Barclays’ role in providing a controversial $40m loan to Tanzania to buy a radar system at the heart of an international corruption probe into BAE Systems is attracting fresh scrutiny as a parliamentary committee prepares to sit on Tuesday.

The international development committee will question BAE, justice ministers and the Serious Fraud Office as it tries to piece together events that led to a major SFO investigation of the defence group. The probe ended with BAE agreeing to pay a £30m settlement after pleading guilty to one offence of false accounting.

But Global Witness, the non-governmental organisation, wants the committee to go further and has pushed it to examine the funding provided by Barclays.

“It is once again pressing to ask what due diligence Barclays did on this loan to reassure itself that its funding would not facilitate a corrupt deal,” Global Witness said in its written testimony to the committee.

Barclays said on Monday: “The loan complied with both the borrowing limits of the government of Tanzania and UK export licensing rules. During the course of arranging finance for this transaction we liaised with the relevant authorities within the UK government and the Tanzanian government.”

Barclays’ loan first attracted political criticism a decade ago. In addition, the World Bank had previously denied Tanzania credit to buy BAE’s air-traffic control system.

Barclays then made the loan at 4.9 per cent interest, it was reported at the time. This was a higher rate than World Bank or International Monetary Fund credit would have been, but lower than normal commercial terms.

Barclays confirmed the loan had been repaid but said it could not comment on specific terms because of its duty of confidentiality.

BAE settled its case with the SFO last year by pledging a £30m ex-gratia payment to Tanzania, minus a £500,000 fine. The settlement ended a probe into billions of dollars of payments allegedly made over many years on BAE’s behalf in the Middle East, Africa, Latin America and Europe.

The group pleaded guilty to one offence that it had inaccurately accounted for $12.4m of payments made between 1999 and 2005 to a Tanzania-based businessman who was instrumental in securing the radar system. BAE settled its related case with US authorities for nearly $500m.

It is yet to make the ex-gratia payment to Tanzania, to the chagrin of the government there, which wants it paid directly to the country rather than through NGOs. The company has set up a board to decide how payments might be made.

The parliamentary hearing comes at a sensitive time, with the UK financial regulator vowing to crack down harder on banks that have creaky anti-bribery and anti-money laundering controls. The Arab Spring this year has thrown into relief the tension between banks providing vital finance to developing economies and the risks of doing business with politically exposed figures. Some leading banks have been criticised for their dealings with the Gaddafi regime.

US authorities are also investigating whether bribes were paid by unnamed investment banks in their dealings with sovereign wealth funds, while Britain’s SFO is working with the World Bank to examine the flow of money from Egypt and other North African countries affected by the Arab uprisings.

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