Qinetiq sale 'wasted £90m'
Qinetiq's sale disputed
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Tuesday, 10, Jun 2008 12:01
Poor negotiating by the government over the sale of defence research firm Qinetiq cost the taxpayer £90 million, according to an influential group of MPs.
Public accounts committee (PAC) chairman Edward Leigh said the Ministry of Defence (MoD) negotiated "like an innocent at a table of cardsharps" when it sold Qinetiq to US firm Carlyle for £374 million in 2003.
His committee has concluded the decision to eliminate other bidders "at an early stage" was partly responsible for the failure. MPs believe the MoD "could have received £90 million more than it did", in part because Carlyle received 2.5 per cent more of the firm than it had asked for.
"Carlyle was appointed preferred bidder with major price sensitive issues still unresolved, leaving that firm with an unbeatable hand in subsequent negotiations about the value of Qinetiq," Mr Leigh commented.
MPs have also voiced concerns about the behaviour of Qinetiq's senior managers. A National Audit Office report published in November 2007 found ten senior Qinetiq managers received shares worth £107 million from an investment of just over £500,000 – a profit exceeding the incentivisation benefits such returns would bring.
Mr Leigh says they "sold the idea" of a sale to the MoD without explaining how they would benefit.
He added: "This is nothing less than profiteering at the expense of the taxpayer. Never again should public servants be permitted to pursue such a self-interested stratagem."
Defence equipment and support minister Baroness Taylor dismissed the claim the MoD had effectively lost £90 million as "pure speculation".
"The Ministry of Defence was backed by a range of experienced specialist advisors during the sale process, including a leading merchant bank," she said.
"The charge of commercial naivety makes a good soundbite but is not supported by the facts."