Cable Faces Scrutiny Over £4m Royal Mail Bonus Vince Cable, the Business Secretary, will come under pressure on Wednesday to cancel a £4m bonus fee for investment bankers as MPs step up their scrutiny of Royal Mail's controversial £3.3bn privatisation. Sky News has learnt that members of the Business, Innovation and Skills (BIS) Select Committee will demand that Mr Cable abandon any prospect of the Government's advisers receiving the money despite his belief that the surge in Royal Mail's share price reflects "frothy" investor demand. Mr Cable is braced for a stormy session, which will be his second attempt to justify to the Committee the 330p-a-share price at which 60% of Royal Mail's shares were sold last month. The seven banks which worked on the privatisation have received around £12m in fees for their work to date, with a further £4.2m payable at Mr Cable's discretion. Aides to the Business Secretary insist that he will not make a decision about paying them for several months, although they point out that the decision to award them is to be based on a series of pre-determined criteria, such as the success of the share offer, the level of demand generated by the banks for the stock, and the quality of investors' feedback. Such factors are common in deciding fees to flotation advisers, but they have become contentious in Royal Mail's case because of the allegation that the 330p pricing significantly undervalued the company and deprived the taxpayer of hundreds of millions of pounds. One insider pointed out that some of the criteria listed in the privatisation prospectus for awarding the discretionary fees were ambiguous, including the final price achieved for the offer and the aftermarket performance of the shares. "The aftermarket performance has been spectacular but all that has done is embarrassed (Mr) Cable," said a banker who worked on the deal. The criteria are there for a reason but he'll be crucified if he awards the bonus. Mr Cable was not questioned about the discretionary element of the fee pool when he appeared before the Committee last month and is expected to say on Wednesday that a decision will not be made for some time. However, a person close to him described it as "inconceivable that a sensible Secretary of State would feel able to hand bankers millions of pounds in this way." He may also be questioned over a disclosure in the annual report of the Shareholder Executive (ShEx), the department of BIS responsible for the sale, that Royal Mail's value had increased "as expected" with the injection of private capital into the company. MPs are likely to ask why Mr Cable decided not to increase the sale level if they expected the share price to increase, as indicated by the ShEx annual report. Advisers to the Government said last week that they had considered raising the price but were deterred from doing so by a hostile reaction from institutions. Adrian Bailey, chairman of the BIS Select Committee, told Sky News this week: "If the price was expected to go up, why did the Government not increase the sale price during its last-minute deliberations?" A spokesman for BIS said: "We always made clear that the Government would retain a stake in Royal Mail so that the taxpayer could benefit from any increase in the company's value following private sector involvement. We have retained a 30% stake which represents good value for money for the taxpayer. Mr Cable will appear before the BIS Committee alongside Michael Fallon, the Business Minister; Mark Russell, chief executive of ShEx; and William Rucker, chief executive of Lazard, the independent adviser to the Government. Royal Mail will announce its maiden results as a public company on Wednesday, just hours before the Committee hearing. Last week, the MPs heard from a number of investment banks, some of which did not work on the privatisation but which pitched valuations of more than £9.5bn for Royal Mail.