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| Version 1 | Version 2 |
|---|---|
| Qinetiq deal 'cost UK taxpayers' | Qinetiq deal 'cost UK taxpayers' |
| (about 7 hours later) | |
| UK taxpayers could have gained "more money" from the privatisation of defence research firm Qinetiq, the National Audit Office (NAO) has said. | UK taxpayers could have gained "more money" from the privatisation of defence research firm Qinetiq, the National Audit Office (NAO) has said. |
| While saying taxpayers could have gained "tens of millions" more, the NAO also condemned an incentive scheme that netted fortunes for Qinetiq's bosses. | While saying taxpayers could have gained "tens of millions" more, the NAO also condemned an incentive scheme that netted fortunes for Qinetiq's bosses. |
| And the minister behind the sale of a Qinetiq stake to a US buyout firm said that he had sought to delay the sale. | And the minister behind the sale of a Qinetiq stake to a US buyout firm said that he had sought to delay the sale. |
| But Lord Moonie told the BBC he was unable to resist Treasury pressure. | But Lord Moonie told the BBC he was unable to resist Treasury pressure. |
| He was a defence minister in 2003 when a third of Qinetiq was sold to the US private equity group, Carlyle. | He was a defence minister in 2003 when a third of Qinetiq was sold to the US private equity group, Carlyle. |
| Stock markets had slumped and Lord Moonie felt that the MoD would not receive a decent price for its shareholding, says BBC business editor Robert Peston. | Stock markets had slumped and Lord Moonie felt that the MoD would not receive a decent price for its shareholding, says BBC business editor Robert Peston. |
| 'Excessive' | 'Excessive' |
| However, says Mr Peston, the Treasury urged that the sale should go ahead because the proceeds were already built into budgets. | However, says Mr Peston, the Treasury urged that the sale should go ahead because the proceeds were already built into budgets. |
| Lord Moonie said: "We were reluctant to proceed with the sale, but a combination of the Treasury and the fact we needed the money for items in our budget persuaded us to go on with it." | Lord Moonie said: "We were reluctant to proceed with the sale, but a combination of the Treasury and the fact we needed the money for items in our budget persuaded us to go on with it." |
| The MoD backed themselves into a corner before they had even started Edward Leigh MP | The MoD backed themselves into a corner before they had even started Edward Leigh MP |
| In the event, Carlyle bought a third of Qinetiq for £42m - and over the next three years it turned that into £372m - a nine-fold return on its money. | In the event, Carlyle bought a third of Qinetiq for £42m - and over the next three years it turned that into £372m - a nine-fold return on its money. |
| Qinetiq's 10 most senior managers gained £107.5m after the move, a return of 19,990% for their total £540,000 investment in shares. | Qinetiq's 10 most senior managers gained £107.5m after the move, a return of 19,990% for their total £540,000 investment in shares. |
| That has been labelled "excessive" by the NAO. | That has been labelled "excessive" by the NAO. |
| Qinetiq's two most senior executives, chairman Sir John Chisholm and chief executive Graham Love, made spectacular gains. | Qinetiq's two most senior executives, chairman Sir John Chisholm and chief executive Graham Love, made spectacular gains. |
| Sir John invested £129,000 in the company and now has shares worth £23m. Graham Love turned £106,000 into £20m. | Sir John invested £129,000 in the company and now has shares worth £23m. Graham Love turned £106,000 into £20m. |
| This deal didn't sell the family silver; it gave it away Vince Cable MP | |
| Conservative MP Edward Leigh, chairman of the Commons Public Accounts Committee, said the taxpayer had been "short-changed" and that top Qinetiq managers had "won the jackpot". | Conservative MP Edward Leigh, chairman of the Commons Public Accounts Committee, said the taxpayer had been "short-changed" and that top Qinetiq managers had "won the jackpot". |
| The Liberal Democrats said the deal amounted to giving away "the family silver". | |
| Acting leader Vince Cable said: "It is completely unacceptable that the government has sold off a valuable national asset for a pittance, providing huge profits for the Carlyle group and the senior civil servants involved. | |
| "This deal didn't sell the family silver; it gave it away." | |
| But the Ministry of Defence says the taxpayer has benefited by nearly £600m to date from the privatisation of Qinetiq, "the majority of which has been retained for reinvestment in the defence programme". | But the Ministry of Defence says the taxpayer has benefited by nearly £600m to date from the privatisation of Qinetiq, "the majority of which has been retained for reinvestment in the defence programme". |
| The government still owns approximately 19% of Qinetiq; the MoD says "this shareholding is currently worth around £250m". | The government still owns approximately 19% of Qinetiq; the MoD says "this shareholding is currently worth around £250m". |
| The increase in value of Qinetiq as it moved into the private sector has actually generated very good returns for the taxpayer Robert Peston, BBC business editor State agency to FTSE 250 | |
| The NAO also criticises the MoD for appointing a preferred bidder while price-sensitive issues were unresolved. | The NAO also criticises the MoD for appointing a preferred bidder while price-sensitive issues were unresolved. |
| Mr Leigh said: "The MoD backed themselves into a corner before they had even started... and the department went on to sell a larger share of the business for less money than they initially agreed." | Mr Leigh said: "The MoD backed themselves into a corner before they had even started... and the department went on to sell a larger share of the business for less money than they initially agreed." |
| The NAO said Qinetiq's bosses were allowed to negotiate the terms of the incentive scheme with Carlyle while the private equity firm was bidding for the business. | The NAO said Qinetiq's bosses were allowed to negotiate the terms of the incentive scheme with Carlyle while the private equity firm was bidding for the business. |
| Our business editor says criticism of the deal will infuriate many business people. | Our business editor says criticism of the deal will infuriate many business people. |
| "Although they acknowledge that Carlyle secured the stake at a great price, they point out that the MoD kept more than half of Qinetiq," he said. | "Although they acknowledge that Carlyle secured the stake at a great price, they point out that the MoD kept more than half of Qinetiq," he said. |
| "So the increase in value of Qinetiq as it moved into the private sector has actually generated very good returns for the taxpayer." | "So the increase in value of Qinetiq as it moved into the private sector has actually generated very good returns for the taxpayer." |