Four years into the worst financial crisis of modern times, it should not come as a surprise that leaving decisions to financial markets will often fail to produce the best social outcome.
As former Nigerian Governor James Ibori is sentenced this week after pleading guilty to 10 charges of fraud and money laundering, the possible involvement of British development funds in Ibori's money laundering scams should at least give pause to those - from Bob Geldof to Tony Blair to Andrew Mitchell - who see finance as the answer to the problem of poverty.
James Ibori is the former Governor of the oil-rich Delta State in Nigeria. He is reported to have stolen up to $3 billion from Delta State's coffers and was extradited to the UK from Dubai after fleeing Nigeria.
Several companies in Nigeria have now been accused of being part of Ibori's attempts at money-laundering. Three of these companies were being invested in by a US-based private equity fund called Emerging Capital Partners. And in turn Emerging Capital Partners was being invested in by the UK's Department for International Development (DfID).
Today, the companies are under investigation by Nigeria's anti-corruption Financial and Economic Crimes Commission (also funded by DfID) and by the European Union's Anti-Fraud Office. So how did British development funds end up tangled in this web of deception and corruption? In short, through the belief that 'finance knows best'.
For many years the British Department for International Development (DfID) has owned a subsidiary called the CDC Group which claims to combat poverty by investing in private equity markets. These funds then invest in companies in developing world countries. The theory is these funds know how to allocate capital to those parts of the world where it's most needed.
British development funds are also invested in a development bank called the European Investment Bank which operates in a similar way - supporting, for instance, public-private partnerships. The EIB is set to take a central role in the 'development' of North Africa post-Arab Spring.
Both these institutions for privatised development invested money in Emerging Capital Partners. Like many such funds, Emerging Capital Partners doubtless offered a fantastic return for money invested - and surely a fantastic return is all you need to prove that you're having a 'positive development outcome'.
This is not the only scandal involving these funds. Under the Labour Government CDC was dogged by headlines - of tax avoidance, million-pounds pay packets for executives and privatisation scandals. Despite a review of CDC's activities, the current government remains totally committed to the idea that financial markets know best.
DfID has been aware of specific concerns around investments in Nigeria for a considerable time. Last year I wrote, with others, to Secretary of State Andrew Mitchell concerning investments in Emerging Capital Partners. He replied that, based on his own investigation, there was no case to answer. Since that time he has apologised for the fact that DfID officials revealed the name of anti-corruption whistleblower Dotun Oloko to one of the companies in question, thus jeopardising the safety of Oloko and his family. We are still waiting for an apology for - and an independent review of - DfID's failure to investigate the alleged role of CDC's investments in furthering Ibori's reign of corruption.
But much wider lessons need to be learnt from this affair. Aid money across the world is increasingly being channelled into financial markets which are apparently less corrupt than governments and more skilful in the development of economies. Apparently Bob Geldof thinks private equity is a "major vehicle for positive change in this world" - to such an extent that he chairs his own private equity fund which is attracting money from the CDC, World Bank and many more public funds. Meanwhile, Tony Blair - who spends his time lecturing African countries on 'governance' - is jumping for joy at the growth of private sector 'investment' into Africa.
But this model - under the guise of fighting poverty - actually removes decisions and accountability from public bodies and reinforces the power of companies driven by a thirst for super-profits. Whether projects have been successful is measured in terms of the level of profits made - a ludicrous benchmark for creating a better society.
It should be clear now that financial markets are not the answer to all of societies problems - either here or in developing economies.