Stunning victory as four fat cats quit over dirty tricks
Published by The Mail on Sunday (5th March, 2017)
Four senior executives at Britain’s biggest specialist foreign aid contractor have quit after explosive disclosures in The Mail on Sunday of dirty tricks and profiteering.
The astonishing clearout of four founding directors at Adam Smith International (ASI) comes after this newspaper revealed how the firm obtained secret Government documents and used them to their advantage in bids for contracts.
Leaked emails also exposed how ASI attempted to dupe MPs by passing faked evidence to a parliamentary inquiry into private-sector fat cats.
The inquiry was set up after previous exposés in this newspaper of excessive pay and profits in the aid industry.
The resignations at the shamed company come after furious Ministers and MPs on the International Development Committee (IDC) set up their own inquiries that endorsed our investigations.
ASI – which has former Foreign Secretary Sir Malcolm Rifkind on its board – is stopping bids for new Department for International Development (DFID) work while it cleans up its act and changes its structure. Government sources claim the moves could cost the firm £150 million in lost business.
ASI used aggressive tactics and a network of well-placed contacts to dominate the sector, winning aid deals for projects from Afghanistan to southern Africa worth nearly £300 million over the past three years alone.
Its turnover and profits have almost trebled since 2010, enabling its top team to pocket millions as aid spending boomed. Nearly all of its income comes from British taxpayers.
DFID said it welcomed ASI’s suspension of bidding while sorting out ‘fundamental’ problems. A statement said there were ‘serious questions over ethical integrity’ that ‘will not be solved with quick fixes’.
The Foreign Office is also concerned by ASI’s actions. ‘We are working closely with Dfid and looking at how this impacts with them working with us in the future,’ said a source. ‘We must ensure any bidders meet the highest standards.’
Other Government sources admit they were surprised to discover they can take no action against Raja Dasgupta, the former Dfid official who circulated the confidential documents soon after joining ASI in a senior role. ‘It’s frustrating there is not more we can do,’ a source said.
The directors leaving ASI and all associated companies are Peter Young, the strategy chief who oversaw the duping of the parliamentary inquiry, and fellow founders Andrew Kuhn and Amitabh Shrivastava.
Executive chairman William Morrison will also quit after restructuring the firm. He said: ‘We regret that certain deficiencies of policy and procedure resulted in our failure to meet the highest standards of corporate governance.’
It is believed nine other senior ASI executives who received the documents in an email from Dasgupta remain in post, despite DFID’s strong public condemnation of their failure to raise concerns. The firm’s spokeswoman said an internal disciplinary review was under way.
The ambitious outfit remains highly active around the world, with a new office in Tunisia and a source in East Africa saying ASI was still ‘fishing’ for lucrative aid contracts.
Ministers are reviewing procurement policies after the scandal, seeking to open up contracts to smaller firms and extend transparency over how taxpayers’ cash is spent.
MPs have urged them to get a grip on the poverty sector. Tory MP Nigel Evans, a member of the IDC, said: ‘My fear is this dysfunctional company is just the tip of the iceberg. Alarm bells should be ringing loudly.’
Scandalous rot that goes far beyond this one bad apple
For years, there have been whispers in the aid world about the activities of Adam Smith International (ASI) as it gobbled up Government contracts to become the UK’s biggest specialist aid contractor.
Insiders talked about the firm’s remorseless focus on making money, which earned millions for the founders as they preached their anti-poverty sermons. I heard people question the dubious nature of projects, dodgy practices behind the scenes, huge spending on Western consultants, and questionable links with Whitehall.
Yet still the firm sucked up contracts, with almost all earnings coming from Britain’s beleaguered taxpayers as aid budgets grew: £89.3 million one year, £93.5 million the next, then £112.2 million last year.
As we revealed last month, one £25 million project designed to improve water supplies in poverty-hit parts of Africa saw at least £17 million spent on consultants. With jaw-dropping inevitability, this scheme was renewed by Government paymasters.
Now the ASI gravy train has, temporarily at least, hit the buffers. But only because an outraged whistleblower helped my investigations that revealed the firm’s rotten core.
Politicians on the International Development Committee and at DFID deserve a cheer for finally forcing this firm to clear out its top team and clean up its act. Yet ASI should not just be seen as one bad apple. This firm stands as a symbol of a system riddled with corruption.
Other players may not behave with such stupidity but are just as focused on their own bottom lines. At least ASI paid tax in this country, for example, unlike some competitors growing fat on the British public’s enforced largesse.
Meanwhile the malaise of hefty six-figure pay packages has seeped into the charity world, and it is no surprise to discover that DFID pays the highest wages in Whitehall while flying around the world on its supposed mission to help the global poor.
It also has an appalling record on rooting out corruption, which is why, for all the sudden bold talk of tackling malpractice, we must remember that officials only acted after journalistic exposure of wrongdoing.
Perhaps this would not matter so much if the floods of money were really making a difference to struggling people in poor places. Yet mostly it makes matters worse by aiding corruption, assisting despots and diminishing hopes of democracy.
With tragic irony, former Prime Minister David Cameron stepped forward last week to mount a defence of aid on the very day that ASI disclosed its dramatic response to our investigation.
Sadly, such practices are the inevitable legacy of his Government’s policies and the wider political obsession with hitting a flawed, outdated target to give away 0.7 per cent of national income.
This sort of behaviour is what happens when spending is prioritised over results, when taxpayers are treated like fools and when Westminster politicians think they can solve complex problems in impoverished corners of the planet.
So will the lessons be learned from this scandal – or will it soon be back to business as usual in the swollen poverty industry?