update about the Royal Mail

The Public Accounts Committee last Wednesday digested the news of Lazard’s inclusion as a priority investor minutes before they grilled members of the Shareholder Executive, which manages Royal Mail on behalf of the government, Lazard & Co, together with UBS and Goldman Sachs who co-ordinated the placement of shares.

It emerged at the hearing that government officials and banks advisers working on the controversial float failed to negotiate an agreement that would have allowed the taxpayer a share in higher than anticipated profits from the Royal Mail’s valuable property portfolio.

The U.S. is no stranger to the fact that delivering mail in the 21st century is a huge money suck, but so far no one's succeeded in selling it off--though it's been suggested, with calls for both partial and total privatization. But the United States Postal Service struggled to even kill off Saturday mail earlier this year, first announcing that Saturday mail delivery would be discontinued, then delaying the change because a Congressional law prohibited messing with the schedule.

We'll see how the situation with the Royal Mail unfolds. The postal worker's union has said privatization "would be bad for customers, bad for staff and bad for the industry," while the advocates in the government have said the move will enable the mail service to borrow private money and not compete for public funding.

MPS appeared shocked that an independent property valuation commissioned by Royal Mail before its sale had not been shared with the government, their advisers or the National Audit Office.

“I’m struggling to understand why this information should have been kept from the National Audit Office,” said Richard Bacon, the Conservative MP and deputy chairman of the PAC.

Richard Cormack, Goldman Sachs managing director, was asked how his team could represent the government, given the investment division of Goldman’s acted for many of the priority investors. He underlined the separation of the businesses: “Our loyalty is to our client which was the government. If we were not working for our IPO issuing clients and we were seen always to be acting in the interest of our investing clients, we would not have a business.”