Revealed: foreign aid fat cats soak up £17m in fees – on £25m pump project

Published by The Mail on Sunday (22nd January, 2017)

More than two-thirds of £25.4 million spent on a foreign aid scheme to install wells, water pumps and irrigation in some of Africa’s poorest areas has been soaked up by fat cat consultants.

Internal documents passed to The Mail on Sunday reveal consultants pocketed at least £16.8 million as taxpayers funded thousands of days of work by private contracting firms.

Department for International Development (DFID) sources confirm average daily rates for staff on the project were more than £600 – equivalent to a £150,000 salary.

Yet a Government review says the scheme improved resilience to extreme weather for just 370 households in poverty-stricken southern Africa, rather than the 15,000 intended.

The leaked papers reveal only a fraction of the money went on building a handful of small infrastructure and irrigation schemes in rural regions.

Meanwhile the Climate Resilient Infrastructure Development Facility (CRIDF) hired 550 staff, spent up to £217 per person on workshops and £20,446 on ‘gender and social inclusion guidelines’.

The documents admit ‘consulting fees are the major cost driver’ and ‘may be high’ – while a DFID analysis found ‘purported’ economy measures were ‘spurious’.

A scheme to help three Zimbabwean villages grow beans and cabbages cost more than £10,000 per household.

Yet despite the scheme frittering away huge sums, DFID increased spending on it by almost £5 million – and invited bids for a multi-million-pound, three-year second phase.

‘This is an absolute scandal,’ said Tory MP Nigel Evans, who sits on the Commons International Development Committee. ‘I feel so angry that money meant to help some of the poorest in the world is lining the pockets of rich people.’

He called for International Development Secretary Priti Patel to urgently review this latest example of profligacy and profiteering in the poverty industry. ‘It’s an appalling waste of money and clearly should be stopped.’

The CRIDF contract was won by the country’s largest specialist aid consultancy, Adam Smith International (ASI), which has seen profits soar as Britain boosted spending on aid abroad to £12 billion.

The firm is already at the centre of two major Westminster inquiries after The Mail on Sunday exposed how it had obtained secret Government papers to gain commercial advantage – then sought to dupe MPs investigating profiteering by fat cat firms.

Four years ago Dfid agreed to spend £20.7 million on CRIDF for small dams, pumping stations and irrigation schemes in order to develop resilience against climate change while showing the value of co-operation between nations.

But a quarterly review in November 2014 revealed 70 per cent of the first £7.8 million spent went on consultants. Many were at higher rates, which can reach up to £950 a day.

The document accepted ‘fees may be high’ and were ‘the major cost driver’ with 550 people hired.

Other spending included workshops in nations such as Mozambique and Namibia with daily costs of £124 to £217 per person; drawing up ‘gender and social inclusion guidelines’; and £7,350 on a communications adviser.

An annual report prepared six months later admitted overspending. It said the shortfall would probably be met by ‘reallocating some funds’ from capital funds, which had been due to be spent on irrigation projects in poverty-struck rural regions.

The document urged DFID to commit more cash, despite more than two-thirds of the forecast budget going on consultancy fees. Incredibly, DFID signed a deal with ASI two months later, giving an extra £4.7 million.

Although praising itself for ‘innovative new thinking’ in many activities, CRIDF admitted spending £1.2 million on transport alone – while at that stage it had helped just 50 of the 15,000 households targeted over the project.

It had not irrigated a single hectare of land – nor helped any of the 50,000 households targeted for better water security or the 275,000 intended to benefit from ‘improved resilience to extreme weather’.

CRIDF had expected to mobilise an extra £10 million by that point from other public bodies. But despite 7,676 days worked by its swollen army of consultants, it raised only £122,000 – and nothing from private firms.

The organisation was committed to only seven capital projects at that stage, costing a total of £2,248,000.

These included Kufandada, a £473,000 project for a weir, pump repairs and small reservoir in south-eastern Zimbabwe, intended to help 120 households. Among other schemes were pump restoration plans in Tanzania and improved sanitation, including communal toilets, for 1,126 households in Zambia.

‘This is unforgivable,’ said one aid expert who studied the documents. ‘They are building a few small things and spending millions on themselves. Clearly the fee rates were too high and management mechanisms totally inappropriate.’

The first two DFID reviews of CRIDF were carried out by Raja Dasgupta, who last year joined ASI, then illegally obtained confidential Government documents to gain commercial advantage.

He no longer works for the firm after this newspaper’s disclosure of dirty tricks, which prompted Miss Patel to start an inquiry into aid contractors. ASI insisted he had been barred from working on CRIDF.

The most recent public Government review, seven months ago, found costs of the water projects – now ten schemes – had soared to £8.63 million with £3.77 million spent on preparatory work. Kufandada was listed as costing £1,223,708 – an astonishing £10,197 on each of the 120 rural households benefiting.

The report admitted CRIDF was behind on projects and failing to hit targets, with just 370 households having improved resilience – ‘well below’ the 15,000 intended.

But this was blamed on ‘a timing issue’ and the project was given an ‘A’ rating. ASI’s DFID contracts made millions for its directors as profits soared. More than 80 per cent of its £111.7 million annual turnover is from Government contracts.

One senior DFID source said: ‘They are now under the spotlight for everything they are doing with us.’

ASI said CRIDF had mobilised an additional £126.6 million funding and was implementing 16 projects for £4.8 million capital spending, with the scheme on track to hit targets.

A spokesman said Kufandada was preparatory work for a £72.5 million programme to benefit 1.5 million people – and the average cost of CRIDF workshops was £28 per participant. They added: ‘CRIDF has already leveraged £5 for every £1 spent by DFID, demonstrating value for money.’

Partners in the project include WYG, a Leeds-based consultancy involved in 15 DFID projects in the past four years. The firm handed chief executive Paul Hamer a £471,000 pay package last year after revenues rose to £133.5 million – although it paid just £321,000 in tax due to historical losses.

WYG said DFID contracts were a tiny fraction of its revenues.

DFID said millions across southern Africa were suffering because of drought and ‘many more would suffer in the years to come’ were it not for this project.

Categorised in: Africa, Aid & development, home page, Zambia