By Lucy Ballinger
Last updated at 5:45 PM on 03rd March 2010
Millions of pounds raised by Live Aid was spent on weapons, it has been claimed.
Money donated to buy food for Ethiopian famine victims was instead used by rebel leaders who used it to buy weapons.
Sir Bob Geldof's Live Aid raised £40million for those starving in Ethiopia, along with other charities who also sent over aid
Gebremedhin Araya, left, handling bundles of money, said: 'I was given clothes to make me look like a Muslim merchant'
But although millions of lives were saved by the Western aid that poured into the country, it is now claimed not all of the cash went to the most needy.
Of the £63million that flowed into the country in 1985, it is claimed that just 5% was spent on famine relief, with the rest going on weapons and attempts to overthrow the government.
The extraordinary claims have been made by former rebels, who told the BBC they posed as merchants in meetings with charity workers to get aid money.
Insurgents would dress up and show sacks filled with sand, not grain, in a 'drama' to ensure they were handed millions of pounds.
Recently declassified CIA documents confirmed that insurgents were 'using the famine and relief efforts for their own purposes'.
They said: 'Some funds that insurgent organisations are raising for relief operations, as a result of increased world publicity, are almost certainly being diverted for military purposes.'
Christian Aid worker Max Peberdy was one of those paying to local merchants, which he believed was being spent on grain - but apparently went straight to the rebels.
Mr Peberdy carried nearly £300,000 in Ethiopian currency across the border from neighbouring Sudan in 1984 to buy grain from men he believed were Ethiopian
A picture shows him counting out bundles of money for a grain merchant, while an official from the Relief Society of Tigray (REST) - the humanitarian arm of the rebel party - documents the transaction.
Mr Peberdy said: 'As far as we were concerned and as far as we were told by REST the people we were dealing with were merchants.
'It's 25 years since this happened, and in the 25 years it's the first time anybody has claimed such a thing.'
But the merchant he is pictured with claims he was a senior member of the Tigray People's Liberation Front (TPLF) and half the sacks of 'grain' were filled with sand.
Gebremedhin Araya, who now lives in exile in Australia, said: 'I was given clothes to make me look like a Muslim merchant. This was a trick for the NGOs.
'They came, I showed them 10,000 quintals of grain. The front side is the grain, the other side is full of sacks of sand. If there is 1,000 quintals 500 quintals is full of sacks of sand.
'I showed them like this for about ten places and they gave me two million cash at hand. We repeat the same action like that.'
The money he was given was passed on to TPLF leaders, it is claimed that among them was Meles Zenawi - who became Ethiopia's prime minister in 1991 after the rebel army overthrew Ethiopia's Marxist government.
Former commander Aregawi Berhe confirmed this to BBC's Assignment - Aid for Arms in Ethiopia investigation, which will be broadcast tomorrow night (Thursday 8.00pm BBC World Service).
Mr Berhe, who now lives in exile in Holland, said when the northern province of Tigray was hit by a terrible famine in 1985 'aid money was flowing'.
But of the £63m that went through the hands of the TPLF, 95 per cent was allocated either to buy weapons or build the ideological wing of the party.
He added: 'We were using aid money to buy arms through secondary means. If you come to the Middle East you can buy arms, so we were using some of the money to buy arms.
'We are talking about millions of dollars.'
Stephen King, who oversaw the work of Catholic aid agencies from Sudan at the time, said: 'If we were being conned, and we were aware of that risk, then I think it was on a very small scale, and certainly not on the sort of scale people are now saying was the case. We made a huge difference by working on both sides of a war, at a time of huge humanitarian need.'
One million people died in the famine, which was exacerbated by civil war. Shocking images from Ethiopia meant millions of people donated money, and more than three million copies of Do They Know It's Christmas sold in just five weeks in late 1984.
Charities Save The Children and Christian Aid said today they always carefully monitored where aid funds went.
Nick Guttmann, director of emergency relief operations at Christian Aid, said: 'This story has to be put into context. We were working in a major conflict, there was a massive famine and people on all sides were suffering.
'Both the rebels and the government were using innocent civilians to further their own political ends.
But that is not what humanitarian agencies like ourselves were doing. We were there to help the people in the greatest need and did
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