) (Reporting by Katie Nguyen; Editing by Tim Pearce)

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