The criticism came in a hard-hitting report from Commons watchdog, the Public Accounts Committee, following the PO’s purchase of German Parcel for £283m in 1999.
The MPs said the DTI ‘did not put themselves in a position to exercise sufficiently active oversight’ by leaving the appointment of a single individual adviser until just three weeks before ministerial approval of the deal was needed.
The DTI later appointed Deloitte & Touche to lead and co-ordinate a multi-disciplinary team to help the Post Office assess future transactions and comment as and when required.
The Post Office – now Consignia – employed PricewaterhouseCoopers as corporate finance advisers and Ernst & Young, its auditors, to provide advice on accountancy issues.
Explaining itself, the DTI said it left taking on a single individual adviser late because it had believed German Parcels’ value below the limit for scrutiny by the department.
PO’s acquisition of German Parcel was the first major exercise of its power to act with ‘commercial freedom’ as a corporation wholly owned by the Government, but making purchases within the private sector
The PAC said the policy to give the PO this freedom meant it did not qualify for supervision by the DTI’s accounting officer to advise on matters of prudent and economical administration, efficiency and effectiveness.
The watchdog has subsequently ordered the DTI’s accounting officer to exercise his oversight responsibilities more actively in the future to safeguard the taxpayers’ interest as sole shareholder.
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