Today is the High Court deadline for a company linked to Baroness Michelle Mone to repay £122 million for supplying faulty PPE at the height of the pandemic, with no indication the Department of Health and Social Care (DHSC) will be paid in full.
PPE Medpro, the company founded by her husband Doug Barrowman and introduced by the Conservative peer into a “VIP lane” for providers, has until 16 hours to make payment.
While Mr Barrowman described himself as the “ultimate beneficial owner” of PPE Medpro and said £29 million of profits from the transaction were paid into a trust for the benefit of his family, including Baroness Moné and his children, he has never been a director and the couple are not personally responsible for the money.
PPE Medpro filed its insolvency file the day before Judge Cockerill’s conclusion of breach of contract has been published and the company’s most recent accounts show assets of just £666,000.
Receivers will now be tasked with recovering as much money as possible on behalf of creditors, primarily DHSC.
Last week, Mr Barrowman’s spokesperson said PPE Medpro’s “consortium partners” were “ready to enter into dialogue with the company’s directors to discuss a possible settlement with the government”.
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The PPE scandal surrounding Michelle Mone explained
Baroness Mone recommended the firm, led by her husband Doug Barrowman, to ministers. Photo: PA
Sky News understands the consortium met last week and contacted administrators to ask them to facilitate a negotiation with the government.
Mr Barrowman’s spokesman did not say how much they would be prepared to offer as a settlement, but in June PPE Medpro offered to settle the case for £23m.
The DHSC rejected this offer, but as the company is in administration and opportunities to recover funds are potentially limited, there is a risk that the government will recover nothing and incur additional legal costs.
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What happened during the pandemic?
In June 2020, PPE Medpro won contracts worth a total of £203 million to supply 210 million masks and 25 million surgical gowns after Baroness Mone contacted ministers, including Michael Gove, on behalf of the company.
While the £81 million mask contract was fulfilled, the gowns were rejected for failing to meet sterility standards and, in 2022, the DHSC took legal action. Earlier this month, Judge Cockerill ruled that PPE Medpro was in breach of contract and required to repay the full amount.
Mr Barrowman has previously named several other companies in connection with the supply of dresses, including two registered in the UK, and last week his spokesman said there was a “strong case” for the administrator to pursue them for the money.
One of the companies cited denied any connection with PPE Medpro and two others did not respond to requests for comment.
What could the government do about this?
Insolvency experts say administrators and creditors, in this case the government, may have some recourse to pursue individuals and entities beyond the responsible company, but any process is likely to be lengthy and costly.
Julie Palmer, partner at Begbies Traynor, told Sky News: “Administrators will want to examine what happened to what appears to be significant profits made on these contracts.
“If I looked at this, I would want to establish the exact timeline, when the profits were withdrawn.
“They may also want to consider whether there is an unlawful trading claim, as this effectively pierces the veil of protection of a limited liability company and may allow prosecution of the company’s directors personally.
“A director’s network may also be extended to shadow directors, people sitting in the background who clearly have some control over the management of the company, in which case certain claims may be made against them.”
A spokesperson for Forvis Mazars, one of the co-administrators of PPE Medpro, made no comment other than to confirm the firm’s appointment.
The DHSC has been contacted for comment.