UK ministers will this week face questions from the opposition Labour party about the fitness of PPE Medpro — a company linked to Tory peer Baroness Michelle Mone — to receive major public contracts and its tax record.
Angela Rayner, deputy Labour leader, has drawn up a list of parliamentary written questions to be published on Monday, piling pressure on the government, which awarded contracts worth more than £200mn for personal protection equipment to PPE Medpro in 2020.
Those deals have led to substantial financial gain for Mone, according to a leaked internal HSBC review.
The UK government spent more than £13bn on PPE during the Covid-19 pandemic and has been accused of failing to carry out adequate due diligence in awarding contracts, with billions wasted in fraud and unused equipment.
Ministers say they were buying equipment during an acutely competitive market because of a global shortage.
But the High Court ruled in January that the government had acted unlawfully in operating a special VIP lane for potential suppliers of PPE who had links with politicians.
Rayner told the Financial Times that new revelations about Mone and PPE Medpro showed a “total failure of due diligence and serious conflicts of interest” in government procurement.
“Ministers must come clean about what checks were performed on PPE Medpro’s financial and tax affairs prior to the award of £203mn in public contracts, as well as the steps they took to meet their duties to include termination clauses in these contracts,” she said.
Early in the pandemic PPE Medpro received two contracts for £80mn and £122mn to provide the government with PPE without competitive tender following a recommendation from Mone, a lingerie entrepreneur.
In 2020 her lawyer told the FT she knew nothing about the contracts.
But the HSBC report seen by the FT indicated that Mone and her children ultimately received £29mn of profits from the PPE contracts through an offshore trust.
Last year it emerged that she had been the “source of referral” between the government and the company, helping place it in the VIP lane after she corresponded with two Tory ministers.
One of PPE Medpro’s directors, Anthony Page, had been the registered secretary of MGM Media — the company that manages Mone’s personal brand — until he quit the role on the same day that PPE Medpro was set up.
Page, who did not answer questions from the FT, was until recently also a director of the Knox House Trust, part of the Knox group of companies founded by Mone’s husband, businessman Douglas Barrowman.
A company linked to Barrowman, called AML Tax (UK) Limited, was fined £150,000 this year by a UK tribunal for failing to hand over records during a tax investigation by HM Revenue & Customs. The court found that the company “aggressively promoted tax avoidance schemes in the UK”.
Properties connected to Mone and her husband were raided in April as part of a probe by the National Crime Agency into PPE contracts awarded during the pandemic.
PPE Medpro was issued with a winding-up petition in September by HMRC — apparently for unpaid taxes — although this has since been withdrawn.
Rayner will ask Oliver Dowden, Cabinet Office secretary, what assessment was made of PPE Medpro against the grounds for exclusion of bidders from public procurement procedures — set out in the Public Contracts Regulations 2015 — which include bribery, fraud and non-payment of taxes.
She will also ask what provisions were included in PPE Medpro’s state contracts to terminate the deal if it subsequently turned out that any of those exclusion criteria had been breached.
Rayner will ask the Treasury to reveal how much revenue the exchequer gained through taxation paid by PPE Medpro in the 2020-21 tax year. She will also ask chancellor Jeremy Hunt what steps the Treasury is taking to track profits made by suppliers through public procurement that accrue to offshore trusts.
The HSBC probe found that £65mn in profits from PPE Medpro were transferred to The Warren Trust, registered in the Isle of Man, whose beneficial owner was Barrowman, £45.8mn of which was then transferred to Barrowman’s personal account. A sum of £28.8mn was then transferred to The Keristal Trust, whose beneficiaries were Mone and her children.
The Department of Health and Social Care said it could not comment on the specifics of the PPE Medpro contract because it was in a mediation process with the government. “Due diligence was carried out on all companies that were referred to the department.”