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Royal Mail sell-off scandal: Business Secretary Vince Cable to face MPs' select committee over £1.4 billion investor discount

Cable and Fallon to face Commons business committee over why Royal Mail was sold to investors at below its market value, cheating the taxpayer out of £1.4bn

Under-fire Business Secretary Vince Cable will face MPs over why he gave profiteers a £1.4 billion discount on the Royal Mail, ministers announced yesterday.

Mr Cable will be questioned on April 29 by the business select committee, which is drawing up a report on the sell-off. He will be accompanied by Michael Fallon, a minister in Mr Cable’s Business Department.

Sources told the Star that the committee will recommend naming investors involved in hoodwinking the taxpayer out of hundreds of millions of pounds.

The committee made the announcement following last week’s publication of a damning report by spending watchdog the National Audit Office (NAO). 

The NAO report said the government was duped by what it thought were long-term “priority investors” who recommended that Royal Mail be sold on the cheap. 

Twelve of the 16 priority investors then sold all or some of their holdings within the first few weeks of trading and made massive gains.

Adding salt to the wound, these investors had been given larger share allocations than were available to others.

Committee member and Tory MP Brian Binley branded Mr Cable “foolish” last week and said that investors were a City cabal “that created the opportunity to make money for themselves.” 

Committee member Katy Clark was also scathing of the Royal Mail sell off, which she said had lost the taxpayers huge sums of money.

She told the Star: “We took evidence for months leading up to the sell off and were extremely concerned as a committee that the shares were underpriced. 

“It is highly unfortunate that we were not listened to by Vince Cable.”

The opposition is also asking Mr Cable to clarify a number of “unanswered” questions over last year’s sell-off.

Shadow business secretary Chuka Umunna said the 16 priority investors selected should be named, as well as details given of any arrangements to make sure they would not sell their allocation.

Mr Umunna has also asked for correspondence between the government and banks advising on the sale to be published — but has failed to pledge that Labour would renationalise the public service.

The request followed furious exchanges in the House of Commons last week, when Labour leader Ed Miliband branded Prime Minister David Cameron “the dunce of Downing Street” for the undervaluation. Mr Cable was once again yesterday forced into defending the undervaluation.

He said: “This is standard practice for any flotation. We did not seek to lock them in as they would have paid less for a stock they could not trade. And there were no meetings between myself or officials and these priority investors.”

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