Defence company's privatisation attacked by MPs

Hoad's Hill. Picture: Google

White van man punches several cyclists on countryside road near Wickham

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.'

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