DTI criticised over monitoring Post Office deal
MPs attacked the Depart-ment of Trade and Industry yesterday for failing to oversee adequately the Post Office’s purchase of German Parcel.
The Post Office – now Consignia – spent Pounds 289m on Germany’s third-largest parcel business in January 1999 as it used new financial freedoms to make its first big diversification into overseas markets.
The deal was done with the agreement of the DTI, which has to oversee acquisitions exceeding Pounds 75m a year. But the department failed to appoint an adviser until three weeks before ministers had to approve the deal, and failed to set clear targets or monitor progress of the acquisition rigorously, according to the Commons public accounts committee.
The committee said yesterday: “The policy to give the Post Office greater commercial freedom does not qualify the responsibilities of the department’s accounting officer to advise on matters of prudent and economical administration, efficiency and effectiveness. They should exercise their oversight responsibilities more actively in future.”
As in the private sector, the commercial freedom given to Consignia to encourage a more enterprising culture “should be accompanied by rigorous financial oversight on the part of the department”.
The committee says the department now has a standing team of advisers, but needs to set “clear financial targets in advance, both for an acquisition and for the overall business, and then monitor them rigorously”.
MPs are disappointed that the effectiveness of the acquisition will not be spelt out in Consignia’s accounts.
Consignia said it was in talks with the DTI on how to provide the information. But it added: “We don’t want to be put at a competitive disadvantage by what we put in our annual report.”
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