Newspaper article The Evening Standard (London, England)

Venture Capitalists 'Ripped off NHS Trust over PFI Hospital'

Newspaper article The Evening Standard (London, England)

Venture Capitalists 'Ripped off NHS Trust over PFI Hospital'

Article excerpt

BARCLAYS Bank and top venture capital house 3i fleeced the taxpayer of tens of millions of pounds, "lining their own pockets" in the construction of a flagship Private Finance Initiative hospital, a powerful committee of MPs said today.

Labelling them the "unacceptable face of capitalism", Edward Leigh chairman of the Commons Public Accounts Committee said the consortium which financed and built the Norfolk and Norwich Hospital - Barclays, 3i, and their partners Innisfree, John Laing and Serco - had bamboozled inexperienced executives at the local National Health Service Trust.

With the NHS said to be nearly bust, the MPs' report into the [pounds sterling]590 million PFI hospital reveals the extent to which private-sector financiers have milked the massive Government spending on health.

The report found that the consortium trading as Octagon Healthcare and headed by Richard Jewson, the multimillionaire heir to the Jewson family timber fortune, geared up the hospital project's borrowing in 2003 from [pounds sterling]200 million to [pounds sterling]306 million in a bid to make refinancing gains of [pounds sterling]116 million.

Of that, [pounds sterling]82 million cascaded back to the consortium, helping the partners increase the rate of returns on their investments from under 20% to 60%.

"The refinancing of the Norfolk and Norwich project lined the pockets of the investors in Octagon," said Leigh.

"This was a poor deal in which the NHS Trust might now have to pay [pounds sterling]257 million if it needs to terminate the contracts early. …

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