UK government-backed fund of funds CDC Group has drawn criticism from Edward Leigh, chairman of government spending watchdog the Public Accounts Committee.
Leigh branded the £970,000 (€1.1 million; $1.4 million) salary paid to CDC chief executive Richard Laing as “ridiculous” in a statement. His comment followed a National Audit Office report on CDC’s operations.
The report highlighted CDC’s “exceptionally good” financial returns – the group has grown £1.1 billion in assets to £2.7 billion in the last four years – and pointed to the fact that CDC had exceeded its stated requirement to invest at least 70 percent of its portfolio in low and lower-middle income countries.
There have been lapses in oversight and governance of executive remuneration since 2004
National Audit Office
CDC is owned by the UK government and was created with the goal of decreasing global poverty by making commercially-driven investments in the world’s poorest countries. Since 1995, it has been self-funded.
The report described CDC’s standards of corporate governance as being “consistent with good practice” in the private sector, but said “there have been lapses in oversight and governance of executive remuneration since 2004”.
The framework for executive remuneration is now being reviewed.
This is not the first time CDC has drawn public criticism this year. In July a BBC radio programme questioned whether UK tax payers’ money should be used to invest in a Nigerian shopping centre, a venture the programme said would only be likely to benefit the country’s wealthy.
A review of CDC’s investment guidelines ensued and in November the Department for International Development, which oversees CDC’s activity, laid out renewed guidelines to direct more investment to the world’s poorest nations.
Emerging markets-focused private equity firms Aureos and Actis are both CDC spin-outs.