Consultants take billions from foreign aid budget

Companies with overcharge will be in trouble after the further transactions check.

Consultancy companies receive billions of pounds due to the help from overseas, and they will be checked by the authorities, showing the salaries and fees they have. The intention was born after The Times did the investigation of the transactions by those companies.

The international development secretary Priti Patel is about to check and recheck all the contracts for the foreign aid after the investigation involving 70,000 transactions showed that since 2012 the spending on consultancy firms had grown two times. Even more interesting, 10 British firms are reported to have received almost half of the money.

One British think tank was reported to demand £10,306 for composing one blog post. Another one got over twice more – £23,000 – from the money paid as taxes for two pages of a policy brief. Other examples include two consultants that have received £12,000 each for a “how-to” guide about disaster resilience that included 6 pages. £15,100 were given to other two consultants for composing a 30-page discussion paper. The bank JP Morgan shared £1 million in aid money with a law firm to advise on Nigeria’s sovereign wealth fund. Ms Patel is understood to have said privately that she will not “tolerate the profiteering by those who have created an industry out of the suffering of the world’s poorest”. She is considering forcing aid suppliers to publish all contracts.

In 2014 the Department for International Development (Dfid) paid £26,000 to hire Krishnan Guru-Murthy, the Channel 4 Newspresenter, and £14,000 to hire Zeinab Badawi, the BBC broadcaster, to moderate a handful of sessions at a two-day aid conference in Mexico.

Last night Guru-Murthy promised to give his £12,750 fee, minus tax already paid, to an international development charity. The broadcaster said he was not aware that Dfid was funding the work at the time and would not have undertaken it if he had been. Badawi declined to comment.

Dfid has played down the extent of its payouts by recording “consultancy spending” as £0 over the past three years and claiming that it has “slashed spending on external consultancy and advisory services by 98.9 per cent since 2009”. However, The Times has established that fees paid to 265 consultancy companies together with payments to 273 other organisations for “technical and advisory services” increased from £501 million in 2012 to £931 million last year.

Ten contractors, including Adam Smith International (ASI) and Oxford Policy Management, have seen the value of contracts increase by £145 million in this period. Insiders warned that performance was often not properly assessed. “There isn’t a feedback mechanism,” a former senior Dfid civil servant said.

“Organisations that are doing badly are not going bust. Reviews are often done by the people responsible for designing and managing the contract. They don’t have a strong incentive to say the project is shit.”

Last year Britain spent £12.2 billion on overseas aid — equivalent to 0.7 per cent of national income. The country is only one of five to have met this target. Dfid itself spends about £8.4 billion on aid programmes each year, with the remainder flowing through other departments or expended on staff costs.

Analysis of every publicly disclosed aid payout from Dfid between 2011 and 2015 — totalling just over £38 billion — reveals the extent to which funds meant for the world’s poor increasingly go to highly paid western consultants.

Consultancy spending reached £3.4 billion over this period with British organisations winning two thirds of the contracts. The figures are likely to underestimate significantly the aid money flowing to them, however. Many receive large contracts via third parties such as the World Bank and the International Monetary Fund, which are handed billions of pounds in foreign aid to distribute themselves.

Dfid documents reveal that the World Bank paid consultants in Libya an average day rate of £1,160 while the IMF paid £1,036 per day — equivalent to salaries of £300,000 a year. The department itself is willing to pay day rates of more than £1,000.

In Libya, Dfid documents recorded that ASI charged £213,000 to provide a single consultant for nine months. A spokeswoman for ASI said the figure included accommodation and other costs and that the consultant provided good value at a time of deteriorating security.

A Dfid spokeswoman said it was “one of the most transparent development agencies in the world” but that it “can and will do more”. She said that consultancy spending had grown in line with overall aid expenditure. The department was “examining how we can increase scrutiny of contractor spending”.

Arthur Bingham
Arthur Bingham

Latest posts by Arthur Bingham (see all)

Reply