MoD gives up veto over Qinetiq projects

The Ministry of Defence yesterday loosened its ties to its former inventions arm Qinetiq, which it spun off in a controversial privatisation a decade ago, in a move that means the Government will no longer have the right to veto its deals or projects.

Qinetiq, often known as the real-life version of James Bond's Q, makes bomb disposal robots and sniper detectors. It was once the main part of the Defence Evaluation and Research Agency, the Government's secret military laboratories. When it was privatised, a special share was set up to give the MoD rights to protect Britain's national interest.

They included the power to veto any foreign shareholding above 3 per cent, and any shareholding above 10 per cent that involves a possible conflict of interest. Those terms remain, but other parts of Qinetiq's share agreement are to be relaxed, including stripping the MoD of its right to veto any of the firm's business deals or activity, and the introduction of a less onerous compliance system.

The company said the moves, which have been agreed by the MoD but still have to be approved at its own annual meeting, aimed to put it on a level playing field with its competitors. "The veto is being removed because it's never been used in the past 10 years and to simplify the process," said a spokesman. The firm added that after 10 years of an unprecedented bespoke compliance regime set in place as Qinetiq's privatisation, the MoD had decided it could be relaxed.

It also said the Government is to pay it £65m as part of a compensation package for "single-source contract work", projects the MoD had directly requested, that had later been changed or cancelled. Most of the money will cover redundancy costs. Such payments to defence companies are usually spread over several years but the MoD has opted to pay a lump sum.