Q131 Angela Browning: Yes, of course. Did the 11th one know he was the 11th?
Sir John Chisholm: Not all the people who were offered to be in the scheme agreed to do so because they were concerned about the risk of putting their own money into the company.
Q132 Mr Mitchell: The Financial Times has said the department was out of its depth, my colleague Don Touhig has said it has a tinge of corruption and the National Audit Office has been concerned about the excessive enrichment of the executives in the deal. I just wonder, as a question to all of you, the department and the company, whether any of you feel any shame or sense of regret about the deal now.
Mr Jeffrey: I would certainly refute very strongly any suggestion of the tinge of corruption. I have found nothing-
Q133 Mr Mitchell: Okay. That said, do you feel any sense of shame or regret?
Mr Jeffrey: In preparing myself for this hearing I have found nothing that supports that remotely. It is worth saying that just to start with. As for a sense of shame, I would say that the problem I have had with this is first of all that the eventual outcome was, as I have kept saying (and I make no apology for that), I think a satisfactory one and if you view the process as a whole it produced a successful outcome. If you then look at the detailed negotiations around the sale of the minority stake it is, as Mr Schofield said, a very complicated sequence of negotiation with potential bidders.
Q134 Mr Mitchell: I will stop you there because I guess that is a no and you are giving me an E Piaf on that.
Mr Jeffrey: What I am saying, Mr Mitchell, is that these were judgments made at the time in the thick of a commercial negotiation.
Q135 Mr Mitchell: Which in retrospect you might have a sense of regret about.
Mr Jeffrey: I cannot say that because I think the eventual-
Q136 Mr Mitchell: Okay. Sir John, do you have any sense of shame about the enormous amount of money you have made out of this deal?
Sir John Chisholm: Absolutely not. What I have a sense of is that the company was extraordinarily successful and as a consequence those of us who invested in it made an extraordinary gain.
Q137 Mr Mitchell: Okay; I will stop you there again because in the course of the discussions about privatisation your position seems to have varied enormously. You told the NAO that you had raised concerns about the potential risk of management making large returns from the involvement of a private equity investor. Did you say that very quietly? Who did you say it to? Did you whisper it?
Sir John Chisholm: Mr Mitchell, I was simply concerned about the perverse situation whereby, as a chief executive who was employed to create a successful company, I was kind of blamed for doing so.
Q138 Mr Mitchell: In other words you were not being critical of large returns if they came to you; you were critical about large returns that went to other people?
Sir John Chisholm: No, Mr Mitchell. As I said, I was just concerned about exactly the kind of perverse situation that we now have.
Q139 Mr Mitchell: About the potential of them going to other people. Okay; that is paragraph 2.2 Further on, in paragraph 2.15, we find that having expressed that concern you then started arguing that the view that the 10% equity offered by Carlyle was low and wanted the arrangement to offer higher returns based on exceptional performance. You discussed this with Carlyle before the final bids were submitted and Carlyle put up its proposal from 10% to 20% for the enrichment of the executives. You wanted that?
Sir John Chisholm: I touched on that early on, that the principal issue surrounding the 10% was to enfranchise a larger number of people in QinetiQ-
Q140 Mr Mitchell: But it also put money in your own pocket. Did you want that increased from 10% to 20%?
Sir John Chisholm: Indeed I did, in order to bring more people from QinetiQ into the scheme. After all, in that increase from 10% to 20% 5% of that was to do with staff in general being able to purchase shares or get shares through options.