Written statement to Parliament

Letter from Secretary of State to BAE Systems


This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Andrew Mitchell

Richard Olver
BAE Systems
6 Carlton Gardens
United Kingdom


Dick Olver                             

Thank you for your letter of 20 July following the IDC evidence hearing. I very much welcome your decision to accept the Government of Tanzania’s proposal for the use of the payment from BAE. As I said in my previous letter, the proposal is designed to deliver tangible results in the education sector, benefitting a large number of children as well as the country’s future development. This is something that we can all welcome.

As I have offered, DFID officials can assist if requested with the monitoring and evaluation of the use of the funds to ensure maximum results. In this way, we will be able to ensure complementarity with the broader reform of the education sector that the UK is supporting.

Regarding the routing of the payment, I do not see an obvious need for the payment to be channelled through DFID, though DFID officials in Tanzania can of course provide assurances that funds transmitted by BAE to the Government of Tanzania have been received in the proper accounts and paid onwards to end beneficiaries for the intended purpose. DFID officials also stand ready to provide advice on the mechanics of the payment. This arrangement may well result in additional costs for DFID that we would look to BAE to cover, to allow the maximum benefit to the people of Tanzania from this payment. 

As you know, we do not think that there are legal obstacles to a direct payment to the Government of Tanzania from BAE, as this would not be a political donation. However, you will want to assure yourselves of the technical nature of the payment, taking advice as appropriate. The
Treasury Solicitors have offered to discuss this with your legal advisers if that would be of assistance, and officials can help facilitate contacts.

It seems to me that it would be useful at this stage for BAE, the Government of Tanzania and HMG, through DFID, to agree a short Memorandum of Understanding (MoU) to provide for the payment and use of funds, as per the Government of Tanzania’s proposal, and to set out the roles and responsibilities of each organisation. DFID will be happy to provide some facilitation and professional advice to assist the process. The MoU would include a clear timeframe to ensure progress remains on track. If BAE are agreeable to this approach I will ask my officials to initiate discussions.

Finally I would like to take this opportunity to clarify a point about the role of DFID in this matter. I want to assure you that - as Richard Alderman stated in his evidence to the IDC - DFID involvement came at the request of Serious Fraud Office, when the Department was asked if it would make its international development expertise available to provide advice about how funds could be used for the benefit of the people of Tanzania. In providing this assistance, no HMG officials have ever sought to raise expectations on the part of the Tanzania Government and have not given any undertakings on how the funds would be provided or used.

I am pleased that we are moving towards a resolution of this issue, and am confident that DFID, BAE and Government of Tanzania can work together to ensure the very best of outcomes.  I think it will be especially important to work together on the communications of what we are doing, so that all three parties are giving the same messages and avoiding future confusion.


Andrew Mitchell

Approved in person and signed electronically

Updates to this page

Published 1 August 2011