The founders of Adam Smith International (ASI), one of the biggest UK foreign aid contractors, have stepped down after the government froze future contracts with the firm over questions about its ethical integrity.
The London-based consultancy, which has come under pressure from the Department for International Development (DfID) amid concerns about “culture and behaviour”, announced a restructuring of its top team.
Last month DfID cut off funding after it emerged that ASI, which has been entrusted with £450m in development cash since 2011, had tried to profiteer by exploiting leaked department documents. It was also heavily criticised for trying to “unduly influence” a parliamentary inquiry by engineering “letters of appreciation” from beneficiaries of its projects.
The Commons international development committee said ASI “overstepped the mark” in soliciting testimonials that were submitted as evidence to the MPs’ inquiry into the government’s use of aid contractors. The committee said ASI’s actions were “deplorable”, “entirely inappropriate” and showed a “serious lack of judgment”.
Its findings on ASI are to feed into a broader report, which the committee expects to be published at Easter, into DfID’s use of contractors, taking in issues such as value for money, pay and practices.
In a statement, ASI said three founding executives – Andrew Kuhn, Amitabh Shrivastava and Peter Young – would step down as it completed its transition to an employee-owned company. William Morrison, a founding director and ASI’s executive chairman, will also leave after leading ASI through the restructuring.
No financial package is being offered to the four executives, according to ASI.
The firm said a key element of the change would be the reinvestment of a “significant percentage” of net earnings into developing countries.
It has also voluntarily withdrawn from the DfID procurement process until its reforms are completed. The company said that it was in the process of hiring staff to manage a new foundation that would invest in what it described as “innovative approaches to aid”.
DfID said ASI’s problems were “fundamental and will not be solved with quick fixes”.
It pointed out that ASI staff had tried to use “improperly obtained” confidential DfID documents “with a view to exploiting the material to ASI’s commercial advantage”.
It added: “There have been serious questions over ASI’s ethical integrity. It is therefore right that ASI is taking action to address this.”
ASI has also been criticised for using DfID money to pursue a free-market agenda in developing countries. A report by the Global Justice Network last year found that electricity consumers in Nigeria faced price increases of up to 45% because of “a controversial energy privatisation programme supported by UK aid through a multimillion-pound project implemented by ASI”. And in Afghanistan, local civil society organisations reported that the country’s new minerals law – drafted with ASI’s support – had done little to improve their lot.
Reacting to the news of the restructuring, Aisha Dodwell, a campaigner at Global Justice, said that ASI remained a discredited company and that it would take “more than just a shuffling of the deck chairs” for it to justify its existence.
“The recent review into the company should be a wake-up call to DfID to stop spending important aid money on expensive UK-based consultants, and to start using it to help developing countries build appropriate public services. That’s the path out of poverty for millions of people,” she said.
Morrison said: “We regret that certain deficiencies of policy and procedure resulted in our failure to meet the highest standards of corporate governance, such that we did not meet the expectations of DfID and the public, to whom we are accountable.
“The changes we are making will address the requirement to now meet and exceed these expectations. We seek to ensure the highest standards of corporate governance, a fit-for-purpose structure and culture, and accountability.”
ASI was set up in 1992. Its turnover tripled between to 2010 and 2015 to £130m.