Poverty boss's £1m 'extraordinary' pay package revealed
As the boss of the publicly owned company which invests billions of pounds of taxpayers' money to alleviate global poverty, Richard Laing is one of many dedicated to improving the finances of the poorest of the poor. But few engaged in the battle to relieve the suffering of the developing world can count on a pay package of nearly £1m as their reward.
The "extraordinary" remuneration received by Mr Laing as chief executive of CDC Group Plc, a little-known investment body that is wholly owned by the Department for International Development (DfID) and controls assets worth £2.7bn, is revealed today in a stinging report by the Westminster spending watchdog.
Between 2003 and 2007, Mr Laing, a 55-year-old Cambridge engineering graduate, saw his income rise from £383,000 to £970,000 as investments in projects from a Nigerian shopping mall to a Chinese egg producer reaped handsome returns. But MPs said the 250 per cent increase in Mr Laing's pay deal had been given without CDC producing sufficient evidence that its portfolio of investments, from a mattress manufacturer to Kenyan fruit farmers, were reducing global poverty.
The House of Commons Public Accounts Committee said that CDC, which was set up in 1948 to improve Britain's financial returns from its colonies but now effectively acts as a state-funded private equity house dedicated to helping poor countries, had delivered an impressive financial performance, almost tripling the value of its assets from £1.1bn in 2004.
But the MPs said the company was guilty of important lapses, including a failure to properly consult DfID about steep increases in the rewards paid to its senior executives based on "dubious" comparisons with the private sector and investing too heavily in countries such as China and India, which were already attracting substantial foreign investment.
A decision by CDC's board to bring pay into line with other "fund of funds" managers had resulted in "extraordinary levels of pay in a small publicly owned organisation charged with fighting poverty", the report said.
The six-figure salary received by Mr Laing, who worked for several blue chip City companies before joining CDC as chief executive in 2000, makes him one of the highest-earning employees of a state-owned body. Although Mr Laing, who owns a substantial property and gardens near Haywards Heath, in West Sussex, saw his income fall to £572,000 last year, the figure still includes a £252,000 performance-related bonus despite a £359m reduction in the value of CDC's assets in 2008. Anti-poverty campaigners said the revelations raised serious questions about the effectiveness of CDC in helping the poor. John Hilary, executive director of War on Want, said: "CDC has long abandoned any interest in poverty reduction. It is focused instead on wealth creation for the affluent, including Mr Laing. This is a travesty of the organisation's original mandate."
Despite being owned by DfID, CDC insists it is required to operate on a commercial basis, striking 10-year deals with audited investment funds, who in turn have taken stakes in more than 600 companies worldwide. CDC, which ploughs its earnings back into the developing world after a 5.5 per cent deduction to meet its running costs, estimates that the companies it has invested in employ nearly one million people.
DfID said last night that it had already refocused the company's investments onto the poorest countries and would soon be linking its executive pay "even more tightly" to delivery of its objectives.
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