UKC

Where is the surprise that the tax payer didn't get full value in this deal?

Yet again, it was arranged behind closed doors by a select group of smart insiders who helped themselves. What a complete non surprise that the Carlyle Group should be the only bidder

http://news.bbc.co.uk/1/hi/business/7108444.stm

Lord Gilbert's views on this on R4 this morning were very telling.

In reply to woolsack:
"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, a return labelled "excessive" by the NAO."
Nice work if you can get it.

In reply to woolsack: After DERA built the nice Farnborough site from the public purse it was basically handed to QinetiQ. With only a small corner held by Dstl. They're still there fighting the good fight.

In reply to dread-i: These are the sort of fiddles that should be taking place under a Tory government aren't they?

Can you imagine how old Labour would have been howling about this deal had they been sat on the opposition benches?

In reply to woolsack:
>These are the sort of fiddles that should be taking place under a Tory government aren't they?
Ahh but with the Freedom of Information Act and the national Audit Office these things are now public, therefor not corrupt just excessive.

Previously these deals would have been concluded behind closed doors by people who went to school together instead of, as in this case, just behind closed doors. See how its different with New Labour ?

On a related note:
I was in a shoe shop in Kendal recently. The thing they use to measure feet for the correct size shoe had a Qinetiq logo on it. I'm guessing that it was some range finding kit scaled down for the kids shoe market. Nice to see a couple of grands worth of kit replacing that simple plastic slidey thingy you put your foot into to measure it.

In reply to dread-i:

Sssshhhh! How do you think they get rid of all that DU from the Eskmeals ranges....

In reply to woolsack: The facts have been in the public domain for years so this isn't exactly 'news'.

The 'spin' is interesting in that UK Plc still made £800M when it sold it's remaining 63% stake thanks ot the efforts of the same senior management. So from that point of view you can argue that the incentive scheme deliverd much more benefit to the taxpayer than it did to the indivdiuals or to Carlyle.

Hindsight is a wonderful thing but people can only be judged on what the situation was at the time. Thereofre I'd be very interested in finding out what the NAO thought would have been a 'fair' market price for 37% of QQ at that time given the stock market situation and the uncertainly about whather QQ would be able to convert its defence expertise to the civil market.

There is no way £342 million would have been a 'fair price' so the issue is not the £100s of millions Carlyle made but whether they should have paid perhaps another £10M or two at the time it was sold.

Equally choosing to 'sell the family silver' in the midst of a recession is almost guarranteed to give a long-term investor a big profit.

In reply to Mark Stevenson:
>
I posted on here about what a scam it was when the story surfaced then, no, its not news.

>
UK PLC would probably have made a great deal more, selling ITS asset had there not been just one secret buyer in the auction. Carlyle is a very murky operation. It is wholly inappropriate that they should wander in to such excessive profits for such small risk.


In order to find a fair market price you auction the asset in a market. Buyers pay according to what they consider it to be worth. If needs be, you can vet bidders if you don't want unsavoury characters as shareholders but to have one private equity group coming in to scoop it up. What happened was a corrupt inside deal.



There should never just have been one bidder in the sale of a public asset

It was 2003, what recession? I do recall a build up to war

In reply to woolsack:

A small risk only in hindsight?


Rather than just a Treasurey driven rushed deal and general cock-up?


Agreed. However was the single bidder down to 'corruption' or was it just another Government cock-up due to budget pressure for a quick sale?


Your right, technically it's the wrong word. It was post the 'dotcom' bubble bursting and high tech investments were not flavour of the month.
A delay would certainly have given time for both more bidders and have allowed the market situation to improve.

Rather than focus on 'corruption' which I think is a bit of a red herring I'd be more interested to understand what budgetry pressures were in place that led to the 'quick sale'. The pertinient question is perhaps whether it might have been due to the 'unsympathetic' approach of the Treasurey to Defence spending?

I have a feeling that if you had sufficeint inclination you could put a case forward that puts blame for the circumstances surrounding whole fiasoc squarely back at one person... or would that be unfair since lots of other poeple were publically ganging up on him yesterday?

In reply to Mark Stevenson: I think when you realise that Carlyle Group inner sanctum/shareholders include the Bush family, Bin Laden family, HM Queen to name a few you get the picture

In reply to kevster747:


SOP for Government, in my experience.

So much so that if I see a government building or facility being refurbished, my first thought is "oh, I din't know that was closing down"...

In reply to woolsack:

A few things:

Oh course it's galling when a few people make a mint, but it's not the first time and it won't be the last.

QinetiQ was not a sure-fire thing - AEA Technology was the closest previous comparison and went the other way.

Carlyle wasn't the only bidder, but (I think) was the only one that was able to stump up an acceptable sum and would not jeopardise the company's raison d'etre - providing independent advice to the MOD and would be acceptable to the rest of the defence industry - that ruled out BAE or Thales as purchasers for a start.

By the time Carlyle sold up, a huge amount had changed, but without the change of environment that wouldn't have happened.

At the time of the sale, QinetiQ's formerly guaranteed research revenue from the MOD was being turned off. So how much would you have paid for a company that had hitherto relied almost entirely on handouts when those handouts were being turned off?

The MOD also shifted a £245 million pension liability off its books.

So the foot-scanner is one spin off - if you're reading this on an LCD screen, that's another (the patent for which expired this year, so that's a chunk of revenue gone). If you use a mobile phone, you will use a dual network QinetiQ designed antenna at some point. If you own anything with carbon fibre in it, that's another; flat panel speakers, the little sticky-out doofrey-wotsits on airliner wings, GPS receiver chips, a radar that scans runways for debris (cp Paris Concorde accident) now sold to Vancouver and Qatar, I think.

Easy to be wise after the event, but another company with suitable ownership and business could have offered a bit more with a decent plan for the business and a small matter of the staff and attendant liabilities and beaten Carlyle to it.

So why didn't they? Too big, too scary and too difficult mainly.

In reply to nniff: Who were these 'other bidders'?

There was no 'before the event' either. Carlyle is too well connected not to have known this was coming up and how to play it.

You can dress it in whatever clothes you like, call it a cockup, bad timing or a liability. It was a deal for insiders.

In reply to woolsack:

No - everyone knew it was coming up at least 3 years beforehand - it was no secret. The other companies that were interested were the likes of BAE, Serco et al. Part of the business went some years earlier, the support services part, sold to Cinven and then on to Amey. The difficulty was finding a company that would be a safe pair of hands and an acceptable owner, given the nature of the company's business, and were prepared to part with a sufficient amount of cash and could cover the risk and liabilities