Chief Political Correspondent
The Chief Executive of the Stock Exchange yesterday warned ministers that the mishandling of the pounds 4bn sale of PowerGen and National Power could hit share prices of future privatisations, including that of the nuclear power industry.
Michael Lawrence also warned the Government it may have to make "rectification" to shareholders as criticism mounted over the flotation of the electricity generators.
John Major dismissed the row as "hysteria", but Kenneth Clarke, the Chancellor, and Sir George Young, Financial Secretary to the Treasury, were forced on to the defensive, denying allegations of breaching insider dealing laws.
Mr Lawrence said the Exchange was unhappy that its reputation had been damaged by the Government's handling of the flotation. He said there should be "a follow up" with "rectification" if ministers or officials were found culpable. They are accused of withholding from shareholders information that the electricity regulator, Professor Stephen Littlechild, intended to announce a crackdown on prices the day after the shares were put on sale.
Mr Lawrence said the Stock Exchange had asked the Treasury to carry out an investigation, but would have asked the regulatory or criminal investigation bodies to do so had it not been for Crown immunity. Sir George confirmed, however, that ministers were not immune from investigation for insider dealing.
The Serious Fraud Office confirmed last night that it was considering an investigation into the allegations by Jack Cunningham, Labour spokesman on trade and industry.
Kleinwort Benson and Barclays de Zoete Wedd, the Chancellor's advisers on the electricity sale, were also moving to the centre of the row yesterday. It became clear that the Stock Exchange considered sending a dossier on the two firms' role to the Securities and Futures Authority, the City watchdog.
Banks in firing line, page 16