THE sale of Rover to BMW is a massive subsidy to British Aerospace, courtesy of the party that doesn't prop up lame ducks, reports DAVE OSLER.
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FLYING FLYING AEROSPACE FLYING, Carworkers are not the onlv victims of BAe's assi legally handed a nationalised company at a heavily subsidised price, without the competitive tendering that would accompany a council bog-cleaning contract, and flogged it off at a fat markup.
In National Audit Officespeak, the £150 million BAe paid for Rover in 1988 'fell significantly short of the real value of the company', which was worth an absolute minimum of £206.5 million.
It had surplus assets, such as disused sites, worth at least £250 million; BAe realised £126 million of them by the end sof 1989. Furthermore, Rover had shareholdings in associated companies, such as Unipart, worth up to f144 million.
The state wrote off £547 million of Rover debt, offered BAe £25 million in tax concessions, and then threw in more sweeteners than the average saccharine factory, collectively worth £44 million. Appropriately enough for a second-hand car deal, BAe was able to defer payment of the meagre asking price, saving £33.4 million in interest. The Government even funded €9.5 million of BAe's acquisition costs.
Leaked correspondence proved that Lord Young, then trade secretary, and Professor Roland Smith, then BAe chairman, discussed how to hide de(FLYING SP Jo HA F FLYING Thatcher's arms sale policy aided BAe "The Rover sale is just one example of the Tories' astonishing largesse to Britain's largest manufacturing company, which announced a loss of £1,200 million, the biggest in UK corporate history, in February 1993. It is in marked contrast with the treatment of the coal industry" tails from parliament and the European Commission.
The German car manufacturer is now paying £800 million for 80 per cent Rover, and shouldering £900 million of debt. BAe shares have risen 30 per cent since the news, adding a further £500 million to its Flul AEROSPACE Flag LOSURES FLYING ASURES KE AFRO® FLYI BAel t-stripping exercise: thousands lost their jobs in 1992 Heseltine: did he meet the prince? value.
Meanwhile, it holds on to an unspecified amount of Rover's land and property assets, and pockets the money raised from the sale of a 20 per cent stake to Japan's Honda in 1989.
Defenders point out that BAe invested £1,000 million in the car manufacturer, but that capital expenditure was financed by Rover operations. Much of it was borrowed money, with repayments simply passing to BMW.
The Rover sale is just one example of the Tories' astonishing largesse to Britain's largest manufacturing company, loss of £1,200 million, the biggest in UK corporate history, in February 1993. It is in marked contrast with the treatment of the coal industry.
In another rigged privatisation, BAe bought Royal Ordnance, the highly profitable state-owned munitions, explosives and guns manufacturer, in 1987.
BAe got an operation with a book value of £235 million for just £190 million. Some £69 million had only just been spent on 'rationalisation', while another f40 million had gone on cleaning up a polluted site in Waltham Abbey.
Intellectual property rights, including drawings, designs and data packages for missiles, together worth at least £50 million, went to BAe for just £1 million. Meanwhile, the Ministry of Defence agreed to a further state investment of £12 million, and gave BAe a five-year contract worth £1,500 million.
Through Royal Ordnance; BAe bought Heckler and Koch in 1991. The former managing director of the German smallarms manufacturer, Walter Lamp, currently faces trial in Rottweil, home of the eponymous dogs, on charges of supplying weapons to Iraq, Nicaragua's Contras and East Germany's Stasi.
The prosecution will argue that Royal Ordnance provided false end-user certificates to skirt embargoes. It is unclear whether the alleged events occurred when Royal Ordnance was owned by the Government or by BAe.
Meanwhile, UK Customs and Excise has denied reports that it has supplied the Scott inquiry into British arms sales to Iraq with documents indicating that the Royal Ordnance channelled explosives to Iraq, Iran, Argentina and South Africa, acting as part of a cartel.
But the Scott inquiry has already touched on BAe's attempt to sell £5,000 million worth of Hawk trainer-light at• 50c • 2FF • 1DM • 500 lire • 10BF • fl Can Marxism • Interview with Michael Löwy
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