Remember the scandalous disposal of Royal Mail? Both Michael Heseltine and Peter Mandelson had tried and failed to sell it off in 1994 and 2009 respectively, both driven by the Treasury’s need for cash. Vince Cable’s handling of the sale was disastrous.
This time around a new chief executive was hired and by May 2013 Royal Mail delivered a 60 per cent surge in profits. Park that fact for a moment.
Then firms known for their unethical and insatiable greed approach to business, the likes of Goldman Sachs, Lazard and Barclays and a few others were paid nearly £13 million simply for placing shares with clients – but not before setting the share-price at £3.30 which was a clear under valuation. As it turns out, Royal Mail was 24 times over subscribed and on day one 38 per cent under valued. There was a 72 per cent increase in the share value in five months accompanied by a 30 per cent increase in the first class stamp price. This was a proper scandal.
The valuation of £3.3 billion should have been £5.5 billion, the austerity ridden tax-payer the big loser. The banks, hedge funds and financial institutions walked away scot-free. This was nothing short of a corporate heist facilitated by incompetent (at best) or criminal (more likely) politicians.
The National Audit Office was not complimentary in its aftermath; “The sale process used by the Department did not identify the market price of the shares and this is not an isolated example.”
Deloitte Touche were appointed as ‘financial accountants’ earning £750k for their efforts – park that as well.
One privatisation that the establishment press has not reported is the sell-off of NHS Professionals. This is a state owned recruitment agency for medical professionals. NHS Professionals is a limited company wholly owned by the Department of Health. Not for long though.