1990-1999 | Malaysia

High court – government illegally linked aid to arms sales

Protesting the uneconomical arms-linked project outside the High Court – Global Justice Now – CC License – via Flickr.

10 November 1994

On 10 November 1994, the High Court ruled that the British Government had acted illegally in linking a huge aid transfer of £234 million for the Pergau Dam in Malaysia to a colossal arms sale of £1.3 billion to the country.  The development assistance package had also broken another fundamental legal requirement as the mega dam project itself was ruled to be ‘economically unsound.’ The court concluded that it would hinder rather than help the development of the country since the electricity generated would be at a far higher cost than the population could afford.

Even The Times, which routinely reported approvingly on British arms sales, agreed that the deal with Malaysia was a ‘scandalous business.’ According to the newspaper, Sir Timothy Lankester, the permanent secretary of the Overseas Development Administration, acknowledged that it was ‘an abuse of the aid programme,’ that it couldn’t be called a ‘prudent and economical’ use of taxpayer’s money and that it represented ‘a very bad buy’ for Malaysia.1 Foreign Secretary Douglas Hurd had approved the project in 1991 because he had inherited a secret promise to back the dam, which Margaret Thatcher had made when negotiating an arms deal with Malaysia in 1988. Sir David Steel later revealed in parliament that one of the key figures who ‘helped broker parts of the deal’ was Steve Tipping, a business associate of the prime minister’s son Mark Thatcher.2


  1. ‘Dam Business,’ The Times, 11 November 1994, p. 17 issue 65109 accessed online at the Times Digital Archive on 29 November 2018
  2. Philip Webster, Michael Dynes and Jill Sherman, ‘Pergau Dam Aid Ruled to be Unlawful,’ The Times, 11 November 1994 p. 1 and David Steel in the House of Commons, 1 March 1994, cited in Hansard accessed online at https://publications.parliament.uk/pa/cm199394/cmhansrd/1994-03-01/Debate-2.html

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