Will UK taxpayers get their £122m back from PPE Medpro? | Michelle Mone

The five-year unfolding of Britain’s most high-profile Covid contracts scandal, involving a baroness, her husband and multimillion-pound government deals, was accelerated last week by a high court ruling against the company linked to former Tory peer Michelle Mone.

Judge Mrs Justice Cockerill ruled that PPE Medpro, owned by Mone’s husband, Isle of Man-based businessman Doug Barrowman, had supplied defective personal protective equipment (PPE) for use on the NHS during the pandemic. Cockerill ordered PPE Medpro to refund the sum of £122 million it paid for the Department of Health and Social Care’s order of 25 million sterile surgical gowns under a contract signed via the VIP line in June 2020.

Chancellor Rachel Reeves hailed the decision as proof that the Labor government was right. stated stability To claw back some of the billions of pounds of public money wasted by Boris Johnson’s administration during the Covid crisis.

“We want our money back. We are getting our money back” Reeves shared a post on X. “And it will go where it belongs – in our schools, our NHS and our communities.”

The June contract and another contract worth £80.85 million for the supply of face masks, also paid for by the DHSC, were awarded to PPE Medpro after Mone met with then Cabinet Office minister Michael Gove in May 2020. His offer was processed through the “VIP hotline” operated by the Johnson government, which prioritizes politically connected people like Mone and treats them as more trustworthy than experienced PPE suppliers. Years later, Mone and Barrowman, through their former lawyers, denied involvement in PPE Medpro until they admitted their roles in late 2023 and Mone admitted they had lied.

The gowns were rejected at an inspection at NHS storage facilities in Daventry, Northamptonshire, in September 2020 because their labels were invalid and also signaled they were not certified as sterile, a life-saving requirement. Cockerill ordered the £122 million to be repaid by 15 October.

But in this apparent story of British justice finally recovering the millions paid by taxpayers for unsafe medical supplies, there is a snag looming on the horizon. The verdict is not against Barrowman personally, but against his company, which is left with little money or assets. In fact, on September 30, the day before Cockerill announced his decision, PPE Medpro Ltd went bankrupt and managers were appointed.

So although the company must repay £122 million by Wednesday, there seems to be no realistic prospect of it being able to do so. In a series of press statements since the decision, Mone accused Reeves of using inflammatory language after the Chancellor jokingly confirmed the government had a “vendetta” against the couple, and Barrowman repeatedly said the decision was wrong, a “whitewash”. [sic] Neither had given any indication that they intended to fund the repayment of the money until a new statement on Friday evening, when their spokesmen said for the first time that the PPE Medpro “consortium” was ready to discuss “a possible solution with the government.”

In November 2022, the Guardian revealed that Barrowman was paid at least £65 million from PPE Medpro’s profits, then transferred £29 million to a trust set up to benefit Mone and his three adult children. Barrowman’s children are also beneficiaries of the trust, the couple told the BBC in a December 2023 interview.

In a statement on October 4, Barrowman’s spokesman harshly criticized PPE Medpro’s supply chain companies and said the executive could pursue legal claims against them. It is difficult to see the basis for this, given that PPE Medpro accepted the gowns five years ago and has always claimed that they comply with the DHSC contract. Barrowman describes PPE Medpro and its supply chain companies as a consortium.

Barrowman’s spokesman confirmed PPE Medpro’s profits, saying that in relation to the £203 million from the DHSC the company had paid £137 million to supply chain companies to source and purchase PPE, leaving Barrowman’s company with a profit of £66 million. PPE Medpro made a profit of £39 million from the contract for the never-used gowns, according to spokesman figures.

However, despite Barrowman making a lot from the PPE Medpro deals and the couple owning luxury yachts, private jets and prestigious properties in different locations over the years, there is no clear path for the government to recover even a penny after the verdict.

The Guardian asked the couple’s spokesperson this week: Barrowman had aimed to provide £122 million so that PPE Medpro could repay the DHSC. The spokesman responded: “We cannot comment on any matters directly related to PPE Medpro Ltd. This is not an attempt to evade your questions. PPE Medpro is currently in administration and only directors can comment on the company. To avoid any misunderstanding, it is vital to make clear that the case and subsequent decision is against PPE Medpro and not Mr Barrowman.”

The Guardian asked the spokesman to clarify whether this meant Barrowman and Mone did not intend to fund the £122 million return or repay any money taken from PPE Medpro profits. The spokesman replied: “That is absolutely not what was said in my statement and for you to come to that conclusion is a huge step and wrong. Let me be clear: ‘At no stage did we indicate that Mr Barrowman did not intend to make any payments to DHSC. We made it clear that we could not answer any questions about PPE Medpro.'”

The spokesman added: “Furthermore, you include Baroness Mone – why? She did not receive any money from the DHSC contract. Her involvement as a publicist was fully disclosed to DHSC… so to engage with her and suggest she should repay the money simply because she is married to Mr Barrowman is not only unfair but disingenuous and shows that you have a personal/public agenda against her.”

In a new statement sent on Friday evening, Barrowman’s spokesman said: “PPE Medpro’s consortium partners are prepared to engage in dialogue with the company’s directors to discuss a possible solution with the government.”

PPE Medpro is now bankrupt; It was placed under administration by Perree Ptc, a private trust company affiliated with Barrowman registered in the tax haven of the British Virgin Islands, which imposed a mortgage-style charge on the company. Barrowman’s spokesman did not respond to questions about Perree or the circumstances under which he placed the company into administration.

The whole legal basis of limited companies is to protect the people who invest the money from being personally liable for all their debts: to give limited liability to the owners. If Barrowman, who described himself as the ultimate beneficial owner of PPE Medpro in a 2023 BBC interview and made profits of £65 million, does not want to pay the DHSC, legal avenues for enforcing the decision appear difficult.

There are narrow circumstances in which a director or someone owes a debt; In this case, the government can get behind a company’s limited liability – “piercing the corporate veil” in legal terminology – and require payments from executives or shareholders.

“There is no clear and easy way to recover money from the people behind the company in this case,” commercial litigation partner Simon Walsh said. SA Lawin question. “Conditions for piercing the corporate veil could include a director proving that transactions were improper or fraudulent. This may not apply here, and investigating this would inevitably be costly, complex and time-consuming. There is then a risk of a major government victory.”

It appears that any process to repay the £122 million is separate from the National Crime Agency’s long-running investigation into PPE Medpro and whether Mone and Barrowman may have committed criminal offenses, including fraud by false representation in the procurement of contracts. The couple deny any criminal wrongdoing.

The NCA confirmed it began its investigation in May 2021, and in April the following year law enforcement raided the couple’s mansion in the Isle of Man and their home in London, as well as the PPE Medpro offices. In December 2023, Mone and Barrowman agreed to an order freezing assets worth £75 million, including bank accounts, wealth management accounts and shares held in companies that own luxury properties, following an application by the Crown Prosecution Service under the Proceeds of Crime Act.

The NCA did not provide details about how long this would take or when the CPS might decide whether any criminal charges would be laid. PPE Medpro’s lawyer, Charles Samek KC, complained during the high court hearing that the NCA investigation “has been going on for a long time and will seemingly never end” and “hangs like the sword of Damocles” over the company with “no progress in sight”.

In response to questions about how long the investigation took, the NCA said in a statement: “Investigations must follow all reasonable lines of inquiry. In serious economic crime investigations, these lines of inquiry can be incredibly complex. Ensuring that a thorough, independent and objective investigation is carried out can take considerable time.”

Reeves insisted the government was committed to recovering money lost in botched pandemic spending. Covid anti-fraud commissioner among other initiatives. But in the PPE Medpro case, there is a risk that a specialist legal team led by Paul Stanley KC will spend millions more to win a tough £122 million verdict that it cannot enforce. Government sources did not give any information about what it might do if the money is not paid by Wednesday.

DHSC refused to expand on comments made by health secretary Wes Streeting, who said on the day of the decision: “PPE Medpro must now repay £122 million to the government and taxpayers. My department will work closely with the directors of PPE Medpro Limited to recover whatever we can.”

Daniel Bruce, CEO of Transparency International, a key member of Transparency International UK Anti-Corruption Coalition One of the core participants in the Covid public inquiry into the pandemic contracts fiasco said: “The government appears to have few tools at its disposal to recover anything close to the £122 million that the high court has ordered PPE Medpro to pay back. The whole case is yet another indictment of the ‘VIP line’ and the flawed, wasteful supply of PPE during the pandemic.” stands.”

This saga of her Conservative colleague, her businessman husband, Johnson’s Tory government and multimillion-pound Covid contracts still has a ways to go.