LONDON, (Reuters) – Politicians yesterday described as “extraordinary” the near 1 million pound salary earned by the head of a government-owned fund manager tasked with reducing poverty in developing countries.
The government department responsible for the fund had shown “ineffective” oversight in how pay levels were set, said the Commons Public Accounts Committee. Richard Laing, chief executive of CDC Group, earned 970,000 pounds in 2007 after his performance-related pay was boosted by unexpectedly large returns in the fund’s investments.
Between 2004 and mid-2008, CDC’s assets more than doubled to 2.7 billion pounds, far exceeding expectations.
“The remuneration arrangements led to extraordinary levels of pay in a small publicly owned organisation charged with fighting poverty,” the committee said in a report.
“Part of that pay reflects market-beating financial results, but it also reflects a dubious comparison with private sector `fund of funds’ businesses,” it added.
It said pay arrangements placed too much emphasis on financial performance and too little on poverty reduction. CDC, formerly the Commonwealth Development Corporation, is wholly owned by the Department for International Development (DFID).
It does not donate aid, but invests in companies in developing countries to create jobs and stimulate further investment from other private sources.
Since a restructuring in 2004, it makes its investments indirectly through private fund managers.
Laing told the committee he could defend his salary as results had been “very good” and that CDC had generated 1.7 billion pounds over four years.
“We need to attract good people to do what we do and that is why people are paid well,” he said.
Last November, DFID Secretary Douglas Alexander said CDC would move away from investing in more profitable urban projects and increase its investments in the poorest countries in sub-Saharan Africa and South Asia.
