"In 2004, the then Development Secretary Hilary Benn carved out the fund management operation from the government-owned develpment fund CDC. The fund's function is to invest UK aid in companies in developing countries. The private equity firm created to do this, Actis, was set up in swanky riverside offices using £5m of public money while 60% of the new "limited liability partnership" was sold for £373,000 to former CDC managers, led by Paul Fletcher. One hell of a good price for managing £1bn of state funds without facing any competition whatsoever.
Fletcher and his pals quickly recouped their outlay. Actis reported profits of $14m in the first year, and that was after accounting for its 192 employees being paid an average of $220,000 each and senior partner Fletcher pocketing $1.84m. Actis will tell you that the government is entitled to 80% of their profits but that arrangement ends in 2009. Furthermore, in a recent public accounts committee report, Fletcher and Co's share (bought for £393,000 remember) was valued at over £200m, and possibly as much as £600m.
So why was Actis sold for so little when it was quite obviously worth so much more? Private Eye has asked to see the calculations that led to the 2004 valuation of £393,000 and how much the still publicly-owned CDC pays Actis to manage the fund. However, the Department for International Development's Openness Unit (an oxymoron if ever there was) and the Shareholder Executive have both refused to release any details. The DfID claimed the valuation calculation was "commercially sensitive" and revealing it was not in the public interest."
As Max Keiser would say: "Send in the Chinese assassin squad!"