The head of a government-owned business set up to alleviate poverty in the developing world was paid almost £1 million last year, a National Audit Office report has revealed.

Richard Laing, chief executive of the Commonwealth Development Corporation, received £970,000 - more than twice the threshold set by its owner, the Department for International Development. The amount was branded “ridiculous” by Edward Leigh, chairman of the Westminster committee that monitors public spending The corporation, which was set up to promote the private sector economies of developing countries and emerging markets, had been given a salary limit of £466,000 for its chief executive and £205,000 for other senior executives.

These figures were in line with senior board members in other development finance institutions, but the National Audit Office found that the corporation had aligned its pay structure with private equity “funds of funds”, where pay is much higher.

Mr Laing’s salary, including bonuses, increased from £383,000 in 2004 to £970,000 last year, while other senior executives were found to have average salaries of £435,000.

The National Audit Office report said that the Department for International Development’s “one-and-a-half person team” designated to oversee the development corporation was smaller than for other government businesses. It added that the department “should have drafted a more precise remuneration policy and monitored its application more vigorously”.

The development corporation, which was established in 1948 to bolster the economies of former British colonies, also came under fire in the report for keeping more than half of its £2.7 billion capital in deposits in Britain, rather than investing it overseas.

The report also found, however, that the corpration, which has received no government funding since 1995, had achieved “exceptionally good financial performance” and had invested in 600 companies, which, together, directly employ almost a million people in poor countries, particularly in sub-Saharan Africa and South Asia. But it gave warning that there was “no systematic evidence of the extent to which development corporation investment adds to overall investment in poor countries”.

While the development fund has been praised for its efforts to nurture the growth of developing economies, the report called into question the accountability of the businesses working for the fund.

Mr Leigh, chairman of the House of Commons Public Accounts Committee, said: “It is ridiculous that the chief executive of a government-owned body aimed at reducing poverty can earn £970,000 in a single year.”

He added: “The truth is that, despite the fact that Commonwealth Development Corporation is government-owned, its reporting obligations to the Department for International Development have been weak. The department must now act to assure itself and the public that the company’s investments are being made responsibly and are clearly succeeding in cutting poverty.”

A development fund spokesman said that it welcomed the National Audit Office’s findings that the development corporation had secured good returns on its investments. He added that the corporation was “constantly working to improve the ways in which we contribute to poverty reduction”.

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