A COMMITTEE of MPs has criticised strongly the investment decisions of the development-finance arm of the UK Government, British International Investment (BII). Aid agencies have called for its funding to be halted.
The details of some of the investments were uncovered during an investigation of British International Investment (BII) by the House of Commons’ International Development Committee. BII invests on the Government’s behalf in low-income countries, with the stated purpose of creating jobs and reducing poverty.
The Foreign, Commonwealth and Development Office (FCDO) is the sole shareholder of BII; but it operates too much of a “hands-off” approach, the Committee said, which has enabled investments to be made in “questionable” schemes.
BII has an investment portfolio valued, in 2022, at more than $7 billion.
The Committee criticised BII for investing in companies owned by individuals with a high net worth, which, the Committee said, restricted the extent to which its investments improved inequality; and for concentrating its portfolio in middle-income countries, such as India, rather than in fragile and conflict-affected states, where people were most in need.
Sarah Champion MP, who chairs the International Development Committee, said that taxpayers’ money was not being invested to help the world’s poorest, and that urgent changes were needed.
“We certainly don’t need more business-as-usual investment in fossil fuels or through tax havens. The BII says it’s desperate to get out of dodgy subsidiary investments, like a cosmetic-surgery firm in India, but the fact that UK taxpayers’ money found its way there in the first place shows how poor control has been.”
The Committee found that BII withdrew its investment only this year from a clinic that, eight years ago, switched from providing children’s day care to cosmetic surgery. BII had also invested in a palm-oil company that was found to be exposing workers to dangerous pesticides, and dumping untreated industrial waste.
It is still investing in Wine Connection, a firm that owns food and drink outlets in South-East Asia. BII also holds an investment through an intermediary in Bridge International Schools, despite allegations of child sexual abuse, and violations of child-labour laws and health and safety which led to the death of one child.
The Committee’s report concludes that some investments “do not appear to have a clear poverty focus, some may have harmed society and the environment, while others conflict with the UK Government’s policies”.
Its legacy investments in gas infrastructure in Mozambique is referred to as an example of a conflict with the Government’s stated climate goals.
Poor internal controls at BII are blamed for the failure to prevent investments which actively harmed communities in some low-income countries.
The Committee called on the Foreign Office to take a seat on the BII board to oversee the UK’s spend overseas, and monitor compliance with its remit. The FCDO has argued, however, that it needs to keep BII at arm’s length, so that it is seen as offering credible and long-term investment. But the Committee heard that the Government had exerted its influence to increase investments in Ukraine after the invasion by Russia, which “demonstrates clearly that BII is not free from political pressure”.
Aid agencies gave evidence. CAFOD’s head of public policy, Graham Gordon, said: “An opaque organisation such as BII should not receive any further aid money from the UK Government until it sorts out its serious failings, and should immediately pull out of fossil-fuel investments.
“Without stricter oversight of exactly where BII’s investments are going, the UK is losing all credibility in claiming to tackle climate change and poverty.”
Oxfam’s health policy manager, Anna Marriott, said: “The FCDO’s ‘hands-off’ approach to BII has resulted in some horrific human-rights abuses, from patients being overcharged, exploited, or denied emergency health care to shocking cases of people actually imprisoned in UK-funded private hospitals because they were too poor to pay their eye-watering bills.
“The Select Committee is right to call for greater oversight and accountability, but the gravity of BII’s failures in both health and education requires immediate government action to halt all future direct and indirect BII investments in these critical sectors, and to fully investigate any harm caused.”
A spokesman for the Foreign Office defended its relationship with BII: “The FCDO works closely with BII’s board to ensure the investment’s portfolio is in line with our objectives, including reducing poverty and supporting a just and fair green transition.
“Under its governance arrangements the FCDO regularly holds meetings with BII’s board, executive management, and shareholders, and continuously engages with BII at a working level. This allows us to hold BII to account on its decision-making and raise concerns where necessary.”
BII said that it would consider the Committee’s recommendations.