and PETER RODGERS
Treasury ministers have been saved only by Crown immunity from investigation and possible prosecution by City regulators over the sale of shares in the generators.
Labour accused the Government of insider trading after Treasury ministers and their advisers decided days ahead of the Genco sale in March against telling the stock market that Professor Stephen Littlechild, the electricity regulator, was considering a new review of the power pricing regime.
After a detailed investigation, the Stock Exchange is believed to have found enough evidence to justify referring the Government's actions to the Securities and Futures Authority, the watchdog that oversees the stock market. But because of immunity under the Financial Services Act, the Treasury cannot be pursued by the regulators.
This emerged last night as the Stock Exchange released a letter to Sir Terence Burns, the Permanent Secretary, asking the Treasury to conduct a new investigation of the handling of the share sale by ministers and officials. The exchange has demanded and won assurances from Sir Terence that the results of the probe will be published.
Michael Lawrence, chief executive of the exchange, wrote to Sir Terence saying "We have discussed the position of this inquiry with other regulatory and prosecutory bodies. Given that we are advised that the Crown has immunity from the relevant provisions of the Financial Services Act, our normal referral procedures are not appropriate in this particular case."
The difficulty of the Stock Exchange's position is underlined by the fact that the discussions with other regulators lasted six weeks.
Mr Lawrence said: "The exchange believes the best way forward is for the Treasury itself to determine how to examine further the handling of this privatisation, including the dissemination of information between various parts of the public sector and between the public sector and the market."
Professor Littlechild's decision to go ahead with the pricing review was announced the day after the share sale. The move hit shares in the electricity generators and infuriated investing institutions in the UK and the United States, who believed they should have been warned.