The Great British Mail Robbery

Posted by The Skibbereen Eagle | May 8, 2014 0

royal mail

Based on last Friday’s share price the taxpayer has lost over £1bn from the Tory LibDem Govt’s botched #Royal Mail privatisation. The Government has now been forced to publish the list of the ‘priority investors’ they gave the lion’s share of Royal Mail shares to in their botched fire sale. Despite Vince Cable’s claims to have prioritised long-term investors, we now know these City firms made a fast buck at taxpayers’ expense. This list includes a hedge fund with links to the Conservative Party. royalmailselloff

Pressure on the Government over the botched Royal Mail sell-off as intensified as more hedge funds were unmasked as key investors in the flotation and the chairman of a committee of MPs condemned the “corporate Masonic lodge” that profited at the expense of taxpayers. After resisting months of pressure to name the 16 priority investors who were allowed to buy a 22 per cent stake in Royal Mail ahead of the public, the Business Secretary Vince Cable finally buckled on Monday. Royal Mailroyal mail

The list – which is highly embarrassing to Mr Cable – reveals the Government’s preferred investors included some of the most aggressive hedge funds in the world as well as investment firms which had close links to the financial institutions paid by the Department for Business to advise them on the sale. The equity arm of Lazard, the department’s key adviser on the sale, was among those given “priority” status reserved for long-term investors. However, as the shares rocketed, Lazard Asset Management sold its entire stake within a week at a profit of £8m. It was able to turn such a huge profit because priority investors were given extra allocations of shares – in Lazard’s case worth £19.8m.

RoyalMailCWU

Margaret Hodge, chair of Parliament’s financial watchdog the Public Accounts Committee, told company representatives who were appearing in front of her committee: “You have 16 priority investors who made a killing [out of the sale]. And it leaves the general public with that uncomfortable feeling that there is just too cosy a relationship between [you] and these investors. You all know each other. You work together. You trade with each other. You are part of this little clique and we the ordinary taxpayer lose out on it.”

The disclosures triggered a dispute at Prime Minister’s Questions, with the Labour leader Ed Miliband claiming the firms had been allowed to make a “fast buck” by selling their holdings as the price rose in a “rip-off of the taxpayer”. At PMQs, David Cameron said the Royal Mail sale was ‘a success for our country’ At PMQs, David Cameron said the Royal Mail sale was ‘a success for our country’Royal Mail 2 Thatcher

Ed Miliband said “The sale was grossly undervalued – shares sold for £1.7bn at privatisation are now worth £2.7bn,” he said. And who cashed in? Twelve of the 16 so-called long-term investors made a killing worth hundreds of millions of pounds within weeks,” he said. “The more we know about this privatisation, the bigger a fiasco it is. A national asset sold at a knockdown price, a sweetheart deal for the City and the Government totally bungled the sale. Everything about this privatisation stinks.” royal-mail

Meanwhile on the ground Royal Mail looks a mess both for its hard working staff and its long suffering customers. Thousands of staff will be rewarded for their hard work by being made redundant over the next few years and those left behind will endure more exploitative conditions. The national delivery service will come under pressure and post office closures will continue taking the critical mass out of many rural communities. As for customer service this will continue to deteriorate as we experience Post Office Lotto  as demoralised staff and lack of investment take their toll. Compare the desultory limp offering of UK Post Offices, many tucked into corners of WH Smith’s with the proud offering in Germany of Deutsche Post with their bright yellow modern post offices with cash machines, full banking service and integrated parcel delivery rather than the balkanised uncompetitive Post Office Counters, Parcelforce and Royal Mail effort we have in the UK. Indeed not only does Deutsche Post look like a serious business it is a serious business owning DHL, having  majority private shareholding who were invited in on a structured basis to add value to the business and it made a profit of over Euro 1.1 Billion last year.

Entrance area of a Deutsche Post retail outlet DP_FRA700

By contrast the rump of Royal Mail looks pallid by contrast, destroyed by short termism and an anti-public service ideology. Indeed from Telecoms to water to Rail it is amazing the Tory commitment to privatisation despite the absolute dearth of evidence  that it has improved anything. So why the enthusiasm, is it the fat fees to City Advisers who have generally been wrong about everything? Is it the quick killing by their Hedge Fund mates who give them so much wonga, including George Osborne’s Beat Man? Or is it the fat profits to be made Oligarch style from flogging undervalued public assets?

As for the Man on the Clapham Omnibus he knows he has been mugged good and proper by the spivs who trousered £1 Billion of our money in The Great British Mail Robbery.

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The Skibbereen Eagle

The Skibbereen Eagle

In 1898, to widespread bemusement, a small Provincial Newspaper in an equally small town in the South West corner of Ireland sonorously warned the Czar of Russia that it knew what he was up to and he should be careful how he proceeded for “The Skibbereen Eagle” was wise to his game and in future would be keeping its eye on him! It is doubtful that Nicholas II, Emperor and Autocrat of All the Russias, even noticed the Eagle’s admonitions but as history soon proved he should have paid closer attention to the Eagle’s insightful opinions!

Today, powered by its readers and contributors, from its cyber eyries in Ireland and the centres of the Irish Diaspora The Eagle casts its Cold Eye on Life and Death and much in between.
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