VINCE Cable is quite justified in calling for an investigation into the sale of the substantial minority shareholding of QinetiQ to the private equity partnership, the Carlyle Group, not, however, solely for the reason which he gives (January 12).
Dr Cable is understandably concerned that this stake was handed over much too cheaply at GBP42.2m. As a private partnership, Carlyle is not subject to the same disclosure rules as public companies; therefore, any of its dealings with governments should be subjected to rigorous parliamentary scrutiny. The Carlyle partnership acquired this stake in February 2003 during Geoff Hoon's lamentable stewardship of the Ministry of Defence. On March 24 of that same year Tony Blair and Mr Hoon took Britain to war against Iraq on the coat-tails of George W Bush as part of his war against terror.
This second Bush White House is permeated by a culture of cronyism and reciprocal backscratching. The offices of the Carlyle Group are situated on Pennsylvania Avenue in Washington DC, right at the heart of the federal government district, midway between the Capitol building and the White House. Up until October, 2003, the senior adviser to the Carlyle Group was George H W Bush, former president and father of President George W Bush.
As an ex-president of the US he is entitled to unlimited access to all the secret intelligence and other sensitive material which comes the way of the various agencies of the federal government, a fact which ensured that any advice which he gave to the Carlyle Group was beyond price. Although his retirement was announced on October 21 of that year, he retains a substantial share of the equity in the Carlyle Group.
James Baker III, the first President Bush's secretary of state, is chief counsellor of the Carlyle Group. He is the Bush family's first port of call when a lawyer is needed. It was he who fronted the younger Bush's litigation before the partisan Supreme Court which ultimately installed him in the White House, regardless of the fact that he was, in all probability, not legitimately elected.
Thanks to the good offices of the elder Bush, John Major has been enjoying a most lucrative retirement from front-line politics, being first appointed to Carlyle's advisory board in 1998, then becoming chairman of Carlyle Europe in May 2001, a post he held until May 2004. Given the closeness that exists between President George W Bush and Sir John Major's successor as prime minister, the sky could very possibly be the limit when it comes to Tony Blair's pension arrangements, especially if the Carlyle Group stands to make a profit of GBP300m on its original investment of GBP42.2m in QinetiQ as a result of this New Labour government's first privatisation.
Perhaps Dr Cable should be demanding a public inquiry into every aspect of the sale of this substantial shareholding of QinetiQ to the Carlyle Group and not just into the relative cheapness with which this purchase was accomplished.
John W Elliott, 19 Gordon Avenue, Bishopton.
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