Thursday, January 12, 2006

Labour's Privatisation Too Far

Am I missing something? In all the discussions about the privatisation of the Ministry of Defence's Defence & Evaluation and Research Agency, Qinetic, and the Carlyle Group's massive £300 million floatation profit no one has made mention of any role played by our former Prime Minister Sir John Major in this whole episode. The Major Government decided that privatising Qinetic would be one privatisation too far and might damage Britain's strategic interests. Washington agreed. So when Sir John became an adviser to Carlyle in 1998 and then Chairman of its European Arm in 2001 he would have been well-placed to advise Carlyle on the benefits to be had from taking a stake in it. And in 2002 they did just that - they bought a 34% stake at a price of £42 million. A mere three years later Labour has now announced a full scale privatisation, which will value Carlyle's stake at around £340 million. Nice work if you can get it. Sir John Major stepped down as European Chairman in May 2004 but remains an adviser to the company. I make absolutely no suggestion at all that Sir John has done anything wrong. But I do find it strange that he hasn't been mentioned in any of the newspaper articles. Is this yet another case of lazy journalism, as well as a decision Dr John Reid might come to regret. When he was taking part in his CND marches in the early 1980s I cannot believe that Dr Reid imagined he would ever be the Minister who sold our Defence Research capaibility to the Americans. It's a funny old world, as someone once said. Hat-tip for graphic to


Anonymous said...

Far be it for me to defend Major, but I fail to understand what the accusation against him would be. He clearly had no insider information - indeed as PM he specifically didn't put plans into place to privatise QinetiQ. All he did was correctly advise Carlyle that £42 million was good value for money but that was based on information available to anyone - the question is why the Government valued it so low.

Major's involvement apparently has no relevance. Perhaps you could clarify what the press should be saying about it - it makes no sense to me.

Iain Dale said...

Guido, what part of "I make absolutely no suggestion at all that Sir John has done anything wrong" is not clear?! I just think it is an interesting fact which all newspaper mention of this has ignored. That's all!

Anonymous said...

With regards Sir John Major , he will have been granted coinvestment rights on Qinetiq from The Carlyle Group and is also like to benefit from any profits earned in Carlyle European Partners I, the fund where Carlyle placed their investment in Qinetiq.

Anonymous said...

Sir John Major is likely to have been granted coinvestment rights in Qinetiq from The Carlyle Group and also benefit from the gains that accrue in CEP I.

I think he also gained from the "Investment Banking fee" which The Carlyle Group charged Qinetiq when they made their investment back in 2002/3