Defence company's privatisation attacked by MPs

Discussion in 'Current Affairs' started by sgtpepperband, Jun 10, 2008.

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  1. sgtpepperband

    sgtpepperband War Hero Moderator Book Reviewer

    Workers at Qinetiq sites around Portsmouth face a morale-sapping future after a parliamentary committee today attacked the firm's privatisation, according to a local MP.

    Portsmouth South Lib Dem Mike Hancock said staff working at Fort Cumberland, Portsdown Hill, and Gosport would feel the effects of senior civil servants making huge profits during the sell-off of the former Defence Evaluation and Research Agency.

    According to the report published today by the Public Accounts Committee, the Ministry of Defence behaved like 'an innocent at a table of card-sharps' when it arranged the sale to the Carlyle Group.

    Spending watchdogs the National Audit Office calculated the taxpayer lost out to the tune of £90 million from the part-privatisation.

    Portsmouth South MP Mike Hancock said: 'Qinetiq has already had a bad press and this will make things harder for workers.

    'I sat on the defence committee and we hauled these guys over the coals for making an absolute fortune, but the government did not listen.'

    The report says the 2003 sale of a minority stake in the company happened when the market for technology stock was weak and the Carlyle Group was offered an 'unbeatable hand' when other bidders were eliminated.

    The MoD began the sale before Qinetiq's most important contract had been finalised, making it difficult to judge the company's value.

    This allowed Carlyle to negotiate a £55 million reduction in its £374 million offer after being appointed preferred bidder.

    The report also accused Qinetiq's directors of 'profiteering at the expense of the taxpayer' after they were allowed to negotiate their own incentive packages with Carlyle before it was named as preferred bidder.

    At the date of the flotation of the company in 2006, the top 10 managers held shares worth £107 million for an investment of just £540,000 – making £200 for every £1 invested, compared with £9 for the taxpayer.

    Mr Hancock said: 'There will be a very bad association with the name Qinetiq as a result of this.'

    The privatisation has to date generated £576 million in proceeds for the taxpayer.

    Committee chairman Edward Leigh said: 'The privatisation of Qinetiq has been successful in protecting the viability of this business of importance to UK defence interests. But the MOD conducted the deal like an innocent at a table of cardsharps, with the taxpayer the fall guy losing out on nearly £100 million.

    'The senior public servants managing QinetiQ behaved dishonourably. They sold the idea to the MoD of privatising the business without explaining they stood to benefit.'

    [Source]
     
  2. All valid, although worth pointing out that the Directors at QinetiQ are no longer Civil Serpents, but operating in the private sector with all the risk that entails (in theory).

    Although all these criticisms have been made before.

    fwiw in my experience they're neither all that commercially savvy or all that competitive now.
     
  3. I must admit it always looked to me that the creation and privatisation of Qinetiq was as much as any thing else a money making exercise for te senior people. This report would seem to bear that out.
     

  4. Indeed…

    Funny how all the top bods were so happy to sink their entire life savings and then some in this 'new venture'… and by strange hapstance, became fabulously rich when it was sold on.

    A suspicious person might suspect some insider dealing.



    Sir John Chisholm, chairman

    Invested £130,000. Worth: £25.97m

    Graham Love, chief executive

    Invested £110,000. Worth: £21.35m

    Hal Kruth, group commercial manager

    Invested £70,000. Worth: £13.88m

    Brenda Jones, marketing director

    Invested £60,000. Worth: £11.18m
     
  5. John Humphrys interviewed Sir John Chiseller, sorry, Chisholm at 0750A yesterday on the Today programme. As ever, he came across as calm reasoned and totally believable in his argument that the people who made money were the ones that took risks that weren't acceptable for the MoD to do similar. He also made it clear that he is not a career Civil Servant but an entrepreneur seconded to make DERA "commercial". I read this as meaning, if you hire a blagger you expect to be blagged. He certainly wasn't repentant and, as a pretend Civil Servant, you could argue why should he be.

    While sharpening the Civil Servant disecting knives, it's worth remembering that all those profiteering barstewards on Oil_Slick's list are not real Civil Servants: they were hired in as Industry/Commercial hot shots. Again, if the Government hires in hot shots, it shouldn't be surprised if it gets its a**e burned.


    http://news.bbc.co.uk/today/hi/listen_again/default.stm
     

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