The Government has vowed to pursue a company linked to Baroness Michelle Mone for millions of pounds paid for defective PPE at the height of the COVID pandemic after a High Court deadline passed without repayment.
Earlier this month, the High Court ruled that PPE Medpro, a company founded by Baroness Mone’s husband Doug Barrowman and promoted in government by the Tory peer, was in breach of contract and gave it two weeks to repay the £122m plus interest of £23m.
In a statement, the Health Secretary Wes Streeting said: “At a time of national crisis, PPE Medpro sold the previous government substandard kit and pocketed taxpayers’ hard-earned cash.
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“PPE Medpro has failed to meet the deadline to pay – they still owe us over £145m, with interest now accruing daily.”
It is understood that is being charged at a rate of 8%.
“We will pursue PPE Medpro with everything we’ve got to get these funds back where they belong – in our NHS,” Mr Streeting concluded.
Earlier a spokesman 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.
“Very disappointingly, the government has made no effort to respond or seek to enter into discussions,” he said.
During the trial PPE Medpro offered to pay £23m to settle the case but was rejected by the Department of Health and Social Care.
While Mr Barrowman has described himself as the “ultimate beneficial owner” of PPE Medpro, and says £29m of profit from the deal was paid into a trust benefitting his family including Baroness Mone and her children, he was never a director and the couple are not personally liable for the money.
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£122m bill that may never be paid
PPE Medpro filed for insolvency the day before Mrs Justice Cockerill’s finding of breach of contract was published, and the company’s most recent accounts show assets of just £666,000.
Court-appointed administrators will now be responsible for recovering as much money as possible on behalf of creditors, principally the DHSC.
With PPE Medpro in administration and potentially limited avenues to recover funds, there is a risk that the government may recover nothing while incurring further legal expenses.
In June 2020, PPE Medpro won contracts worth a total of £203m to provide 210m masks and 25m surgical gowns after Baroness Mone contacted ministers including Michael Gove on the company’s behalf.
While the £81m mask contract was fulfilled the gowns were rejected for failing sterility standards, and in 2022 the DHSC sued. Earlier this month Mrs Justice Cockerill ruled that PPE Medpro was in breach of contract and liable to repay the full amount.
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Baroness Mone ‘should resign’
Mr Barrowman has previously named several other companies as part of the gown supply 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 named has denied any connection to PPE Medpro and two others have not responded to requests for comment.
Insolvency experts say that administrators and creditors, in this case the government, may have some recourse to pursue individuals and entities beyond the liable company, but any process is likely to be lengthy and expensive.
Julie Palmer, a partner at Begbies Traynor, told Sky News: “The administrators will want to look at what’s happened to what look like significant profits made on these contracts.
“If I was looking at this I would want to establish the exact timeline, at what point were the profits taken out.
“They may also want to consider whether there is a claim for wrongful trading, because that effectively pierces the corporate veil of protection of a limited company, and can allow proceedings against company officers personally.
“The net of a director can also be expanded to shadow directors, people sitting in the background quite clearly with a degree of control of the management of the company, in which case some claims may rest against them.”
A spokesman for Forvis Mazars, one of the joint administrators of PPE Medpro, did not comment other than to confirm the firm’s appointment.
