Brown queries sale 'scandal'

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The Independent Online
Gordon Brown, the shadow Chancellor, has asked the Commons' Public Accounts Committee to investigate the privatisation of a property company which netted more than pounds 70m profit for the consortium which bought it three years ago.

The deal, revealed by The Independent yesterday, earned pounds 18m personally for Dr Wilem Frischmann, who led the consortium which bought the company, part of the Property Services Agency, which used to run Buckingham Palace, the Houses of Parliament and government buildings in Whitehall.

As Labour denounced the deal as a "scandal" which proved the company had been seriously undervalued, it emerged yesterday that the re-sale had been approved by John Gummer, Secretary of State for the Environment.

The company was sold by the Government for pounds 11.4m in 1993, and sold again 10 days ago for pounds 84.6m. Dr Frischmann's group has so far paid only pounds 500,000, with the remainder of the purchase price payable by the company's new owners, CVC Capital Partners.

The original sale agreement required the Government's approval if the company was re-sold within five years. A spokesman for the Department of the Environment said: "We are content that the sale will not affect the services the company provides, and that the guarantees given to the Government will be upheld."

The company, now called Building and Property Management Services, manages buildings and building projects, mainly for the Ministry of Defence, including its main building in Whitehall.

The government spokesman rejected the charge that an excessive profit had been made. "The company that is being sold now is a very different company from that sold three years ago," he said. "It has new clients and the whole company has been restructured and streamlined."

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