The Public Accounts Committee, a UK Government spending watchdog, has branded the pay packets of CDC executives as “extraordinary” after reviewing the publicly-owned private equity firm charged with tackling poverty.
The Committee’s report found that CDC, a Government-backed fund of funds, had performed well since it was restructured by the Department for International Development (DfID) in 2004. The firm has outperformed the market through investing in poor countries.
Despite this, the watchdog concluded that CDC’s efficiency and business model are “questionable” given that administrative costs have risen in relation to portfolio value.
Richard Laing, the firm’s chief executive, has seen his pay rise from 383,000 (€428,000) to 970,000 (€1 million) between 2003 and 2007. According to the report, “The remuneration arrangements led to extraordinary levels of pay in a small publicly-owned organisation charged with fighting poverty.”
Although the Committee found that steep increases in pay for CDC executives reflected the firm’s financial performance, DFID was not properly consulted under the agreed remuneration policy.
Speaking in December, Public Accounts Committee chairman Edward Leigh called Laing’s pay “ridiculous” and said that executives were enjoying pay packages up to twice the levels originally set by DFID.
The ostensibly philanthropic private equity house has also been charged with increasing the proportion of its portfolio in countries such as China and India, which are already successful in attracting foreign investors.
Whilst CDC invests more of its resources in poor countries than any other Development Finance Institution, there is limited evidence of CDC’s effects on poverty reduction, the Committee found. As such, a recommendation has been made for the firm to collate and systematically report such evidence to DFID in the future.
D.C.