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  • MPs to ask firms to explain how UK taxes helped dictators build arsenals

    Among questionable ethical deals was £35m lent to Robert Mugabe and spent on BAE’s Hawk fighter jets

    Robert Mugabe bought five BAE systems Hawk jets between 1989 and 1992 and deployed them in the war in the Democratic Republic of Congo. Photograph: Indranil Mukherjee/AFP/Getty Images

    Britain’s arms industry and other companies are to be called before MPs to explain why taxpayer funds ended up helping Robert Mugabe to buy five Hawk fighter jets and 1,030 police Land Rovers which he later used to suppress dissent.

    The bosses of the world’s biggest multinational defence and oil companies, including BAE Systems and BP, will be asked to account for why hundreds of millions of pounds of government money was used to help military dictators build up their arsenals, and facilitated environmental and human rights abuses across the world.

    An official all-party inquiry into the government Export Credits Guarantee Department’s (ECGD) underwriting of the loans will begin to call witnesses next week, the Guardian has learned.

    The all-party parliamentary group on international corporate responsibility will investigate more than 40 years of the government’s involvement in supporting dubious practices overseas. The actions of the ECGD have led to it being christened the “department for dodgy deals” by the Jubilee Debt Campaign.

    Among the catalogue of ethically questionable deals was £35m lent to Zimbabwe to buy five Hawk fighter jets from BAE Systems between 1989 and 1992.

    Zimbabwe, which was already heavily indebted at the time of the loans, spent £49m repaying the cost of the Hawks, according to a response to a freedom of information request from the Jubilee Debt Campaign seen by the Guardian.

    Mugabe’s government deployed the jets in the 1998-2002 war in the Democratic Republic of Congo, Africa’s most deadly conflict in modern history, which led to 5.4m deaths.

    At the time of deployment the British government approved Zimbabwe’s purchase of spare parts worth £5m-£10m despite concerns the aircraft were being used in the deadly Congo war, according to the journal Africana Bulletin.

    The department also supplied Mugabe with £21m of loan guarantees to help him import 1,030 police Land Rovers and other military equipment. The vehicles were sent to Zimbabwe after Mugabe promised that they would be used “with due respect for human rights”. He specifically pledged not to use them for riot control, but Amnesty International said they were used to crush demonstrations.

    The Land Rovers were sent to Zimbabwe in the late 1990s, before Mugabe began taking over white farmers’ land in 1999. Robin Cook, the former foreign secretary, later banned the shipments.

    The ECGD also supported the notorious al-Yamamah “oil for arms” deal with Saudi Arabia, for which BAE Systems was investigated by the Serious Fraud Office amid allegations of bribery and corruption. The inquiry was eventually dropped following the intervention of the then prime minister, Tony Blair.

    The government loans also allowed the former Egyptian dictator Hosni Mubarak, and his predecessor Anwar Sadat, to buy arms, including helicopters and missiles, and helped Argentina buy two Type 42 Destroyers and two Lynx helicopters, which were later used in the invasion of the Falklands.

    As well as arms, the department has provided funds for the world’s largest and riskiest oil-drilling project, in the Atlantic Ocean, and a 1,760km BP joint venture oil pipeline through the Caucasus.

    The inquiry will this week begin asking arms and oil industry executives to provide evidence to parliament after pressure for the ECGD to clean up its act. The cross-party group of MPs will also call on former politicians to explain why they signed the deals. More than 100 MPs signed an early day motion calling for the ECGD to commit itself to transparent and open dealings in the future.

    The ECGD, which is part of the business department and has changed its name to UK Export Finance (UKEF), was often used by arms companies to get a state-backed guarantee to recompense their banks if the deal fell through or the debtor failed to make repayments. In the 1980s the ECGD had 4,000 staff in branches across the country and offered backing for 40% of Britain’s exports.

    Lisa Nandy, a Labour MP and chair of the all party group, said the department had committed “billions of pounds of taxpayers’ money” to projects that had been the subject of “countless criticisms” for human rights and environmental abuses.

    “It is vital that we bring together all stakeholders and interested parties through this inquiry to look seriously at the allegations levelled at this department,” she said.

    “This Department commits billions of pounds of taxpayers’ money each year. It has a responsibility to spend that money in a way that is ethical and effective. In the past it appears that this responsibility has not been taken seriously enough.”

    “In a time of recession, business needs support from government but that support must be of long-term benefit for everyone: safeguarding human rights, protecting the environment and, at the very least, not exacerbating poverty.”

    Tim Jones, policy officer at Jubilee Debt Campaign, said: “We welcome the launch of this inquiry. Vince Cable’s ‘Department for Dodgy Deals’ has a notorious track record of backing loans for undemocratic and damaging projects. UK Export Finance claims it is owed £2.3 billion. This includes loans for General Mubarak’s Egyptian army to buy British defence equipment, Argentina’s 1970s military dictatorship to buy British warships, and Robert Mugabe’s police to buy British Land Rovers. Vince Cable needs to implement Liberal Democrat policy and audit the debt, cancel that which is unjust, and reform UK Export Finance so no more dodgy deals are backed in the future.”

    The inquiry has no legal power to force industry executives or former politicians to provide evidence.

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    The Guardian, Monday 7 May 2012 19.39 BST

    Find this story at 7 May 2012
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