I bumped into this saga in 2000 when we were proposing a big increase in aid to Tanzania in order to help fund universal, free primary education. One of the Department for International Development officials then informed me that an old proposal for the sale of a military air traffic control system, which had been blocked many years earlier, had re-emerged. The old proposal had been divided by BAE into two phases in order to make it appear cheaper.
My problem was that the increased aid would end up paying the BAE bill. Tanzania had recently received debt relief and one of the conditions was that it would not borrow money except on concessional terms such as those available from the development banks. Yet this project was to be funded by a loan from Barclays bank, which claimed to be concessional. Since Barclays is a commercial company, it did not seem credible that they would offer loans below market prices. The suspicion was that they had simply inflated the price and then pretended the loan was concessional.
Two lessons here: money is fungible and yes, there is indeed corruption in the governments of many African states.
Poses something of a problem for those who insist either that we should be giving more aid (for if money is fungible and there is corruption then even if they don\’t nick the aid they can steal from elsewhere and get the aid to cover the hole) of that we should be ensuring that all those evil multi-nationals pay more tax (for it might well get stolen, eh?).
These aren\’t the points that anyone wants you to take from the BAe/Barclays thing, of course. But there\’s no point in facilitating a thief if there ain\’t a thief to facilitate, is there? And it\’s the existence of the thief that is the ultimate cause.