The Government has vowed to pursue a company linked to Baroness Michelle Mone over millions of pounds paid for faulty PPE at the height of the COVID pandemic after a High Court deadline passed without a refund.
Earlier this month the High Court ruled that PPE Medpro, a company founded by Baroness Mone’s husband Doug Barrowman and promoted to government by the Conservative peer, was in breach of contract and gave it two weeks to repay the £122m plus interest of £23m.
In a statement, Health Secretary Wes Streeting said: “At a time of national crisis, PPE Medpro sold the previous government’s substandard kits and pocketed taxpayers’ hard-earned money.
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“PPE Medpro has missed the payment deadline – they still owe us over £145 million, with interest now accruing daily.”
It is understood that the rate is 8%.
“We will pursue PPE Medpro with everything we have to put these funds where they belong – in our NHS,” Mr Streeting concluded.
Earlier, a spokesperson for Mr Barrowman and the consortium behind the company said the government had not responded to an offer from PPE Medpro to discuss a settlement.
“It is very disappointing that the government has made no effort to respond or seek to engage in discussions,” he said.
During the trial, PPE Medpro offered to pay £23 million to settle the case, but was rejected by the Department of Health and Social Care.
Although Mr Barrowman has described himself as the “ultimate beneficial owner” of PPE Medpro and claims that £29m of profits from the deal went to a trust for the benefit of his family, including Baroness Mone and her children, he has never been a trustee and the couple are not personally responsible for this money.
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£122m bill that may never be paid
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.
With PPE Medpro under administration and potentially limited means to recover funds, there is a risk that the government will recover nothing while incurring additional legal costs.
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 was required to repay the entire amount.
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Baroness Mone ‘should resign’
Mr Barrowman has previously named several other companies involved in 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.
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.