NAO to investigate QinetiQ deal |
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Sun, 29 Jan 2006 19:40
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LONDON - The UK Government's move to privatize the military research group QinetiQ, has come in for sharp criticism from analysts and commoners alike. Even the National Audit Office has expressed reservations and will investigate the deal saying that it "will now examine whether the privatization of QinetiQ was good value for money."
The UK government owns 56 percent in QinetiQ and 31 percent is owned by US-based private equity firm Carlyle Group. The move was defended by Defense Secretary John Reid, who maintained that the taxpayer was well-served by privatizing the company, "The taxpayer, for those shares we are now selling off, is getting eight times as much for those shares as we could have done in the market a few years ago precisely because of the value that has been added there," Reid told BBC.
"It is since we brought in the private sector management that the value of the company has increased. This is precisely why the (Ministry of Defense) brought them in; the (ministry) is very good at certain things but not necessarily good at running companies."
The whole issue has stirred up controversy with opposition MPs claiming that the $75.6 million paid by Carlyle Group in 2003 was below the value of the shares at that time. QinetiQ is expected to be valued at £1.3 billion when it floats on the stock market next month. Carlyle Group could make up to £370 million profit on its original investment of £42 million.
The Blair Government is looking to calm investors and opponents before the float next month and hence Reid clarified on the issue saying that there was no conflict involved. Reid also said that the NAO was looking at the deal "not because there is a scandal, but because it is pretty routine for the NAO to investigate these things after the event, we welcome that."
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Government is privatising defence firm QinetiQ 