A deal that shames Blair

Observations on fraud investigation

The story of how, in 2001, Tony Blair came to approve the sale of an outdated and overpriced military radar system to an impoverished African country is a dark chapter in new Labour's story. When it emerged last month that the deal is being investigated by the Serious Fraud Office for alleged impropriety, we the Tories were determined to shine a spotlight on the affair and pushed for an opposition day debate.

Which is why in the Commons at the end of January you saw the normally loyal International Development Secretary, Hilary Benn, a decent member of this government, squirming with embarrassment as he was forced to defend the Prime Minister's decision to permit a deal he knew to be rotten. After he had spoken, his former boss Clare Short rose to condemn a deal she had opposed tooth and nail at the time.

In 2001, the Prime Minister was asked to consider granting export licences for the sale to Tanzania of an air traffic control system. The system cost £28m and the heavily indebted Tanzanian government took on more debt to secure it. The International Civil Aviation Organisation had said that the system was "not adequate and too expensive for civil purposes", while the International Monetary Fund said it was concerned about the impact of the purchase on Tanzania's debt burden. The World Bank was also opposed, arguing that the system was outdated, and that a satisfactory alternative could be secured for a fraction of the price.

In Tanzania, opposition was widespread. In 2001, more than half the population lived in severe poverty. Life expectancy was 45 years. Primary-school enrolment was 67 per cent. Some two million people were living with HIV/Aids. According to Oxfam, £28m could have provided basic healthcare for two million people, or education for 3.5 million children.

In Britain, a wide spectrum of development organisations was opposed. Oxfam said the deal was "outrageous" and "a complete waste of money". Clare Short, the then international development secretary, said the deal "stank" and would damage Tanzania's development. Now we know that Hilary Benn also opposed the deal. Yet, despite the opposition of the most informed observers, the licences were approved at the end of 2001, forced through by Tony Blair.

Last year the SFO started investigating the deal for alleged corruption. On 15 January this year, it was reported that some $12m (£6m) of the £28m total cost of the project had been secretly paid into the Swiss bank account of an agent with connections to senior military and government officials in Tanzania.

These revelations raise serious questions about the depth of the scrutiny that was given to the deal when it was considered and the wisdom of the government in making that decision. It is astonishing that the government concluded that spending £28m, over a quarter of the value of UK aid to Tanzania, on an outdated and unsuitable radar system, did not contradict its own guidelines.

Such events threaten to undermine public support for overseas aid. Governments cannot simultaneously negotiate debt relief while allowing poor countries to saddle their citizens with illegitimate debt. Nor should this government sign high-minded, anti-corruption declarations in international forums while sanctioning questionable deals in No 10.

Months before approving the deal, the Prime Minister said Africa was a "scar on the conscience of the world". I don't doubt his sincerity in wanting to reduce poverty. But when Blair reflects on his premiership from the comfort of retirement, the Tanzania radar saga will be a scar on his conscience.

Andrew Mitchell MP is shadow secretary of state for international development

This article first appeared in the 12 February 2007 issue of the New Statesman, Sunni v Shia