A vessel seized by Sierra Leone authorities for illegally fishing off the West African nation's coast received funds from a British government development agency through an investment fund, officials said.
Some $1.74 million (1.09 million pounds) from the government's Commonwealth Development Corporation was invested in the Sierra Fishing Company, owner of the vessel Marampa 803, through private equity firm ManoCap, according to ManoCap's founder.
Sierra Leone's military captured the 61-meter ship and its crew in mid-January after it was spotted trawling in nearshore waters reserved for small-scale local fishermen.
Illegal fishing costs West African governments around $1 billion in lost catch each year, threatening one of the world's best remaining fisheries and cutting badly needed revenues to some of the world's poorest states.
We have asked ManoCap to undertake a thorough review with Sierra Fishing Company to establish why this happened and to report back to us with the details of the actions to be taken to ensure that this does not happen again, CDC spokesman Rhyddid Carter said by email in response to enquiries.
CDC, founded in 1948 by the government with an aim to demonstrate the power of enterprise and private capital to reduce poverty in the poorest places of the world, invested $5 million in ManoCap in 2009.
CDC says its investments are self-financing, and it has received no new public funds since 1995.
ManoCap is a private equity fund manager operating in West Africa which aims to deliver returns to its investors while creating local wealth and employment.
ManoCap's founder Tom Cairnes said that $1.74 million of the CDC's $5 million investment went to Sierra Fishing Company, and that just $17,360 of that made it to the Marampa 803. He said that the vessel's management had been outsourced to a Canary Islands-registered firm, Taerim Ltd.
We took the decision to outsource management, and then didn't spend time looking at what the vessel was doing, he said, adding that the management would be changed.
ManoCap has a 40 percent stake in Sierra Fishing Company, making up more than a third of its total portfolio, and the Marampa accounts for just 1 percent of Sierra Fishing Company's assets, Cairnes said.
UK-based Environmental Justice Foundation said the case suggested there was a worrying lack of due diligence undertaken by CDC in this investment and a commensurate failure to ensure that the company they invested in conformed to their expected environmental, social and governance standards.
(Writing and additional reporting by Richard Valdmanis)