PATRICIA HEWITT, Trade and Industry Secretary, was forced into an embarrassing climbdown yesterday as an agency she controls agreed, in an out-of-court settlement, to review her controversial decision to water down new anti-bribery rules.

In a decision that has landed the taxpayer with up to £275,000 in legal costs, the agency that underwrites British exports to the developing world bowed to the demands of an anti-corruption campaigner and agreed to consult human rights and other non-corporate groups before finalising Ms Hewitt’s changes.

The Export Credits Guarantee Department (ECGD) agreed the settlement with The Corner House, the anti-corruption group, at midday as the two parties were due to begin a two-day hearing in the High Court.

Under the terms of the agreement, the Department of Trade and Industry (DTI) will pay The Corner House’s legal costs, which could be as high as £250,000. The Government’s own costs are expected to be £25,000.

The agency agreed to public consultation on the changes by Ms Hewitt, who canvassed companies but did not talk to other interested parties, such as anti-bribery campaigners.

However, the revised rules will continue to apply during the consultation process, which is expected to begin by the end of this month.

Susan Hawley, research analyst for The Corner House, who brought the case, said: “This case is about ensuring that the coterie of ECGD’s customers do not get to dictate the anti-bribery law.”

Ms Hawley said that she had proof that linked sustained lobbying from Rolls-Royce, BAE and Airbus to Ms Hewitt’s decision to water down the new anti-bribery rules.

Ms Hawley sent a letter to the DTI last night demanding the right to publish this evidence ahead of the public consultation. Ms Hawley plans to pursue the matter in the High Court if the Government refuses.

Although court documents reveal that BAE, Airbus and Rolls- Royce lobbied extensively to change the rules, the “paper trail” that the ECGD plans to publish would demonstrate for the first time just how the lobbyists caused Ms Hewitt to overrule her ministers, Ms Hawley claimed.

The ECGD supported £1 billion worth of contracts for BAE, £509 million for Airbus and £67 million for Rolls-Royce and its International Aero Engines subsidiary, and £509 million for Airbus, in the year to last April.

Ms Hewitt’s revised policy, introduced on November 8, required British exporters to give anti-bribery undertakings in deals only on behalf of those companies it controlled. Under the previous policy, introduced on May 1, exporters to developing countries had to vouch for all affiliates in the deal, increasing the scope for corruption, according to opponents. Andy Scott, director of international competitiveness for the CBI, said: “Although we are disappointed that the issue has not been completely resolved, we welcome the fact that (The Corner House) was not able to quash the November 2004 procedures.”

Mr Scott added that the original anti-bribery rules were “unworkable” because it was impossible for companies to access information relating to corruption in businesses they did not control. The ECGD said yesterday that the settlement was “sensible”.