A long-awaited report from the government’s spending watchdog concluded on Thursday that the Ministry of Defence sold the defence technology business Qinetiq too cheaply to a US private equity specialist that reaped millions of dollars in capital gains from the deal.

The National Audit Office report says that Sir John Chisholm, chief executive of Qinetiq, and nine other senior managers of the company, made a return of 19,900 per cent on their investments over the three years before the company was privatised in 2006.