The department for International Development’s (DfID’s) permanent secretary has strongly defended publicly-owned development company CDC, which was criticised last week for the large salaries paid to its top executives.

Speaking to Whitehall & Westminster World, Minouche Shafik said the decision to pay chief executive Richard Laing £970,000 in 2007 was “not wrong”, but admitted that CDC should have informed DfID of the move.

A report published last week by the Commons public accounts committee described the pay as “extraordinary” and said DfID should have much greater control over CDC’s remuneration policy.

However, Shafik held that the mistake was merely one of procedure. “The public accounts committee acknowledges the substance of the [pay] decision was not wrong, as does the National Audit Office, but CDC failed to inform DfID that they had made the decision,” she said. “That should not have happened; the CDC board has apologised. But in substance, it was really nothing.”

Committee members also complained that CDC – previously known as the Commonwealth Development Corporation – focuses on financial performance rather than poverty reduction. The company has not invested £1.4bn of its £2.7bn assets.

But the DfID permanent secretary robustly defended the CDC group, which she said had outperformed similar investors since it was restructured in 2004. “[Until this year] CDC was making an average annual return of up to 26 per cent for the government and they turned £1bn of assets into £2.4bn, which is a remarkable performance over a four-year period,” Shafik said.