§ 4. Mr. McAvoyTo ask the Secretary of State for Defence what is his Department's estimate of the amount of procurement fraud committed against his Department in the last five years; and what steps he has taken to limit this. [25095]
§ Mr. FreemanIn the last five years identified procurement fraud was approximately £1.8 million, most of which relates to the Foxley case. The recent report by the National Audit Office recorded that my Department had made good progress in its efforts to reduce the risk of fraud in defence procurement by measures such as more and better training of staff.
§ Mr. McAvoyBearing in mind the concerns expressed by the National Audit Office, can the Minister confirm that all the corrupt funds in the Gordon Foxley case have been identified? Despite his assurances about the response of the Department, is he entirely sure that the MOD is assiduously learning the lessons of the Gordon Foxley case to prevent a repeat of the financial waste, the damage to employment and the long-term damage to Britain's defence industry which have been the results of that case?
§ Mr. FreemanI cannot assure the hon. Gentleman that we have traced all the funds, partly because of the nature 5 of banking laws and regulations in Switzerland. Our present estimate is £1.5 million but the sums may be much more —possibly as much as twice that amount. I cannot give the hon. Gentleman precise figures, as it is far too early.
On the lessons learnt, the Department is continually improving its methods of training staff. Although £1.8 million is a significant sum over five years, it is a small fraction of the £40 billion which the Department would have spent on procurement in the past five years. Compared with industrial and commercial companies in the private sector, the Defence Ministry's record is good. It must continue to improve, but we have set in train steps to improve the quality of the training of staff to identify fraud.
§ Mr. John MarshallDoes my right hon. Friend agree that it sticks in the gullet of most taxpayers that, having short-changed us as an employee, Mr. Gordon Foxley then proceeded to get £160,000 in legal aid? Is not something wrong somewhere?
§ Mr. FreemanThat is not a matter for me, but the sentiments of many in the House would probably be the same as those of my hon. Friend.
§ Dr. David ClarkHow does the Minister justify rewarding companies that have perpetrated fraud? How does he justify awarding the M107 shell contract to Simmel, a company that was involved in the Foxley-Taylor fraud scandal and which is co-owned with Borletti, which was a major player in that fraud? Does the Minister understand the anger among British workers who have lost their jobs because foreign firms have fraudulently bribed MOD officials and, as a result, are now out of work while those same companies are being given contracts?
§ Mr. FreemanThe Ministry of Defence and the Procurement Executive in particular are extremely annoyed at the actions of the three European companies and we have taken action against them: first, to recover the moneys paid in bribes; and, secondly, to suspend procurement decisions with those three companies for a time. But because the management involved in the Foxley case has now left the companies, it is not in the interests of the taxpayer to ban dealings with those companies for ever.