THE National Audit Office is to investigate the privatisation of QinetiQ, the defence technology company that will float next month with an expected value of £1.3 billion.
Sir John Bourn, the comptroller and auditor general, decided yesterday to begin an investigation after several weeks of pressure for an independent inquiry from opposition MPs and former defence ministers. The inquiry will examine whether the privatisation strategy delivered value for the public purse.
There has been concern that the sale of a third of the company to Carlyle, the US private equity group, in 2003 significantly undervalued the business. On flotation Carlyle’s stake will be worth more than eight times its initial £42 million investment.
The inquiry will examine the choice of privatisation strategy, the management, price and whether the deal is likely to meet its objectives. The inquiry’s findings will be published at the end of this year.
Vince Cable, the Liberal Democrat Treasury spokesman, who has pressed for an NAO investigation, said that the spending watchdog should also examine the long-term contract awarded by the Ministry of Defence to QinetiQ as a form of “dowry” at the time of the share sale to Carlyle.
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Lord Moonie, the former defence minister, who handled the initial sale of a 31 per cent government stake to Carlyle, is among four former ministers understood to have had concerns. He argued that the the Government should have delayed the 2002 sale, in the belief that it could have achieved a higher price.