DFID squeezes £70m from the private sector

Actis Capital complains of "strong arm" tactics

The Department for International Development has sold its 40 per cent stake in the emerging markets investment company it set up in 2004, Actis Capital. In return, DFID is receiving $10m in cash and a large share of future profits, expected to be worth over $100m over the next ten years.

The company was spun out of the Commonwealth Development Corporation when its managers paid £373,000 for 60 per cent of the business. It has gone on to become one of the world's leading private-equity firms specialising in emerging markets, but in that time the revenue to the taxpayer for its minority share has been zero.

Despite the fact that DFID was supposed to receive 80 per cent of the company's profits, no payments were made, because the company had set up a charitable arm which reduced reported profits to zero. In 2011, Andrew Mitchell, the secretary of state for international development, told the Commons that he was "amazed and surprised at the way the management of Actis have so enthusiastically exploited the taxpayer's position."

What is fascinating about this sell-off is that Mitchell apparently decided that, since Actis' managers weren't playing fair, he wasn't going to either. The government's financial adviser suggested that its share in Actis was worth between $3m and nothing, yet they managed to get almost forty times that. The BBC's Robert Peston reports how:

It is understood that Mr Mitchell - a former banker at Lazard - threatened to use the government's residual shareholding to frustrate the smooth operation of the business. For example he has the right to veto the appointment of Actis's chair and one non-executive.

The government will have been emboldened by the political background of the Actis spin-off, since the Conservatives have always maintained that Gordon Brown privatised it for far below its fair value; yet from a party which is so often accused of using privatisation to give "hand-outs" to private-sector allies, it is rather refreshing to see genuine antagonism.

DFID secretary, Andrew Mitchell. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.