The Great [Pounds Sterling]1.3bn Defence Betrayal; MPs to Probe Military Research Sell-Off Profits
Byline: GRAHAM WILSON;MATTHEW HICKLEY
THE controversial sell-off of Britain's military technology laboratories will be the subject of an MPs' inquiry within days, it emerged last night.
The all-party Defence Select Committee has decided to investigate the [pounds sterling]1.3billion flotation of QinetiQ as part of an inquiry into Britain's defence research industry.
The committee's chairman James Arbuthnot, a former Tory defence minister, said it had decided to intervene following the furore over the decision to There has also been outrage at the huge profits which will be reaped by senior managers, as well as the American investment firm Carlyle, which is expected to make an 800 per cent profit on the [pounds sterling]42million stake it bought in the firm four years ago.
The flotation has already triggered concerns over the security of Britain's military secrets - a risk which Mr Arbuthnot warned could undermine transatlantic relations. 'I have been worried from the start that this could jeopardise our relationship with the United States and our ability to share defence research with the Americans,' he said.
'The committee is due to start an inquiry into Britain's defence industry strategy within the next few days and QinetiQ will now be a part of that inquiry.' Mr Arbuthnot said the committee's members had decided not to launch a standalone inquiry into the flotation at this stage, but he added: 'If things change we are ready to revisit this issue.' The defence committee's decision follows confirmation this week from Whitehall's spending watchdog, the National Audit Office, that it too is considering starting an investigation into the sell-off.
Concern about the flotation has been fuelled by the role of Whitehall adviser Shriti Vadera in the QinetiQ sell-off.
Miss Vadera - one of Gordon Brown's most influential political advisers - famously described private Railtrack shareholders who lost their savings when the company folded as 'grannies'.
QinetiQ was created in 2001 when Labour part-privatised the Defence Evaluation and Research Agency, which had been responsible for developing top-secret military technology.
While the most sensitive technology was kept under Ministry of Defence control, QinetiQ was tasked with developing less secret equipment and exploiting scientific breakthroughs on the commercial market.
The MoD currently owns 56 per cent of the firm. Another 13 per cent belongs to managers and staff, while the remaining 31 per cent was controversially sold off to the Carlyle group in 2002 for just [pounds sterling]42million.
News that Carlyle's share is likely to be worth [pounds sterling]338million when the company floats next month - more than an eightfold increase - has led to accusations that the Government has squandered a national asset through a massive miscalculation.
QinetiQ's executive chairman Sir John Chisholm is expected to make a profit of up to [pounds sterling]26million on shares which cost him [pounds sterling]129,000.
Chief executive Graham Love - who is expected to make some [pounds sterling]21million - claims the flotation is needed to raise QinetiQ's global profile and to give an incentive to some 10,000 staff who will benefit. …