Q41 Chairman: I am afraid we cannot accept in this Committee, just because a department makes some money, that it has achieved value for money. We have to look at objective criteria. It seems to me that what the Comptroller and Auditor General is talking about makes sense.
Ms Strathie: I do not disagree with anything that Mr Morse has said.
Q42 Angela Browning: At the bottom of "e" there is a specific recommendation from the National Audit Office and I think I would be happy if you could just confirm that you accept that and that is what will happen in the future, where it begins "The Department should prepare" et cetera.
Ms Strathie: I can absolutely confirm that is what will happen in the future. I can confirm that all of our strategic arrangements and contract management from board level downwards are in place including the strength in both our commercial and our legal resources in this area. Absolutely.
Q43 Mr Bacon: Could you tell us what would embarrass you?
Ms Strathie: Not very much.
Q44 Mr Bacon: Not very much; my point being that if being the boss of one of the world's leading tax authorities and entering into a property deal with an offshore tax avoider for your own property does not embarrass you, then what would?
Ms Strathie: I said I was not personally embarrassed and I tried to set out why. I would be embarrassed if I felt I were not doing the job I am paid to do. I accept all of the success that HMRC have had and all of the areas for improvement when I take the job. The only thing I can do is change the future, so I am not embarrassed about what I have done in this contract since I took the job.
Q45 Mr Bacon: That is a great line for a 1960s folk song: the only thing I can do is change the future. Mr Friedlos, who owns Mapeley?
Mr Friedlos: About 80% of the shares in Mapeley are owned by funds which are managed by Fortress Investment Group, a US fund management company.
Q46 Mr Bacon: Right. And the other 20%?
Mr Friedlos: The other 20% are owned by management, individuals and some other professional investors.
Q47 Mr Bacon: It says in the Report that when the deal was struck Fortress Registered Investment Trust and Soros and Delancey Estates owned the business. There is a piece in the Sun newspaper, which as we all know is a paper of record, which said on 17 June 2005 that Mapeley had made a dashing stock market debut yesterday. Was there then a flotation followed by a private buy-back, a private equity deal of some kind, where it was taken off the stock market again? Is that what happened?
Mr Friedlos: No, there was a flotation in June 2005. We were a public company for just over three years. The company de-listed, came off the stock market in April 2009 because Fortress, or the funds managed by Fortress held more than 75% of the equity and we were required at that level to de-list.
Q48 Mr Bacon: It says in your CV that you are responsible for all areas of day-to-day business of the company, including day-to-day operations.
Mr Friedlos: Yes.
Q49 Mr Bacon: Do you live in Bermuda?
Mr Friedlos: No, I do not live in Bermuda.
Q50 Mr Bacon: I do not understand. The company is based in Bermuda and, if you are responsible for the day-to-day operations, how do you run it?
Mr Friedlos: The company's investments are based in Bermuda and the Bermudan company is run by a board of directors.