The parent company of P&O Ferries is receiving £550m from the shrunken UK aid budget to expand ports in Africa despite its on-the-spot sacking of 800 workers, sparking fresh anger in parliament.
MPs are demanding an explanation for the huge funding sum – accusing the government of putting commercial investments ahead of “tackling extreme poverty”, as many other aid projects are axed.
It is also an “inappropriate” use of aid cash because DP World, the Dubai-based parent firm, could find a private partner to develop the ports, the chair of the Commons international development committee is alleging.
“It pains me to think of what more that £500m could achieve for global health, women’s education or tackling extreme poverty,” Sarah Champion said.
Navendu Mishra, a committee member, attacked the sum being “pumped into a disreputable employer” when the 800 workers were “treated in a disgraceful way”.
In the wake of the P&O scandal, ministers pledged to review all DP World contracts, but the committee was told it was too late to stop the £550m being handed over.
Furthermore, the head of the finance arm behind a growing slice of UK aid spending vowed to make the same investment again, regardless of the P&O mass sackings, hailing its “enormous” potential.
The controversy comes after the government admitted it cannot prosecute P&O, despite its confession that it deliberately broke UK law and despite Boris Johnson vowing the firm would be “taken to court”.
It also lifts the lid on the activities of the aid finance arm, called the CDC Group, which has previously been accused of backing “projects with only the most tenuous relation to poverty reduction”.
A coalition of charities has attacked its looming name change to British International Investment (BII), arguing it lays bare a new focus “solely on private sector investment and profit making”.
“Increased funding for BII will lead to damaging reductions in other grant-based areas of UK aid spending, already cut by over £4bn this year,” said a protest letter signed by Christian Aid and Global Justice Now.
CDC Group is taking a minority stake in a $1.7bn (£1.29bn) joint venture with DP World, investing an initial $320m and a further $400m into the ports in Egypt, Senegal and Somaliland – worth £550m in total.
Even as the aid budget shrinks, the group’s share of it has risen to around £780m, as part of a shift to building “economic partnerships”, the foreign secretary Liz Truss has said.
Ms Champion criticized the funding for ports expansion because DP World could “find other investors”, adding: “Our aid should be used as a last resort.
“The UK government is condemning the actions of DP World whilst its development finance arm is using hundreds of millions of pounds of taxpayers’ money to support a joint venture with them.
“It needs to send a clear and consistent message that these sorts of employment practices are unacceptable – and businesses that use them will certainly not be supported wherever they operate in the world.”
But a defiant Nick O’Donohoe, CDC’s chief executive – asked if the group would make the same investment, with the knowledge of P&O’s sackings – told the committee: “Yes.”
Calling the benefits “enormous”, he said: “The impact case is an overwhelming one here, the difference that this will make to people’s lives in these countries.”
Mr O’Donohoe argued it would have been “very difficult” for the firm to find other private cash, adding: “There are not a lot of commercial investors who are prepared to invest in Somaliland.”
And he insisted DP World must follow international social and environmental standards set by the World Bank, telling the MPs: “They are contractually obliged to follow that.”
But, sitting alongside him, Caroline Read, the Foreign Office’s director of economic cooperation, was unable to spell out how the firm would be held to account.
Asked how anyone could “believe what DP World said when they are quite comfortable to break British law”, she admitted the government could only “assume they will live up to those standards”.
Ministers have also refused to stop the firm running the London Gateway freeport – an investment described as “exciting” by transport secretary Grant Shapps when he met DP World chiefs in Dubai late last year.