Criticism over poverty chief's pay
A Government-owned business set up to help alleviate poverty in the developing world paid its chief executive almost £1 million last year, a report has revealed.
The £970,000 payment to CDC Group's Richard Laing - branded "ridiculous" by the chair of the Westminster committee which monitors public spending - was more than double a threshold set by its owner, the Department for International Development (DFID).
DFID came under fire in the National Audit Office report for failing to keep closer tabs on pay at CDC. And the NAO found the Group's board should have got formal approval from DFID before changing the way senior pay was calculated.
Meanwhile, questions were raised over CDC's decision to keep more than half of its £2.7 billion capital in deposits in the UK, rather than investing it overseas, and over the extent to which its activities reduce poverty.
CDC is a fund management company which invests in private businesses in emerging markets, particularly in sub-Saharan Africa and south Asia, in support of DFID's goal of nurturing the growth of the private sector economy in developing countries.
Although it is owned by DFID, it has received no Government funding since 1995. The report found it had achieved "exceptionally good financial performance", increasing its assets from £1.1 billion to £2.7 billion since 2004. It invests in 600 companies, which together directly employ almost one million people in poor countries.
But the NAO found that there was "no systematic evidence on the extent to which CDC investment adds to overall investment in poor countries". Without better information, DFID was "not well-equipped to consider the benefits of its investment" compared to other aid approaches.
And it noted that CDC this year had £1.4 billion deposited in cash in the UK, compared to £1.2 billion invested in businesses overseas.
A 2004 agreement set a £466,000 threshold on the chief executive's pay and £205,000 for other senior executives, above which DFID should be consulted. The levels were based on comparisons with other senior staff in development finance institutions, pension funds and private equity "funds of funds". But over the years, the NAO found that CDC shifted to a comparison with the funds of funds only - where pay is significantly higher.
The chairman of the House of Commons Public Accounts Committee, Edward Leigh, said: "It is ridiculous that the chief executive of a Government-owned body aimed at reducing poverty can earn £970,000 in a single year."
