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Privatization

UK's Royal Mail sale bad deal for taxpayers

British taxpayers lost out heavily in the sale of Royal Mail, a committee of lawmakers has claimed. It said the privatization of the company was accompanied by fear of failure and poor advice.

British taxpayers most likely lost some 1 billion pounds ($1.7 billion, 1.25 billion euros) in the sale of Royal Mail in 2013 in what was the country's largest privatization for years, a cross-party committee of lawmakers reported Friday.

It was not at all clear that the sale had "brought an adequate and appropriate return for taxpayers," the chairman of the Business Select Committee, Adrian Bailey, said in a statement in London.

The British government sold off 60 percent of the postal service last October, raising about 2 billion pounds. But while the share price at flotation point was 3.3 pounds, it rose to 6.18 pounds later on, indicating the sale's untapped potential.

Wary of failure

"We believe that fear of failure by ministers and poor quality advice [from banks] led to a significant underestimate of the demand for Royal Mail shares," Bailey commented.

Friday's report also highlighted concerns that the government had benefited properly from the sale of some Royal Mail assets, including a number of sites in London.

Ministers for their part staunchly defended the government's handling of the sale, which followed three failed attempts by previous administrations to privatize the postal service. The said they'd been cautious to reduce the risk of the launch being a flop in the face of possible strike action at the company.

hg/sri (Reuters, dpa)

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