The company awarded large government personal protective equipment (PPE) contracts after an introduction by the Conservative peer Michelle Mone has declined to say how it would repay millions of pounds of public money for unused equipment if ordered to do so following a dispute with the government.
The Guardian reported this week that leaked documents indicated that Mone and her children secretly received £29m originating from the profits on these contracts after her support helped the company, PPE Medpro, secure a place in the “VIP lane” that the government used during the Covid pandemic to prioritise firms with political connections.
After Mone’s approach, PPE Medpro secured government contracts worth £203m to supply face masks and sterile surgical gowns.
The leaked documents, which were compiled by HSBC, show PPE Medpro paid at least £65m in profits to Mone’s husband, the Isle of Man-based financier Douglas Barrowman, just months after securing the contracts. Barrowman then made a series of distributions from those profits, including a secret £29m payment to a trust that benefits Mone and her children, the documents indicate.
However, the gowns that PPE Medpro supplied under the second contract, for which the government paid £122m, were rejected by the Department of Health and Social Care (DHSC) after a technical inspection carried out by officials, and have never been used in the NHS.
For the past 10 months, the DHSC has been seeking to recoup money from the company for the unused gowns through mediation, a dispute resolution process.
On Thursday, the Guardian asked Anthony Page, a PPE Medpro director, given the revelation that the company paid Barrowman at least £65m in profits, whether it had the funds available to repay the government should that be the outcome of the mediation.
Neither Page nor his lawyer replied.
Page has said the gowns did pass inspection and that PPE Medpro is entitled to keep the money.
On Thursday, in response to an urgent question in the Commons from Labour’s deputy leader, Angela Rayner, the junior health minister Neil O’Brien described the PPE Medpro gowns contract as “underperforming”. O’Brien said court action would follow if the parties could not reach a satisfactory agreement.
The minister said the DHSC had “a substantial team” working on recouping money from companies whose PPE contracts were “underperforming”. The government has come under sustained pressure to do so after a series of highly critical reports on its PPE procurement during the coronavirus pandemic. Of £12bn spent, the DHSC wrote off £9bn on PPE that was either substandard, defective, past its use-by date or dramatically overpriced.
Mone and Barrowman have repeatedly insisted they had no “involvement” in PPE Medpro and “no role” in the process through which the company was awarded its government contracts.
Earlier this year, the Guardian revealed that Mone first approached Michael Gove in May 2020 offering to supply PPE through her “team in Hong Kong”. This approach was made before the company was even incorporated.
Gove, now back in the cabinet as the minister for levelling up, is under mounting pressure to explain his role in the subsequent award of the contracts to PPE Medpro. He said this week that he referred all offers of PPE to “the appropriate civil service channels”. Emails released to the Guardian following a Freedom of Information Act request, however, show that after approaching Gove, Mone then contacted the Cabinet Office minister responsible for procurement, Theodore Agnew, on his private email.
She told Agnew: “Michael Gove has asked to urgently contact you [sic]. We have managed to source PPE masks though [sic] my team in Hong Kong.”
Mone’s offer was then referred to civil servants operating the “VIP lane”, which gave high priority to PPE recommendations from MPs, peers and other politically connected people. Within weeks, the DHSC had awarded the newly formed company an £80.85m contract for the supply of 210m face masks, followed by the £122m gowns contract awarded on 25 June 2020.
The leaked documents reported on by the Guardian this week were compiled by HSBC, whose officials became concerned about the flows of millions of pounds from the profits on the PPE deals through various accounts linked to Barrowman and Mone. In September 2020, Barrowman was paid at least £65m in “profits” from the PPE deal, the HSBC report states. It says that money was transferred in two instalments to the Warren Trust, one of Barrowman’s Isle of Man trusts, using the reference “Distribution”.
From there, transfers totalling £45.8m were made to Barrowman’s personal HSBC Isle of Man bank account. That account, in turn, transferred £28.8m in October 2020 to the Keristal Trust, the beneficiaries of which, bank records indicated, were Mone and her children, the report states.
The Keristal Trust’s “settlors” – a reference to the individuals who created or funded it – were Barrowman and another individual linked to PPE Medpro, the document indicates. The document adds that the Keristal Trust’s bank account was opened in May 2020. That was the same month Mone recommended PPE Medpro to Gove and Agnew.
HSBC was unable to corroborate any concerns of wrongdoing by the couple, but it did identify a number of “risks” related to retaining Barrowman and Mone as clients – including what it saw as potential reputational damage to the bank. Multiple sources have told the Guardian that HSBC then decided to drop the couple as clients.
Contacted about the new disclosures, HSBC said it was unable to comment, even to confirm if the couple had been clients. A lawyer for Mone said: “There are a number of reasons why our client cannot comment on these issues and she is under no duty to do so.”
A lawyer who represents Barrowman and PPE Medpro said a continuing investigation limited what his clients were able to say on these matters. He added: “For the time being we are also instructed to say that there is much inaccuracy in the portrayal of the alleged ‘facts’ and a number of them are completely wrong.”
The House of Lords commissioner for standards, who is investigating whether Mone breached rules governing peers’ conduct by failing to register an interest in PPE Medpro and lobbying for the company, said this week he was unable to finalise his report while a criminal investigation was ongoing.
The National Crime Agency is investigating potential fraud relating to PPE Medpro and searched the homes of Mone and Barrowman in April. No arrests or charges have been made. Mone has denied breaking the Lords conduct rules.
