Bank `made £7m from coal deal'

Minister who awarded contract to Rothschild is now a director
Click to follow
Indy Politics
BN M Rothschild has earned an estimated £7.5m to date from advising the Government on the future of the coal industry - a contract awarded to the bank by its new director, Lord Wakeham, when he was the Secretary of State for Energy in May 1991.

So far, said Tim Eggar, the Minister of State for Energy, Rothschild has worked 37,000 hours on the contract, which is still continuing.

Mr Eggar's revelation, made in a parliamentary answer to Stephen Byers MP, will fuel controversy about Lord Wakeham joining the firm, which also acted as consultant on the electricity privatisation.

Mr Eggar has indicated the coal contract was not awarded to the lowest bidder, saying it was given to Rothschild on a "best value for money" basis.

This is Whitehall code, usually meaning not the cheapest. Rothschild was one of seven short-listed bidders for the work, which is not expected to be completed until spring next year at the earliest.

After advising on the pits sell-off and closure programme, the firm has moved on to dealing with the above-ground buildings, land and surplus machinery.

Neither the Government nor Rothschild will reveal the value of the contract, but City sources indicated they would not expect the firm to be charging less than £200 an hour.

Lord Wakeham, who resigned from the Government last year when Leader of the House of Lords and joined Rothschild last month, has defended his role in giving his new employer the lucrative business.

He said the bank was chosen after the recommendations of officials.

In the same answer, Mr Eggar refused to disclose what advice officials gave, claiming it was confidential.

Lord Wakeham cannot remember if the bank was not the lowest bidder, but said: "It has long since been a policy in public purchasing that you don't always have to take the cheapest, you take the best value for money. The cheapest is not always the best way forward."

Mr Byers said last night: "It will come as a surprise to many people that this contract personally awarded by Lord Wakeham when he was Secretary of State for Energy is worth many millions of pounds."

He claimed that Mr Eggar's disclosure of the 37,000 hours, "once again raises the issue of the potential conflict of interest between Secretaries of State leaving office and then shortly taking up positions with companies that they have had commercial dealings with as members of the Cabinet".

Comments