Exclusive: Investment bank Lazard’s ‘cosy’ relationship with Government questioned by MPs

 

Deputy City Editor

Lazard, the investment bank which advised the Government on the much criticised Royal Mail flotation, has earned millions of pounds advising Whitehall on a huge majority of the biggest state asset sales in recent years, The Independent can disclose.

The bank, whose international arm is chaired by the former business secretary, Lord Mandelson, has been the prime adviser to the Government on at least six of the present administration’s bumper state asset sales, several of them extremely controversial. They covered taxpayer-owned businesses or state contracts worth more than £11bn, including the sell-off of the Tote betting business and the government’s blood plasma service.

Adrian Bailey MP, chairman of the powerful business select committee, said the Business Secretary Vince Cable would be called before the committee to explain why Lazard was used so repeatedly. “Clearly, it does appear the Government has got a potentially overly cosy relationship with Lazard… it certainly gives cause for concern,” he told The Independent.

Lazard’s ties go deeper than just winning prestigious advisory contracts with the Government. At the Department of Business, the chief executive of the Shareholder Executive, which manages taxpayers’ shareholdings in nationalised assets, is Mark Russell, a Lazard executive until 1986. 

Roger Lowe, the Shareholder Executive’s “senior responsible official” in charge of the Royal Mail flotation project, was a senior Lazard banker until 1998. Lazard also had at least one member of staff on secondment to the Department of Business last year, before the Royal Mail flotation.

Revelations of this close relationship with the Government came in a week of rising public concern about Whitehall’s dealings with the City following a scathing National Audit Office report into the Royal Mail sell-off.

The NAO made it clear that the Government was wrong to have relied so unquestioningly on advice from Lazard.

The bank is keen to publicise its work for the British Government on its website, promoting the extremely prestigious Westminster contracts of its “Sovereign Advisory” team.

Analysts said the British Government contracts served as powerful marketing tools for the bank when selling its more expensive services to other governments and multinational companies. The Independent has also learned that Lazard is likely to be called in front of the combative Public Accounts Committee at the end of this month.

A spokesman for Lazard said: “Lazard is pleased to have been selected to advise ¬several different departments of the UK Government on a number of advisory assignments in recent years, following competitive tender processes.”

A Department for Business, Innovation & Skills spokeswoman said: “Lazard were appointed to advise on the Royal Mail sale following a competitive procurement process. Seven potential advisers were invited to bid for this work. Three were interviewed, and Lazard was selected as it had the highest score against the evaluation criteria.”

Banking sources pointed out that there was a shortage of banks who could offer independent advice without being conflicted by their divisions who would be involved in buying or selling the shares.

UBS was advising the Government, before Lazard, on selling Royal Mail. However, it swapped sides in early 2013 to become one of the “book¬runners” marketing the shares to investors: a service for which it and six other banks were paid £12.7m.

Of the few other big state sales not involving Lazard, Citigroup advised on the sale of the High Speed 1 rail operating franchise and Deutsche Bank on the disposal of Northern Rock to Virgin Money.

Working closely: When Lazard Advised the government

The 2011 sale of the Tote betting business to Betfred for £265m. Lazard was paid £1.69m for its advice. The deal was controversial because the horse-racing industry preferred a rival bid from race-loving businessman Sir Martin Broughton.

The 2013 sale of Plasma Resources, the Government-owned blood plasma service sold to a US private equity firm for £200m. Lazard’s fee was £1.5m. Lord Owen, the Labour health minister who created the services, said of the sale that it was “hard to conceive of a worse outcome”.

The 2013 sale of a 60 per cent stake in Royal Mail valuing the service at a total of £3.3bn. Lazard was paid £1.5m.

The 2013 agreement with EDF Energy on how much taxpayers should pay for electricity generated at its proposed Hinkley B nuclear power station. Lazard was paid £1.6m for its advice which led to an agreed price of roughly twice the current market rate for the next 35-40 years.

The 2013 sale of £3.3bn of the taxpayer’s shares in Lloyds.

The March 2014 sale of a further £4.2bn of Lloyds shares. Lazard worked for free on both Lloyds sales due, analysts say, to the extremely prestigious nature of the contract.

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
people'I hated him during those times'
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
Dame Vivienne Westwood has been raging pretty much all of her life
peopleMemoir extracts show iconic designer 'felt pressured' into going out with Sex Pistols manager
Life and Style
fashionAlexander Fury's Spring/Summer 2015 London Fashion Week roundup
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late on stage in Brixton show
News
i100
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
News
people''Women's rights is too often synonymous with man-hating'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Head of Marketing and Communications - London - up to £80,000

£70000 - £80000 per annum: Ashdown Group: Group Head of Marketing and Communic...

Nursery Nurse

Negotiable: Randstad Education Manchester: Level 3 Nursery Nurse required for ...

Nursery Nurse

Negotiable: Randstad Education Manchester: L3 Nursery Nurses urgently required...

SEN Teaching Assistant

Negotiable: Randstad Education Manchester: We have a number of schools based S...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam