The CEO of an energy company cutting hundreds of Scots jobs is facing demands to explain £40million of loans and cash transfers.
Stephen Fitzpatrick’s Ovo Energy was given £17million in furlough payments after taking over Perth-based SSE’s retail division in January 2020.
But the businessman – whose firm was criticised for suggesting people cuddle their cat and “do star jumps” to keep warm as bills soar – is now slashing 1700 jobs as part of a restructuring.
A headquarters in Perth employing 700 people is to be slashed along with bases in Edinburgh and Cumbernauld, where hundreds more work.
Accounts filed at Companies House show Ovo was billed £21million by parent company Imagination Industries Ltd – also controlled by Fitzpatrick – to cover “brand royalty fees”.
Meanwhile, almost £20million was invested by Imagination Industries in other business ventures set up by the 44-year-old tycoon, including a flying taxi firm and a prosecco distributor.
Unite general secretary Sharon Graham and SNP MP Pete Wishart have demanded an explanation, and assurances money has not been diverted that could have saved jobs at Ovo.
Graham said: “There are a lot of questions that need answering about Ovo’s accounts.
“At the very least, there should not be a penny more of taxpayers’ money spent on Ovo until they provide answers.
“Right now, the Ovo offices in Perth, Edinburgh and Cumbernauld are going to be axed, which puts hundreds of jobs at risk.
“Unite has been demanding the company open the books before any redundancies are forced on the workforce.”
Perthshire MP Wishart added: “When Ovo took over from SSE, they came with all sorts of commitments to develop the site, sustain jobs and to grow.
“Instead, what we find two-and-a-half years later is that they are actually going to be closing down, creating a huge hole in Perthshire’s labour market.
“That hole is going to be very difficult to fill and it is bitterly disappointing.
“Some of the financial issues need to be properly investigated. We need to have assurances that money hasn’t been used in other companies – which have nothing whatsoever to do with the energy retail market – that could save jobs at Ovo.
“I think Mr Fitzpatrick has to explain exactly what has been happening here, and there are serious questions about how some of this money has been moved around certain of his companies.
“We need to know that this has not had an impact on jobs that are now going to be lost in Scotland.”
Wishart revealed crunch talks were held with Ovo executives on Friday.
He said: “Unfortunately Mr Fitzpatrick did not attend but other members of senior staff were there.
“They say they want to achieve these cuts through voluntary redundancy and that there are plans to set up a new hub in Glasgow. But it was overall disappointing – why close a base in Perth to open another similar one elsewhere?
“And it seems unlikely so many jobs will be accounted for through voluntary redundancies.”
Fitzpatrick, 44, is a Tory donor and former city trader who lives in a £3million mansion in the Cotswolds. He is a former Edinburgh University graduate.
In January 2020 his company was fined £8.9million by the regulator Ofgem for overcharging customers.
Ovo Group reported a pre-tax loss of £176million on revenues of £4.5billion in 2020, its accounts show.
It became the UK’s third-biggest supplier of gas and electricity with about 4.5million customers when it took over SSE’s operations.
The UK is facing a cost-of-living crisis driven by sharply increasing energy prices, which are likely to climb steeply again in April.
In an interview earlier this month, Fitzpatrick said that without government action to reduce bills there would be a “tragic situation where UK households cannot afford to heat their homes”.
Other transactions revealed in the accounts which are being questioned by Unite and Wishart include a £5.6million loan from Imagination Industries to Vertical Aerospace – a firm which builds electric air taxis and was floated on the New York Stock Exchange last year for £1.6billion.
The company also loaned £4.4million to Imagination Industries Incubator Ltd, £1.6million to the software development firm Imagine Just 3 Things Ltd, and millions more to a firm called Imagination Industries AeroLtd.
An undisclosed sum went to prosecco firm Della Vite Trading Ltd. There is no suggestion of illegality or wrongdoing on the part of Fitzpatrick or anyone at Ovo.
Fitzpatrick said: “I founded Ovo Energy with my own savings in 2009 and still own more than 60 per cent of the company.
“The Ovo brand licensing agreement was set up in 2014, as we prepared for external investment, and is a common commercial agreement put in place to protect brand ownership.
“The licence fee is budgeted for annually as a normal business charge and has been referenced in all of our accounts filed at Companies House over the last eight years.
“Imagination Industries pays full UK taxes on its licence fee income, and has already reinvested these funds into founding several new businesses, including Vertical Aerospace, an electric aircraft company based in Bristol.”
Responding to criticism of furlough payments, he added: “The furlough scheme was set up to help ensure people still received wages if they were unable to work – this is exactly what we used it for.”
Referring specifically to Ovo’s Scottish operation, a spokesman for Ovo said: “Scotland is a great place for our business, which is why we’re making it an operational centre of excellence and one of our three office locations.
“We are opening a new Ovo Academy in Glasgow, creating opportunities in the city that hosted Cop26, for those who want to be at the forefront of the UK’s green revolution.
“While we’re closing some of our offices, there is an opportunity for remote working. The pandemic has changed the way we work and many of our offices are underused, with people already working remotely.
“We’re committed to investing in Scotland – creating higher-skilled, better-paid jobs in Scotland.”
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