MoD RESPONDS TO NAO REPORT ON QINETIQ PRIVATISATION
22 Nov 07. The National Audit Office published a report into the successful privatisation of QinetiQ.(See: BATTLESPACE ALERT Vol.9 ISSUE 22, 23 Nov 2007, QINETIQ PRIVATISATION CRITICISED BY NAO).
Minister for Defence Equipment and Support Baroness Taylor said, “The original intention behind the sale was to protect defence interests and the NAO have acknowledged that this has been achieved.”
“We have consistently stated our view that the privatisation has been an overall success. It has delivered excellent value for money, generating more than £800m for the taxpayer, while protecting UK defence and security interests. The process has established QinetiQ as a FTSE 250 company – a successful British-based technology business providing a sustainable future for key defence capabilities and employing 13,500 staff.”
“As the largest shareholder it is the taxpayer who has gained the most from the increase in QinetiQ’s value. The value that MoD received for the sale of a minority stake in QinetiQ to the Carlyle group was determined by the market in a competitive process. The competition process was run on MoD’s behalf by UBS, a global investment bank, in line with normal market practice.”
The MoD will respond in full to the NAO report in due course and welcomes the decision by the Public Accounts Committee to take evidence on this report.
The Ministry of Defence notes the NAO’s view that:
* The status quo was not sustainable and the privatisation achieved a key objective of improving the viability of a business of national strategic importance.
* The restructuring of DERA into two viable businesses was a challenging project which was managed well.
* The decision to sell only a minority of shares to Carlyle ensured that it was the taxpayer who benefited most from the subsequent growth in value.
* The business was well prepared and able to demonstrate growth before the 2006 stock market flotation.