Minister reveals zero tolerance approach to foreign aid fraud

The UK government has zero tolerance of corruption and has put much stronger systems in place to ensure aid money is not lost to fraud, the International Development Secretary said.

Andrew Mitchell spoke out after a committee of MPs warned that the amount of British aid lost to fraud and corruption could rise because of changes to how the money is targeted.

The Department for International Development (DfID), whose budget is rising despite massive cuts across Whitehall, is refocusing overseas aid on countries seen as fragile and in conflict, such as Somalia, Burma and Pakistan.

But the cross-party public accounts committee (PAC) cautioned that “operating in high-risk environments means the potential for increased risk of leakage through fraud and corruption”.

It said in a report: “The department intends to focus more on fragile and conflict-affected states which pose higher risks in terms of poor security, delivery capacity, measurement of costs and outcomes, and leakage of funds through fraud and corruption.”

Mr Mitchell said it would not be right to say that the government had taken its eye off the ball.

“They are looking at the legacy from the last government,” he said. “We have much stronger systems to ensure that this money is well spent.”

He added: “Wherever we find money being stolen, if ever we find money being stolen, we are absolutely ruthless on the taxpayers’ behalf, in stopping it and not allowing it to happen.

“This government has a zero tolerance of corruption.”

He also stressed the role of the new Independent Aid Watchdog.

“You’ve got independent experts giving their judgment, not to ministers, but to the public and to Parliament, about how it’s spent.”

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

“The department plans to increase the proportion of its funding spent via multilaterals, but does not have the same visibility over the cost and performance of multilaterals’ programmes as it does over its bilateral programmes,” the PAC said.

“Furthermore, the strategy to increase DfID spend through multilateral programmes appears to have more to do with it being easier for DfID to do this than for it to assess the viability, effectiveness and value for money of bilateral programme proposals.”

It criticised DfID’s “poor understanding” of the scale and likelihood of aid being lost to fraud. The department was unable to quantify its losses, the committee said.