UK auditor says Royal Mail was sold off cheaply

LONDON (AP) — The British government cost taxpayers millions by selling off the Royal Mail at too low a price, the country's public-spending watchdog said Tuesday.

The Conservative-led government sold a majority stake in the postal service last year, putting the system under private control for the first time in its 500-year history.

The National Audit Office said the government sold the shares "substantially below" their actual trading price.

Shares were offered at 330 pence ($5.49), but on the first day of London Stock Exchange trading in October closed at 455 pence. They traded Tuesday at 565 pence.

Audit Office chief Amyas Morse said the government's approach "was marked by deep caution, the price of which was borne by the taxpayer."

"The government retained 30 percent of the company," Morse said. "It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost to the taxpayer."

The auditor also said 12 of the 16 institutional "priority investors" given the chance to buy chunks of shares sold all or part of their stake within weeks at a substantial profit, contrary to the government's expectation "that they would form part of a stable long-term and supportive shareholder base." Most of the 16 institutions have not been named publicly.

Business Secretary Vince Cable said the government had succeeded in selling the Royal Mail, "predominantly to responsible long-term investors."

"Achieving the highest price possible at any cost and whatever the risk was never the aim of the sale," Cable said.

But opposition Labour Party spokesman Chuka Umunna said the sale had left taxpayers "shortchanged by hundreds of millions of pounds."