REPUBLICAN PARTY OF GREAT BRITAIN  

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Rediscovering the Great British Republican Tradition

REPUBLICAN PARTY NEWSLETTER

 

For a Civic and Constitutional Republic

www.republicanparty.org.uk

 

                                                       Issue No 34 Friday 01 May 2009

 

 

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This week

 

·        How The Commonwealth Development Corporation Became The CDC.  Or How Vision Turned To Greed.

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News Stories

Highlighting  news stories important to the Civic Republican view, particularly those that are overlooked or little covered in the main media.

 

 

DEVELOPING WORLD

 

·        How The Commonwealth Development Corporation Became The CDC.  Or How Vision Turned To Greed.

The BBC reported this week on the salary of Mr Richard Laing. Mr Laing is not, it must be said, a banker but the Commons Public Accounts committee found that in 2007 he received a salary £970,000 which had risen from £383,000 in 2003. He is, in fact, the chief executive of a little publicized company, in which the government has a majority stake, that calls itself CDC. The initials are meant to mean nothing at all but in reality derive from the company that it grew out of which was the government owned Commonwealth Development Corporation.

The Commonwealth Development Corporation was founded by the Atlee government in 1948. That seems quite a long time ago in years, but it is an even longer time ago indeed in terms of the attitudes that rule a Labour government’s or any British government’s thinking. Originally the idea was to provide help in the way of investment to parts of the Commonwealth that were most in need. There were then, as now, many poor mainly agricultural areas in Commonwealth countries where desperate poverty was and is the norm. No private company would ever be found to invest in these places except at extortionate rates of interest and so, it was reasoned, the British government should be prepared to take a risk were no others would.

Given that this initiative started in the post war years when Britain had plenty of problems of her own (rationing continued into the early 1950’s) the spirit of broad-minded generosity and ability to take a long term view now seems truly remarkable. But these were the days when the new idea of the British Commonwealth, to be made up of countries formerly belonging to the British Empire, had only recently been formed. (No one seemed to be concerned that the word “commonwealth” in Britain had previously meant “republic” and that such a “commonwealth” had existed already in Britain in the seventeenth century, but that is probably just another sign of how times change.)

The British Commonwealth had at its core the idea that developed nations like Britain, Canada and Australia should band together with poorer nations like India, Nigeria and Ghana for mutual benefit and the Commonwealth Development Corporation was a part of this desirable objective.

The Commonwealth ideal can instructively be compared with two other post-war international organisations – the World Bank and the European Union. The Commonwealth was created before the World Bank had expanded its operations and before the Common Market, as the EU would first be known, had even been seriously thought of.

The World  Bank introduced a quite different kind of model for “helping” developing nations whereby it would give them loans which had to be paid back in dollars. This system has lead to many developing nations being in bondage thanks to unpayable debts. The Common Market started off as a club for rich nations which, notwithstanding newer entrants for Eastern Europe, is essentially what it has remained.

It thus might seem that the Commonwealth Development Corporation had behind it a degree of idealism. But, if this is true, the idealism was soundly rooted in a vision of what is of long term interest to all nations, developed and developing. But it was never very likely that such a project would survive the onslaught of Thatcherism and the New Labour government that followed it. The embarrassing reference to the Commonwealth ideal had to be hidden and the faceless monogram of CDC was adopted.

CDC has been transformed in much of its dealings into an investor in profitable projects that just happen to be located in developing nations. In addition, it has managed to deliver handsome salaries and payoffs for its partners and executives that cannot possibly correspond to any benefit they have given the people and businesses they are supposed to be serving. These payouts may not be on the Sir Fred the Shred scale but they are by any standards excessive nevertheless. The recently reported salary of the current chief executive of nearly a million pounds is not the first example of such excess and rip off.

Previously the BBC reported on how CDC invested in a “shoppertainment” complex in Lagos, Nigeria, and in a well-funded solar panel manufacturer in New Delhi. These projects do not sound like the kind of projects the CDC is supposed to be involved in. CDC is supposed to be setting a standard for investing in poor countries but its portfolio of investments has been described by a city accountant as “low risk”. This is not what the Commonwealth Development Corporation was set up for. It was not supposed to operate as a private equity company.

Furthermore, as we try to dig deeper we find that the operations of CDC are shrouded in secrecy. Its partners do not give interviews (except when hauled before select committees), it has countless subsidiaries whose accounts are not available for  public scrutiny, and many of these subsidiaries are located in well recognised tax havens, so depriving the nations in which it invests of much needed tax revenues.

Going beyond that, money was siphoned off by executive in the creation in 2004 of a subsidiary called Actis. Actis occupies a penthouse office suite overlooking the Thames and was set up entirely using taxpayers’ money. It was sold to the CDC partners for £370,000. This has turned out to be pretty much of a knocked down price as the shares are now worth £2.3 million. The setting up of Actis was strangely timed to coincide with the CDC partners receiving a bonus that comfortably exceeded the acquisition price and so millions of pounds of tax payers money was transferred to the partners without their contributing a penny.

CDC and Actis have been subject to the “light touch” regulation so liked by Gordon Brown and New Labour and consequently public accountability has been almost non-existent. It is only thanks to the diligence of the Public Accounts Committee and the BBC that their operations have at least been brought to the public’s attention. (This, incidentally remind us of just how important these institutions are as part of the system of checks and balances that we have.)

It must be a fundamental principle of Civic Republicanism that we view our own well being and prosperity intimately linked with that of all nations rich and poor. The sad descent of the Commonwealth Development Office into at worst a money spinning exercise for its partners and at best an indirect channel for benefiting poorer nations is part and parcel of the descent of standards of morality and virtue in the running of the nation that is such a familiar story in the day to day news we see on television and in the other media.

If we continue as we are, we are, surely, without exaggeration, on the road to hell. We have to try to rediscover our basic humanity – a humanity, lest we forget, we share with all. The original Commonwealth Development Office was surely not perfect but it was only possible to create it when the assumptions about where our true interests really lie were altogether different from what they are today.

The Commonwealth Development Office is a reminder of where we have come from. Its demise a reminder of how much we have to do.

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Current

What is happening now of interest to Civic Republicanism

 

 

REPUBLICAN PARTY NEWSLETTER

 

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……. …….until next week