UK: Poverty Industry Boss Paid £1m A Year

30 Apr

By J. P. Anderson:

A Westminster spending watchdog has said it was "extraordinary" that a Government-owned company set up to help alleviate poverty in the developing world was paying its chief executive almost £1 million a year.

The pay package of CDC Group’s Richard Laing soared from £383,000 in 2003 to £970,000 in 2007.

The company instituted "steep increases" in executive rewards without properly consulting its 100% shareholder, the Department for International Development (DFID), found the House of Commons Public Accounts Committee (PAC).

The committee also raised concerns about CDC’s decision to hold some £1.4 billion – more than half its £2.7 billion capital – in the UK, rather than investing it in developing countries.

And it questioned the decision to focus an increasing proportion of CDC investments since 2004 in countries like China and India which are already successful at attracting foreign investors.

CDC is a fund management company which invests in businesses in emerging markets in support of DFID’s goal of nurturing the growth of the private sector economy in developing countries and demonstrating to commercial investors that it is possible to make profits there.

Although it is owned by DFID, it has received no Government funding since 1995. A recent report by the National Audit Office 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 1 million people in poor countries.

But the PAC report said that there was "limited evidence" of the impact of CDC’s activities on poverty reduction.

A CDC Group spokesman pointed out that senior staff’s pay was performance related, and its chief executive’s package fell in 2008 to £570,000.

"CDC’s success is down to the skills of the people who work for CDC," said the spokesman. "The framework for paying CDC employees was set by DFID following independent advice and is intended to encourage and incentivise success. It has done exactly this."


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