CDC Group CEO Nick O’Donohoe has defended the institution's largest-ever single investment with DP World, owner of the widely criticized P&O Ferries.
P&O Ferries admitted to breaking the law after it fired 800 staff without notice and replaced them with international workers earning less than the U.K. minimum wage on March 17. The company has been widely condemned by U.K. politicians and the government.
The affairs “has left the reputation of P&O Ferries, and I’m afraid, you personally, in tatters,” transport secretary Grant Shapps wrote to the company’s CEO, Peter Hebblethwaite, Monday. Shapps said Hebblethwaite had shown “contempt for workers who have given years of service to your company.”
CDC Group, due to change its name to British International Investment on April 4, announced with the Foreign, Commonwealth & Development Office its investment as a minority shareholder in a DP World ports and logistics project in Africa last year.
The institution plans to invest an initial $320 million into ports in Egypt, Senegal, and Somaliland, followed by a further $400 million. It is “contractually” obliged to provide the financing, said O’Donohoe.
Asked by Sarah Champion, chair of the International Development Committee, if CDC Group would invest with DP World “if you knew what you know now,” O’Donohoe replied: “Yes … the
impact case is an overwhelming one here. The difference that this will make to people’s lives in these countries … is enormous.”
He added: “What I will also do, which we have already done, is make absolutely sure that contractually that the company are obliged to follow the … [performance] standards, they are contractually obliged to follow that.”
Caroline Read, director of Economic Cooperation and Growth Directorate at FCDO, said the government took “great comfort that DP World have signed up to these standards … we can only … assume that they will live up to those standards.” She was unable to say if the FCDO was reviewing the contract.
Still, skepticism remains. “[DP World] have broken the law in the U.K. so it doesn't fill me … with a lot of confidence that they won’t do that in other parts of the world where perhaps employment law is less strict than the U.K.,” said MP Navendu Mishra.
The investment’s “impact on the economies of Somaliland, Egypt and others is huge,” Read said, adding that “we mustn't forget the point of doing these projects is the impact on poverty.”
DP World “would have had difficulty” finding another investment partner for the project, said O’Donohoe.
“It is difficult to understand the rationale. 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,” said Champion in a statement released after the IDC’s hearing.
She added: “The purpose of CDC is to invest in projects that have beneficial development impacts and would otherwise not be funded. … I’ve no doubt that CDC’s investment in this project would generate jobs and economic growth, but it is difficult to accept that a global supply chain company like DP World would have been unable to find an alternative investment partner. It pains me to think of what $720 million could achieve for global health, women’s education or tackling extreme poverty.”
About the author
William Worley@willrworley
Will Worley is the Climate Correspondent for Devex, covering the intersection of development and climate change. He previously worked as UK Correspondent, reporting on the FCDO and British aid policy during a time of seismic reforms. Will’s extensive reporting on the UK aid cuts saw him shortlisted for ‘Specialist Journalist of the Year’ in 2021 by the British Journalism Awards. He can be reached at william.worley@devex.com.