The chief executive at Ovo Energy has been asked by MPs and unions to explain £40m of loans and cash transfers, after cutting hundreds of Scots jobs.
Stephen Fitzpatrick’s company was given £17m in furlough payments after taking over Perth-based SSE’s retail division in January 2020.
The Perth-headquartered business employs around 700 people, with bases in Edinburgh and Cumbernauld, where hundreds more work.
The businessman - whose firm was criticised for suggesting people cuddle their pets and “do star jumps” to keep warm as bills soar - is now cutting around 1,700 jobs as part of a restructuring.
Accounts filed at Companies House show Ovo was billed £21m by parent company Imagination Industries - also controlled by Fitzpatrick - to cover “brand royalty fees”.
Meanwhile, almost £20m was invested by Imagination Industries in other business ventures set up by him, including a flying taxi firm and a prosecco distributor.
Unite general secretary Sharon Graham and SNP MP Pete Wishart have demanded an explanation, along with assurances that 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.”
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 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.”
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.”
In January 2020, Ovo was fined £8.9m by the regulator Ofgem for overcharging customers.
The group reported a pre-tax loss of £176m on revenues of £4.5bn in 2020.
Ovo's 2020 accounts show that the brand licence fees paid to Imagination Industries were £21m, but the company does not recognise the £40m figure.
It became the UK’s third-biggest supplier of gas and electricity, with about 4.5 million customers, when it took over SSE’s operations.
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 £5.6m 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 £1.6bn.
The company also loaned £4.4m to Imagination Industries Incubator, £1.6m to the software development firm Imagine Just 3 Things, and millions more to a firm called Imagination Industries Aero.
An undisclosed sum went to prosecco business Della Vite Trading.
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% 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.”
On furlough, he added that 3,400 people were placed on furlough at the end of March 2020, three months after SSE was acquired. “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.
“We’re committed to investing in Scotland – creating higher-skilled, better-paid jobs in Scotland.”
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