Britain's overseas aid budget at risk of corruption

by Christopher Hope, telegraph.co.uk
October 20th 2011

The Department for International Development (DfID) is one of only two departments – the other is Health – that are protected from spending cuts in Whitehall.

The development department is currently refocusing its overseas aid on countries seen as fragile and in conflict, such as Somalia, Burma and Pakistan, as it increases aid spending to 0.7 per cent of gross national income by 2013.

But the cross-party public accounts committee said that this opened it up to new risks and “leakage through fraud and corruption”.

Margaret Hodge, the committee’s Labour chairman, said: “The department is going to be spending more in fragile and conflict-affected countries and the danger to the taxpayer is that there could be an increase in fraud and corruption.

“However, the department could not even give us information as to the expected levels of fraud and corruption and the action they were taking to mitigate it.”

Mrs Hodge complained that DfID was “only considering fraud risk at the level of delivery method rather than at a country level”.

The MPs claimed that the department’s record on financial management was not good enough. Its reported losses of £1.156 million, or 0.016 per cent of total spending, in 2010-11 were “unbelievably low”, they said.

Mrs Hodge added: “Unfortunately, the department has not always kept its eye on the financial ball, and in 2010 stopped monitoring its finance plan.

“That must not happen again and DfID should report publicly on its financial management.”

The committee also warned that increasing spending through multilateral organisations, such as the European Commission and the World Bank, may also mean more British money is lost to fraud and corruption.

Richard Bacon, a senior Conservative member of the committee, said: “The DfID must improve its estimate of British taxpayers’ losses to fraud and corruption if the welcome drive to do more for the poorest in our world is to succeed”.

Andrew Mitchell, the International Development Secretary, said: “Although accurately reflecting the position under Labour, the report appears to take little account of the huge changes the Coalition has made since taking office.

“We have transformed the way the department manages its finances, so spending is attached to tangible results on the ground, which are rigorously scrutinised by the new Independent Aid Watchdog.

“This Government takes a zero-tolerance approach to corruption. British aid saves lives and we clamp down ruthlessly on any misuse of funds.”

He added: “The DfID’s counter-fraud unit tackles corruption head-on, recovering 92 per cent of known losses this year.”

Original Page: http://www.telegraph.co.uk/news/politics/8837572/Britains-overseas-aid-budget-at-risk-of-corruption.html

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