Corruptly privatised defence firm announces bumper profits and job cuts

Ah, privatisation. Is it ever free of corruption?

No, it’s inherently corrupt. Call it “crony capitalism” or, if you like to be technical , “state monopoly capitalism“.

The QinetiQ sale is the perfect example of the government acting in the interest of big business. In this case, the private equity pirates, the Carlyle Group, home to the two Bush presidents, John Major, and a host of other former government figures from around the world.

Latest word is that QinetiQ has boosted its profits and is about to cut jobs in the UK.

The BBC covers it coldly:

UK defence and security firm Qinetiq has seen half-year profits rise 9%, boosted by sales in the US.

Pre-tax profit was £25.9m ($12.6m) in the six months to 30 September, up from £23.7m in the same period a year ego.

Qinetiq listed on the London Stock Exchange in February 2006, after the Ministry of Defence sold off a stake in the firm to a private equity company.

The sale has proved controversial, with the government accused of selling the stake too cheaply.

A third of Qinetiq was sold to the US private equity group, Carlyle, for £42m in 2003. By the time it listed on the stock exchange last year, the value of the stake had jumped to in value to £372m.

The Morning Star’s Louise Nousratpour gives better copy:

PRIVATISED Ministry of Defence research firm QinetiQ announced plans to axe 400 jobs to cut costs on Wednesday, at the same time that it revealed a massive increase in profits.

Chief executive Graham Love, who made £22 million at the taxpayer’s expense when QinetiQ was floated in February last year, declared that the job cuts would fall among the company’s 8,000 British staff.

The news emerged just one week after a scandalous National Audit Office report which found that Mr Love, along with nine other senior civil servants, had trousered £107.5 million in profits from the flotation of the business.

It also occurred as QinetiQ announced a 9 per cent rise in pre-tax profits to nearly £30 million for the six months to September 30.

Mr Love boasted that the job cuts were part of a business restructuring plan designed to boost the division’s operating profits by £10 million a year.

“As far as we are concerned, we are doing the job, which is delivering value for shareholders,” declared the former public servant.

A spokesman for Civil Service union PCS condemned the planned cuts, warning that staff will be outraged.

“It seems that the bosses are not content with the astronomical returns that they made from the sale of the QinetiQ group and the 9 per cent profit rise so far this year,” he stormed.

“Now, they want to make even more millions by sacking staff.”

The PCS spokesman said that the way that QinetiQ had been privatised was “scandalous and obscene” and he demanded an official investigation into the whole affair.

Scientific union Prospect national secretary David Luxton expressed members’ “shock” at the news so soon after the audit office’s report.

Mr Luxton stressed that the union would resist any compulsory job losses.

“Any job cuts must be done through voluntary redundancy,” he insisted.

“We will now be actively engaged in consultation with the company to ensure that the full contractual redundancy terms are applied rather than any attempt to get people to leave on the cheap.”

QinetiQ can trace its roots from the birth of powered flight in Britain at Farnborough through to the development of radar at Malvern during the second world war.

The company has 38 British sites at locations including Bristol, Plymouth and Rosyth.