COVID 19: Businessman was paid £21m of taxpayer cash for securing NHS PPE

The case has raised concerns about the vast sums of money involved. 

By investigative reporters at The Guardian

A Spanish businessman was paid more than $28m (£21m) in taxpayers’ money to act as a middleman in the sale of personal protective equipment to the UK government by a Florida-based jewellery designer, according to a US court document.

The document, filed in Miami, states that Gabriel González Andersson stood to earn a further $21.3m in consulting fees, also to be borne by UK taxpayers, for three more PPE contracts between the company Saiger and the government. Saiger was set up this year by Michael Saiger, the owner of the jewellery company Miansai, in response to the coronavirus pandemic.

In May, Saiger, whose jewellery is sold in more than 35 countries, told the Council of Fashion Designers of America that Miansai’s business had slowed. He said: “I am spending my days procuring PPE supplies for local charities, shelters and governments.”

The US court case concerns a dispute between Saiger and Andersson relating to three further contracts agreed in June to supply millions of gloves and gowns to the UK, under which Andersson was to be paid an additional $21.3m in fees.

The contracts signed between Saiger and Andersson specified that he would provide services including “sourcing the manufacturer, due diligence and coordinating logistics”.

The details raise fresh concerns about the vast sums of money the UK government has paid during the coronavirus crisis to private companies. PPE contracts signed with other companies, include one worth £252m signed in April with Ayanda Capital, which describes itself as specialising in currency trading and offshore property, and 11 with Pestfix, primarily a pest control business.

Separately, in the UK, Good Law Project and EveryDoctor launched legal proceedings on Tuesday against the Department of Health and Social Care (DHSC) over the award of PPE contracts worth more than £250m in total to Saiger.

One of the contracts, entered into on 4 June for £70.5m of gowns (of which $16m was due to go to Andersson according to the US document) was for the supply of 10.2m gowns, approximately the entire number of gowns used by NHS England for the duration of the coronavirus pandemic, but was offered without any advertisement or competitive tender process, the claimants say. They also allege that the government overpaid Saiger for gowns under this contract, relative to the prevailing market price.

Jolyon Maugham QC, director of Good Law Project, said: “At last we can all see – in simple black and white – the staggering sums flowing from public coffers to private pockets. Who could blame individuals for joining the queue if government is handing out free money? But you and I – and our children – are going to have to pay higher taxes because government’s incompetence handed fortunes big enough to last generations to obscure foreign businessmen.

Dr Julia Patterson, of the campaign group EveryDoctor, said: “It is quite simply heartbreaking to NHS staff to see this mismanagement of public funds exposed.”

The claimants say notices of the contracts were not published until five months after the contracts were awarded, in breach of the law which requires government to make the details available within 30 days. The measures are designed to reduce the risk of fraud and improve value for money by allowing proper scrutiny of how taxpayer cash is spent.

A DHSC spokesperson said: “Proper due diligence is carried out for all government contracts, and we take these checks extremely seriously.”

Andersson’s lawyer, Jonathan Morton, declined to comment on the US proceedings when contacted by the Guardian.

The government cannot say they did not know this kind of thing was happening. FOUR MONTHS AGO, The Guardian’s George Montbiot told that newspaper’s readers exactly what was happening with bucketsful of taxpayers’ money.

He wrote:  This stinks. It stinks worse than any of the other carrion this government has buried. Every day for the past fortnight, I’ve been asking myself why this scandal isn’t all over the front pages. Under cover of the pandemic, the government has awarded contracts worth billions of pounds for equipment on which our lives depend, without competition or transparency. It has trampled on its own rules, operated secretly and made incomprehensible and – in some cases – highly questionable decisions.

Let’s begin with the latest case, unearthed by investigative journalists at the Guardian and openDemocracy. It involves a contract to test the effectiveness of the government’s coronavirus messaging, worth £840,000. It was issued by the Cabinet Office, which is run by Michael Gove. The deal appears to have been struck on 3 March, but the only written record in the public domain is a letter dated 5 June, retrospectively offering the contract that had already been granted. There was no advertisement for the work, and no competition. No official notice of the award has yet been published. The deal appears to have been done with a handshake and a slap on the back.

In response to these latest revelations, the government claims it had to override the usual rules for public procurement because it was responding to an emergency. There are several problems with this claim. The first is that six weeks elapsed between the government’s first recognition that coronavirus presented a potentially serious public health risk and striking the deal with Public First. The second is that, of the four contracted services later listed on the government’s website, two were not for testing the government’s coronavirus messaging at all, but for “EU exit comms”: in other words, Brexit. The coronavirus work, according to this list, did not begin until 27 May. The Cabinet Office now claims that when it said “EU exit”, it meant coronavirus. This seems an odd mistake to make.

The third problem is that the government’s communications on the pandemic have been disastrous. Did it choose to ignore Public First’s “emergency” work, or was it of little value?

On Friday, the Good Law Project (GLP) issued proceedings in the high court against Gove, alleging breaches of procurement law and apparent bias in the granting of the contract to his longstanding associates. It is crowdfunding the challenge.

But this, extraordinary as it is, is not the strangest of the cases the GLP is taking on. Another involves a pest control company in West Sussex called PestFix, which, according to the GLP, has listed net assets of only £18,000. On 13 April, again without public advertisement or competition, the government awarded PestFix a £32m contract to supply surgical gowns. PestFix is not a manufacturer, but an intermediary (its founder calls it a public health supply business): its role was to order the gowns from China. But, perhaps because of its lack of assets, the government had to give it a deposit worth 75% of the value of the contract. The government’s own rules state that prepayments should be made only “in extremely limited and exceptional circumstances”, and even then must be “capped at 25% of the value of the contract”.

If the government had to provide the money upfront, why didn’t it order the gowns itself? And why, of all possible outsourcers, did it choose PestFix? In the two weeks before it awarded this contract, it was approached by 16,000 companies offering to supply personal protective equipment (PPE). Some of them had a long track record in manufacturing or supplying PPE, and had stocks that could be deployed immediately.

The face of a nurse after doing a shift wearing a mask  on the frontline in an intensive care unit treating Covid patients.

Again, the government relies on the emergency defence to justify its decision. But it issued its initial guidance on preventing infection among health and care workers on 10 January. On 14 February, it published specific guidance on the use of PPE. So why did it wait until 13 April to strike its “emergency” deal with PestFix? Moreover, it appears to have set the company no deadline for the delivery of the gowns. Astonishingly, even today only half of them appear to have reached the UK, and all those are still sitting in a warehouse in Daventry. On the government’s own admission, “none of the isolation suits delivered so far has been supplied into the NHS”. So much for taking urgent action in response to the emergency.

Again, the contract is surrounded by secrecy. Crucial sections, such as the price paid for the gowns, have been redacted. Bizarrely, the award notice initially stated that the contract was worth £108m. But in responding to the lawsuit, the government now says the real value is £32m. Apparently, it struck “further contracts” with PestFix for other items of equipment. It has so far failed to reveal what these might be, or to publish the contracts. It is worth remembering that while all this was happening, frontline health and care workers were dying as a result of inadequate supplies of PPE.

There are plenty of other cases: such as the employment agency with net assets of £623 that was awarded an £18m government contract to supply face masks; the confectionery wholesaler that according to the GLP was given a £100m contract to supply PPE; and the £250m channelled through a “family office” registered in Mauritius, specialising in currency trading, offshore property and private equity, also to supply protective medical equipment. Altogether, billions of pounds’ worth of contracts appear to have been granted, often to surprising companies, without competition. I think we may reasonably ask what the hell is going on.

This is not just about value for money, important as that is. Transparent, competitive tendering is a crucial defence against cronyism and corruption. It is essential to integrity in public life and public trust in politics. But the government doesn’t seem to care. As the scandal over Cummings’ trip to Durham shows, its strategy is to brazen out disgrace until public outrage subsides. We know it cheats and lies. It knows that we know, and it doesn’t care.

But these things matter. People die when the government gets them wrong. Our challenge is to discover how to make them count.

 George Monbiot is a Guardian columnist

One comment

  1. Quite frankly does anyone care how much public money is glad handed by the Tories to their chums.

    Most certainly not unfortunately the majority of Democrat readers. Apathy is the poverty that feeds the masses, keeps them nurtured. Why would anyone bother.

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