Development Projects (Afghanistan)
(9 years, 6 months ago)
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Steve McCabe (Birmingham, Selly Oak) (Lab)
Mr Weir, I am grateful to have this opportunity to raise some issues about the role of the Department for International Development with respect to development projects in Afghanistan. If you will allow me, I would like to begin by making some general observations about how DFID conducts its business.
About 9% of DFID’s 2011-12 budget, some £360 million, was given directly to the private sector. Of the 117 major DFID contracts and procurement agreements—worth nearly £750 million between them—published on the Government’s own portal since January 2011, only nine applied to non-UK firms. The reality of aid under the present Administration is that it is an economic development project largely designed, organised and delivered by the private sector. Nearly £500 million spent by DFID in 2011 went to private consultants. Aid has become a lucrative business for consultants, several of whom take home six or seven-figure salaries.
It is worth remembering that in 2001 the UK Government promised to untie aid and that one of the first commitments of the present Government when it came into office was to reaffirm that decision. The coalition pledged that
“We will keep aid untied from commercial interests, and will maintain DfID as an independent department focused on poverty reduction.”
However, the reality today is that large parts of UK aid are being channelled through big multilateral organisations and British commercial firms. The European Network on Debt and Development—Eurodad, as I believe it is called—has noted that developing countries are often little match for firms from big donor countries. In the UK, KPMG—one of DFID’s top contractors—has an entire department dedicated to working with development groups.
With this approach, the UK Government seem to have adopted the model of the US, which unashamedly ties aid to local business opportunities. It is a model that has acquired a rather sullied reputation in the US, as a result of the activities of Halliburton or the behaviour of International Relief and Development, the contractor company.
Interestingly enough, the US has recognised the potential conflicts of interests with contractors and consultants who play multiple roles, the blurring of the lines between profit and non-profit groups and the risk of using contractors who are not subject to proper oversight and discipline. The US acknowledges that there is a stench of corruption in some of its aid channels. However, at the very time when the US is reviewing its approach and has given a commitment to spend at least 30% of its aid money through Government and organisations in developing countries, the UK seems to be heading in the opposite direction.
DFID has set up a unit to focus on private sector development and claims that it will
“help private enterprise work its miracles as the engine of development”.
However, this approach has been criticised by the Independent Commission for Aid Impact, which questions how it can be adopted fairly and effectively. The ICAI argues that staff need clear guidance and a framework within which to
“develop a coherent portfolio of projects that, taken together, effectively support economic growth and poverty reduction”.
The ICAI made those comments as part of its investigations into DFID projects in Bangladesh, Ethiopia and Tanzania, but I believe that I can demonstrate that its concerns about projects in Afghanistan are not very different. The ICAI has argued that the current aid model encourages contractors to focus on short-term targets and quick wins, rather than on helping countries to embark effectively on economic growth and poverty reduction. In effect, it is a “get rich quick” approach for some, but according to the ICAI some of DFID’s private sector projects end up having a negative impact on the very people and places that they are supposed to help.
In the financial year 2011-12, DFID awarded 135 contracts worth a total of £489 million. Five individual contractors secured 50% of that funding. Of course, the model being used permits many contractors to have multiple contracts, and so we see organisations such as Adam Smith International with 28 live contracts, Mott MacDonald with 27 and Coffey International with 20.
When I debated the question of the Bost airfield and agri-park in Afghanistan—a debate in Westminster Hall, as it happens—on 18 March, I asked a number of questions about the contractual arrangements surrounding the Bost development proposals. In her reply to that debate, the Minister—the Under-Secretary of State for International Development, the right hon. Member for Hornsey and Wood Green (Lynne Featherstone)—did not mention the memorandum of understanding that had been signed in mid-February 2011, but I am sure that she must have been familiar with the terms of that agreement and how it limited the capacity of either party to pull out of the project unless it faced a major collapse.
I have looked again at what we know about the Bost project, and I want to press the Minister who is here today to tell me, if he can, what went so drastically wrong in the 22 months from February 2011, when the agreement on the project was signed, and December 2012, when the Secretary of State for International Development says she terminated the project after a visit to Afghanistan. I hope he has some idea of the specific events that led to the termination of the agreement and that he can say a little more today about what led to it. What factors spiralled out of control and forced the Secretary of State to close down the project?
As the Minister will know, the ICAI report on Afghanistan refers to the work on the business park—the Bost agri-park—as being 90% complete, which makes the decision to pull the plug on the project all the more confusing. And what of the Islamic loan product? What has happened to that? Is that more DFID money being written off, or can he give me an update on that project? What has happened to the flexible fund? I understand that it has been transferred, so can he update me on where it has been transferred to? What was the basis of these decisions? Is there any reason why, after two years and with the Department about to embark on a new phase of work in Afghanistan, he is unwilling to clear up some of the questions about what has gone before?
As the Minister will know, the Afghanistan Investment Support Agency, or AISA, issued a statement on its website, in which it said:
“On 9th January 2013, DFID without any rational reason informed AISA that they have decided to stop funding for the development of the first phase of the BABP.”
That is, the Bost agri-business park. The statement continued:
“DFID’s unprofessional team involved in BABP project and their lack of understanding and expertise about its own project arrangements has been surprising”.
That sounds as if our Afghan partners thought that DFID had not behaved very well over this matter.
The Secretary of State has told me repeatedly that she made the decision to end the Bost project after visiting Afghanistan in December 2012, because of a failure of our partners to complete the work and the fact that the project could no longer be considered value for money. However, the outgoing deputy head of mission, Mr Fergus Cochrane-Dyet for the Helmand provincial reconstruction team, wrote to the provincial governor on 8 January 2012, 11 months before the Secretary of State decided to terminate the project, and said:
“We could not obtain the necessary assurances on environmental and land related issues required by the UK to complete responsible construction within a reasonable timeframe. We will stop our involvement in the Park now because the cost to complete the Park exceeds the economic benefits we estimate will follow.”
I want to know, as straightforwardly as possible, whether Mr Cochrane-Dyet is blessed with second sight. Is that how he was able to anticipate the Secretary of State’s decision? Alternatively, does he just not know when he entered and left Afghanistan? Is it just a mistake? It would also be useful to know who the key figure was at the centre of this agreement and the memorandum of understanding.
I understand that the programme director was a Mr Dominic d’Angelo, but the agreement was actually signed by an “acting head”, a Mr Andrew Kidd. There may, of course, be a perfectly simple explanation, but I am curious to know whether Mr d’Angelo’s role as an employee of the consultancy firm Upper Quartile could have had anything to do with it.
The Secretary of State answered my parliamentary question on 11 June 2014, telling me that her Department paid only three consultancy firms directly for work relating to the Bost airfield and agri-park development, none of which were Upper Quartile. However, Upper Quartile’s website mentions its work relating to the Helmand growth fund on behalf of the UK Government and spells out that it has done work in relation to the Bost project:
“the company’s experienced team is reviewing the investment potential—both domestic and international—in the Bost Airfield and Agriculture Park.”
Of course, like many other firms, Upper Quartile is not the beneficiary of just one DFID contract, but several. Again, in June 2013, Upper Quartile was tasked by DFID with providing advisory support to a Minister with a high degree of visibility in the Afghan Government. I know about this because I read it in a news release written by one Dominic d’Angelo, in his capacity as an adviser to Upper Quartile.
Upper Quartile seems to be a very important contractor for DFID. Mr d’Angelo went to Kabul in 2009 as a DFID employee then went on to serve as a ministerial adviser to Ministry of Rural Rehabilitation and Development, and then as a senior adviser to Minister Amin Arsala. But in 2011 he was still working for DFID as the man in charge of DFID’s Afghanistan growth and livelihoods team, responsible for at least £150 million of taxpayers’ money. At least two other prominent Upper Quartile employees who appear on its website also seem to have been DFID employees.
The Minister will know that I have tried to indulge my curiosity on these matters by submitting some freedom of information requests. On 16 January, I asked whether I might have a copy of the appraisal report produced by Upper Quartile consultants on the Bost agri-park. The Department replied that the report was being withheld under regulation 12(4), as the material is still in the course of completion and contains unfinished documents. The project was closed down by the Secretary of State in December 2012. Is the Minister saying that the report is still material in the course of completion and an unfinished document?
In September 2013, I submitted an FOI request and asked whether I could see a report in relation to a contract won by the Mott MacDonald consultancy firm, which covers an impact assessment and extensive planning regarding the Bost airfield and agricultural business park programme. I was told that the request was being refused under regulations 12(3) and 13(2), as the Department believed that letting me have this report would involve releasing details that would breach the legitimate expectation of an individual’s right to protection of personal information. Naturally, I am not clear what personal information was involved. I was asking to see a report on planning and an impact assessment. The request was also refused on the grounds that it was unfinished material. Will the Minister confirm today that he still regards it as unfinished material? When might it become finished material?
I am aware of at least three consultant reports on the Bost airfield and agri-park project, two of which the Department has refused to let me see and a third, by Coffey International consultancy group in July 2010, which says:
“Bost park represents a high risk investment that has a high risk of financial failure.”
Naturally, I can only speculate about what the other two appraisals say and how so much of our money continued to be committed to this project.
DFID’s own website, “Development Tracker”, says that only £2.7 million of taxpayers’ money was spent on the airfield and business park, yet a Minister—a different Minister, I should say—told me in response to a question in October 2013 that a total of £8.42 million was spent on the airfield and business park programme. How do we account for the additional £5.7 million? Will he tell me exactly what the £2.7 million was spent on and what the remaining £5.7 million was spent on? How much of it went on consultancy fees and which companies and/or individuals were the beneficiaries?
I understand that Mott MacDonald, as well as producing a Bost consultancy report, was contracted to develop the engineering design for the park and training for the Helmand-based businesses, and that it in turn subcontracted part of this work to Monic & Monic Consulting, to provide capacity-building training for local businesses. It is alleged that Monic & Monic then charged local businesses for writing a business plan: the allegation is that it was paid twice. Is the Minister familiar with this accusation and has it been investigated? Will he say today that he will investigate it? Can he say categorically that these allegations play no part in the Department’s decision to give so little information about these companies, their contracts and the termination plan?
The Independent Commission for Aid Impact’s report of March 2014 was less than flattering about DFID’s efforts in Afghanistan. It cites
“examples that include weak component design and assessment for the Bost Agri-Business Park, the Flexible Fund, the hybrid Sharia-compliant loan product and the biomass project, all of which were ultimately cancelled or transferred to other programmes.”
It accuses DFID of indulging in over-ambitious and complex programme design and of a lack of consultation with intended beneficiaries. Indeed, the report points out that the more ambitious and multifaceted the projects, the less successful they were, and that even where projects are deemed as successful, it is not clear how long the positive impacts will be sustained.
The review covers the effectiveness of DFID’s bilateral growth and livelihood projects, which account for approximately 30% of DFlD’s annual aid budget in Afghanistan.
The ICAI report makes some key recommendations and I should be interested to hear the Minister’s view of them. It says that DFID needs to review formally current and future projects and focus its portfolio more firmly on reducing poverty, using evidence-based interventions. Does he intend to take that advice? It says that DFID should ensure that the intended beneficiaries are, as far as is practicable, directly consulted when new projects are being designed. How will he respond to that challenge? Can he confirm today that it is still the Department’s intention to proceed with a major project on tackling violence against women and girls in Afghanistan? Can he say more about how that project is proceeding and what companies and/or organisations are involved? Who has been consulted to date?
ICAI also says that DFID should enhance its approach and commitment to independent monitoring to assess current and future project performance, and to allow proper assessment of the impact of the programmes. How does the Minister intend to address that?
There is an unpleasant smell about some of DFID’s dealings in Afghanistan; the same names and companies appear too often. The British public puts a high value on aid to developing countries, but they expect that money to be invested in health and education programmes, and in investment that helps local people to improve their own economy and living standards. It should not be a get-rich-quick scheme for a privileged few. We need more transparency and more evidence of value for money for the British taxpayer.
The Minister of State, Department for International Development (Mr Desmond Swayne)
I last visited Afghanistan in 1976, when it was a very different place. I had the pleasure, and indeed the liberty, to hire a horse and ride round the lakes of Band-e Amir and to visit the standing Buddhas at Bamiyan, since destroyed by the Taliban, all entirely on my own and entirely safely. Of course, things have changed dramatically since those days. The British taxpayer has shed treasure and British soldiers, sailors and airmen have given their lives and shed much blood in attempting to return Afghanistan to some form of stability. Perhaps those days will come again.
Afghanistan is one of the poorest countries in the world and, after 30 years of warfare, we have the extraordinary situation where the average lifespan is only 49 years. One third of the population lives on less than 70p a day. Barely one in three is literate and able to read and write, and one child in 10 dies before their fifth birthday. It is unlikely that, or rather, it is certain that Afghanistan will not meet any of the millennium development goals before 2020. That is why we believe it is right that we should have a lasting commitment as a partner to Afghanistan for the long term. Our aim is to deliver 71,000 jobs for people in Afghanistan and to provide primary education for 5.4 million people, with 40% of the places for girls. We want to assist, and we provide important technical assistance on the public finances and to address corruption, strengthen basic services and fundamentally improve the lives of women, as well as providing resilience for the country in the face of natural disasters, given that it is situated in earthquake zones and subject to those dangers.
The focus of much of our development has been on the rural economy and providing for the distribution of goods and access to markets. Since 2002, we have been the largest donor to the World Bank’s Afghanistan reconstruction trust fund. I should point out to the hon. Member for Birmingham, Selly Oak (Steve McCabe) that about half our aid to Afghanistan is channelled through the World Bank to provide basic services to people. The achievements of the Afghanistan reconstruction trust fund include the delivery of some 9,321 miles of road, benefiting some 6 million people.
We also support the infrastructure trust fund, which provides finance for power. As a result—this is among the other achievements of that fund—some 30% of households are now on the electricity grid. We also contribute to the comprehensive agriculture and rural development facility, which tackles obstacles to rural development, increasing productivity, encouraging value-added production and improving rural incomes. It has delivered some 6,663 jobs, of which 1,977 have been for women. It has increased incomes by some £2 million, delivered 800 small farms and 250 greenhouses, and provided for canals and reservoirs. The next phase of the project begins this year, with an even more ambitious target of 13,000 jobs and an increment to incomes of some £88 million.
We are presented with an enormous opportunity by the political developments in Afghanistan with the new Ghani regime, and we will be hosting a conference in London in December to catalyse on that. The conference was originally conceived as a technical catch-up on the conference that took place in Tokyo to try to keep Afghanistan up to the mark in delivering its side of the development bargain, by reducing corruption and living up to our expectations on probity. The situation has fundamentally changed with the Ghani regime and his welcome appointment of his main presidential rival as Chief Executive Officer, or, to all extents and purposes, as Prime Minister—although the Afghanistan constitution does not have a role of Prime Minister, that is the nearest comparison by which to paraphrase that role. He has put his rival in that role and announced by presidential decree a reopening of the investigation into the plundering of the Kabul Bank in 2012.
Steve McCabe
The Minister is making a fascinating, upbeat speech, but we are a bit like ships passing in the night. Given that it does not sound as though he will be able to address the points I have raised, I ask him to look at what I said and give me a thorough written response.
Mr Swayne
If the hon. Gentleman will allow me, I will come to his points, but the title of the debate entitles me to put on record the policy of the Department and the achievements we have made and seek to make. With respect to the opportunity that is now opening up, it is time to re-engage with Afghanistan in the London conference in December, which will provide an opportunity for the new Afghan regime to lay its cards on the table and show its commitment to reform. The conference will provide us with the opportunity to restate our long-term commitment to Afghanistan, notwithstanding our withdrawal from the combat role.
The hon. Gentleman has raised the issue of the Bost development before. On account of that and the 40 parliamentary questions that he has tabled on the matter, I took some trouble before this debate to look into what he clearly sees as a conspiracy of silence to conceal information from him. Given the number of questions and the new information he has presented today, he is right: I will not be able to address them all in this debate, although I will attempt to address as many as I can.
My immediate reaction on having read his earlier Westminster Hall debate was to think, “Is there a conspiracy?” As a fellow Member of the House—and one who served under his chairmanship in that famous private Bill Committee—I say to the hon. Gentleman that while it may smell rotten to him, I am of the belief that there is nothing rotten here. However, given what he has said today, I will of course go away and look at it again. I make a genuine offer to him. I know how frustrating it must be to try to elicit information through parliamentary questions, only to get a glacial increase or increment or a step back with each one, but I am more than happy to pursue this matter through correspondence. I will be as open as I can.
I am glad that the hon. Gentleman has made good use of the Department’s website. We believe in transparency and making things public, with respect to freedom of information requests. Will the report ever be finished? I am afraid the answer is: “No, it won’t.” As I understand it, the reason the report he referred to has not been released is because it was a draft report.