Senior officials were “hounding” colleagues over the approval of a PPE supply contract worth a quarter-of-a-billion pounds to a hedge fund with “close ties” to the government, the High Court has heard.
The Good Law Project and EveryDoctor are bringing legal action against the Department of Health and Social Care (DHSC), claiming that contracts awarded to PestFix, Clandeboye and Ayanda Capital were given unlawfully at the height of the first wave of the coronavirus pandemic in April and May 2020.
The two groups allege DHSC has failed to provide proper reasons for why the contracts were awarded and say the Government violated principles of equal treatment and transparency when making the deals worth more than £700 million.
Jason Coppel QC, for the groups, said millions-of-pounds-worth of equipment that was “useless to the NHS” was purchased, without proper technical checks, at inflated prices.
“The outcome of all of this was a truly tragic waste of public money,” he told the court previously.
A large part of the Good Law Project and EveryDoctor’s claim is that the use of a “VIP lane” gave an unfair, unlawful advantage to some companies.
Coppel said Ayanda Capital, described as a small private equity, trading and asset management company with no experience in supplying goods “of any kind”, had net assets of £1.8 million before it was awarded a contract worth £252.5 million.
The barrister claimed Andrew Mills, a former member of the UK Board of Trade and representative for Ayanda, was added to the VIP lane when he contacted a senior official at the Department for International Trade (DIT).
Coppel said pressure was put on a member of the VIP lane team to manage it as quickly as possible, with an email from an unnamed person stating: “This is likely to get escalated to ministerial level in next 20 mins or so.”
“She was threatened with escalation very quickly and sends the Ayanda offer to (the) technical assurance (team),” Coppel said.
Emails with subject lines which read “Very urgent VIP escalation” and “Urgent VIP case” were sent from the VIP lane team to the technical assurance team, court documents show.
The barrister later said a senior official was “hounding” the technical assurance team about the contract.
Court documents show that other staff described the contract as a “big opportunity”, adding: “Our contact has close ties to DIT so it wouldn’t be a good outcome.”
The court also heard that a Cabinet Office official raised concerns two days before the contract was signed in April 2020, rating the company as “red” due to a lack of financial information.
“Ayanda failed the financial due diligence. It was not necessarily fatal but at that point it had failed and further steps needed to be taken to resolve concerns before contracting with Ayanda,” Coppel said.
Natwest, DHSC’s bank, “was so concerned by the advance payment to Ayanda that it tried, unsuccessfully, to stop it”, the barrister added.
In an email seen in court, one official said: “Shit hit the fan … due diligence hadn’t been carried out on Ayanda … there are a lot of people covering there (sic) own arses … I think something went wrong!!! Big style!”
Coppel concluded: “The accounting officers who approved a quarter-of-a-billion-pound contract did not have the relevant information in front of them.”
The barrister added that decision-making officials were not aware that some of the PPE being purchased was made at a factory with previous concerns about quality.
He said: “There was a large prepayment being made and one would have thought that the accounting officer would have been interested to know that it was being made at a factory with recent stains on its record.”
The court also heard about some of the technical faults in the PPE itself.
Coppel said that PestFix’s agent in China had secured surgical gowns by bribing local officials.
These gowns were contracted by the government at a price of £945,000 and were not reviewed by the technical assurance team, the barrister claimed.
He said: “They should have failed technical assurance and the accounting officer was not told as much as he should have been.
“In terms of the balance of risk, meeting an urgent need with gowns that have not been tested for flammability was potentially counterproductive.
“As to what happened to those gowns, we would expect they have not been used.”
But a number of the gowns had been “lost in the system”, Coppel said, meaning that it was not known whether they were used or not.
The case, which is being heard remotely by Mrs Justice O’Farrell, is expected to end on Tuesday.