The fat cats of foreign aid: Ministers 'to target consultants paid £500m by the taxpayer'

 

• Probe launched by International Development Secretary Justine Greening
• 'Poverty barons' making millions in consultancy fees from the aid budget
• Nearly £500m paid last year to firms working on Third World programmes
• PM pledge to increase aid budget to 0.7% of national income of GDP by 2014
• TaxPayers' Alliance: 'Looks like a very bad deal for the taxpayer'
• Tory right-wingers say money should be spent to help the needy at home
• One firm profiting is London-based consultancy Adam Smith International

By James Chapman, Gerri Peev and Neil Sears
PUBLISHED:22:41, 16 September 2012| UPDATED:20:14, 17 September 2012 /The Mail Online

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Probe: International Development Secretary Justine Greening has launched an emergency audit following revelations that 'poverty barons' are making millions in consultancy fees from the foreign aid budget

An emergency audit was opened last night into revelations that ‘poverty barons’ are making millions in consultancy fees from the foreign aid budget.

Nearly £500million was paid out last year to firms that work on Third World programmes. Some give their directors seven-figure salaries.

The probe was launched by Justine Greening, who was appointed International Development Secretary against her will in David Cameron’s Cabinet reshuffle this month.
Miss Greening, who is an accountant by training, has demanded a rapid explanation of apparently extravagant spending and is said to be going through the Department for International Development’s budget ‘line by line’.

‘Justine will be sure to bring an accountant’s eye to DfID and will be looking extremely closely at every single area of spend to ensure value for money for the British taxpayer,’ said one source.

‘She has ordered a full report on all the issues that have been raised on her desk by the end of the month.’
One of the firms to profit from the ring-fenced aid budget is Adam Smith International.
The London-based consultancy, which promotes the free market in poor countries, has received contracts worth tens of millions of pounds in a single year.

Its work includes building schools in Pakistan, developing the free market in Nepal and reforming the tax system in Afghanistan.

Peter Young, a director of both ASI and its parent company Amphion Group, made more than £1million in 2010. He receives a salary of £250,000 and paid himself a dividend of £800,000 two years ago.

Defending his payout to the Mail, he said it was a one-off dividend accumulated over many years, adding: ‘I don’t think it’s particularly helpful to take pot-shots at success.’
Mr Young, who lives in Tunbridge Wells, Kent, said: ‘For a very modest outlay the tax revenue of the Afghanistan government has gone up to £2billion.

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‘I don’t know if you think it would be better to hand the few million it cost to do that to the people in Afghanistan?

‘When people think about aid they think about just handing out money to people, but it’s more complicated than that.

‘There was one occasion where we were paid out a substantive amount in dividends that represented profits from a number of years.

William Morrison: £1m dividend

Andrew Kuhn: Paid £125,000

Peter Young: £800,000 payout

Amitabh Shivaastava: £1m

THE BARONS OF POVERTY: ADAM SMITH INTERNATIONAL'S BIG FOUR

William Morrison: The 41-year-old Bristol University graduate has worked on economic reform in Bangladesh, Pakistan and India and helped set up the post-war government in Iraq.

His basic pay at Adam Smith International is around £150,000 but two years ago he took a dividend from the consultancy of more than £1million. He lives in upmarket Lewes in East Sussex.

Andrew Kuhn: An economist, he has worked in the Palestinian West Bank but is currently in charge of Adam Smith’s work in Afghanistan.

He also banked a dividend of more than £1million two years ago and is on a basic salary of around £125,000. Home is a flat in fashionable Earls Court in central London.
Peter Young: As head of strategy and operations for Adam Smith, Mr Young, 53, boasts expertise in ‘resource allocation’.

He is on £150,000 a year and claimed an £800,000 dividend in 2010. He has a luxury home in Tunbridge Wells, Kent.
Amitabh Shrivastava:The 43-year-old has toured 25 of the world’s most impoverished countries, including Rwanda and Sierra Leone, and boasts particular expertise in ‘making markets work for the poor’.

His annual salary is also in the £125,000 range, again boosted by a £1million-plus dividend two years ago.

He lives in affluent Wimbledon in south-west London, but was yesterday working in Afghanistan. He declined to comment.

‘But our company makes relatively modest profits for doing a very difficult and challenging job in very difficult and dangerous places.

‘Do you think no one should make a profit out of that sort of activity? It’s like saying no one should make a profit out of the medical sector, or judicial system.’

William Morrison, the managing director of ASI, received a salary and dividends worth £1.3million in 2010. Directors of the firm are on an average of £125,000 each, while contractors earn up to £850 a day.

A fellow director of Mr Young and his colleagues at ASI is former Tory defence secretary Sir Malcolm Rifkind, whose party takes a stern line on wasteful foreign aid.

Yesterday, Sir Malcolm, 66, did not respond to a request for comment.

In need: Nearly £500million of taxpayers' money was paid out last year to firms that work on Third World programmes. Some pay their directors seven-figure salaries

Another firm which was paid around £6million from DfID last year is a subsidiary of the Marie Stopes abortion rights charity.

It carried out work in India, Africa and Nepal. Its highest paid director was on £233,000 – £80,000 more than the Prime Minister.
The highest paid director at another consultancy, Maxwell Stamp, doubled their salary and is now on £326,000.

Good intentions: But is Britain's aid budget falling into the wrong hands?

The firm raked in £16.4million for its work on legal services in Bangladesh and discouraging child marriage in Ethiopia.

Foreign organisations have also cashed in. Washington-based Search for Common Ground took nearly £4million for providing support to the ‘electoral cycle’ in Sierre Leone.
The Clinton Foundation has also taken a slice of a £200million contract to advise on forestry while consultancies in Uganda and India are also winning contracts.

David Cameron has pledged to increase the aid budget to 0.7 per cent of national income of GDP by 2014. That would see DfID’s budget rise from around £8billion to more than £12billion.

That pledge has yet to be enshrined in law and Miss Greening’s appointment could make it less likely that it will be fulfilled.

The growth of the budget has angered Tory right-wingers who believe taxpayers’ money should be spent on helping cash-strapped families at home who are struggling with the recession.

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said: ‘Ministers have insisted that they need more money to help the world’s poorest, but taxpayers will be appalled that hundreds of millions of pounds is being channelled to pricey consultancy firms.

‘Sometimes external expertise can be useful, but systematically spending these vast sums on consultants looks like a very bad deal for the taxpayer.


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