The executive chairman of outsourcing provider Capita Group Plc has resigned after becoming embroiled in the political party funding scandal in the UK.
Rod Aldridge has led the London-based company for over 20 years but has stepped down after it was revealed he was one of 12 people who had made secret loans to the ruling Labour Party totaling 14m pounds ($24m). Aldridge’s contribution was 1m pounds ($1.7m).
Political parties in the UK must disclose the source of donations of more than 5,000 pounds ($8,700), but they have been getting around this rule by taking loans from individuals at very preferential terms.
Some of these lenders were also nominated by the government for seats in the House of Lords, the UK Parliament’s upper legislative chamber, leading to a scandal becoming known as Loans for Lordships. There is no evidence that Aldridge was among those nominated.
While on the face of it, no laws have been broken by either the Labour Party or its wealthy supporters, the secrecy of the loans has called into question the motives of the lenders.
Capita has won a number of central government IT contracts since Labour won power in 1997, including a records management contract at the Department of Work and Pensions, a claims processing deal at the Department of Trade and Industry, and it handles the Cabinet Office’s civil service pensioner payroll.
It has also won lucrative contracts with the state-funded BBC, including a 132m-pound ($229m) human resources deal that it won last month.
Capita’s continued success in securing UK public sector contracts has come despite attracting a very high level of criticism for work on many major projects.
The company experienced problems early on in its tenure as primary vendor for Transport for London’s congestion-charging scheme, with systems initially misreading as many as four vehicle registration plates in 10.
Capita’s 400m-pound ($694m) project for the Criminal Records Bureau also suffered early setbacks, with the company failing to meet specific targets.
Perhaps Capita’s most high-profile failure came in 2001, when the government’s Department for Education and Skills scrapped the individual learning accounts scheme run by Capita, following allegations of fraud. The company also suffered adverse publicity over its handling of housing benefits for Lambeth Borough Council.
Despite his resignation, Aldridge remained defiant, and said the loan was entirely my own decision as an individual, made in good faith as a long standing supporter of the Party. Suggestions that the loan helped Capita win government contracts was entirely spurious, he said. He will continue to serve as non-executive chairman until the end of July.
Chief operating officer of UK outsourcing advisory firm Morgan Chambers, Phil Morris, said Aldridge’s resignation was a crying shame. He added that Aldridge had been a leading thinker who has led the way BPO has grown in this country.