Firms caught in nuclear snare
Government committee critical of atomic body's contract awarding before sell-off. Jon Bunn and our parliamentary staff report.
Two leading accountancy firms have been named in a critical report by the Commons Public Accounts Committee into the privatisation of part of the Atomic Energy Authority.
The AEA was slated for handing seven contracts, worth #4.4m, to Coopers & Lybrand without competition at a time when John Bullock, a former deputy chairman of Coopers, was a part-time board member.
The MPs were also ‘concerned’ the AEA underestimated the costs of reporting accountants Binder Hamlyn, which escalated from a budgeted #161,000 to #709,000.
The committee also noted one of the contracts involved supplying a secondee to repl-ace the commercial manager, at a cost of #149,000 for just seven months, while AEA’s facilities services division was being sold off in 1995.
Its report said total adviser costs for restructuring the division should have been added to the #3.1m costs of the sale, amounting to 44% of the proceeds of #12m.
The committee was told by AEA that Coopers’ Bullock ‘was in no way connected’ with the decision to hire them and that his role as a non-executive director of the authority was ‘completely separate’ from Coopers’ success in winning work from the authority.
An AEA spokesman said: ‘Such contracts were not referred to the board.’
A Coopers spokesman commented: ‘Bullock was not involved in the selection of Coopers. There was no criticism of our work or the value we added.’
The Treasury said the use of competition would have demonstrated care was taken to avoid conflicts of interest.
Smith & Williamson partner Chris Appleton, a current AEA board member and also a former Coopers partner, said all contracts are now tendered for. The AEA said it believed it had acted in the public interest but accepted that, ‘with hind-sight, it had been difficult to justify the award of these contracts without competition’.