Court papers reveal a private WhatsApp group of CEOs and a similar group for leading procurement executives were used to line up deals for PPE.
Offers that entered the “VIP Lane” - for firms with political connections - were responded to “within the hour”, internal emails reveal.
However a report on April 20, 2020 stated: “VIP escalation is obstructing progress of more viable opportunities for large/scalable manufacturers.”
The details emerged today at the latest hearing of the Good Law Project’s challenge to Health Secretary Matt Hancock over PPE deals struck with PestFix, Ayanda Capital, and Clandeboye.
Trade minister Greg Hands is said to have had “involvement” in the contract award to Ayanda, a hedge fund with ties to the Conservative Party.
Court papers today confirmed for the first time that Clandeboye used the VIP Lane along with PestFix and Ayanda, while the names of three other companies who benefited were also revealed.
Clothing manufacturer Meller Designs, Luxe Lifestyle – trading in ‘specialised design activities’ – and P14 Medical were all given priority access to government deals in the early stages of the pandemic.
The new details were contained in internal government audit of the workings of the VIP Lane, prepared for the Cabinet Office in September last year.
The report said an unnamed MP had been copied into emails from Clandeboye, as it agreed to deliver a £107.5 million contract for 25.6m gowns. The company is registered as a “wholesaler of sugar, chocolate, and sugar confectionary”, and was given an ‘amber’ rating by the audit “over its financials and liquidity”.
P14 Medical, run by a Conservative councillor from Stroud, won a £156.2m contract for medical gowns in June last year, after being recommended by a government official from the Department for Business, Energy, and Industrial Strategy.
Meller Designs Limited, which is run by Conservative donor David Meller, secured a £65.8 million contract for masks through the VIP Lane.
And the report noted that the contract won by Luxe Lifestyle Ltd, despite the firm’s small size and lack of experience in PPE production, had featured in the media.
A due diligence check was carried out on the deal, returning a ‘red’ rating, after the £25.7m contract for masks and gowns had been signed last April.
Jason Coppel QC, representing the Good Law Project, today demanded that the government “put its cards on the table” by revealing the internal discussions over the VIP Lane, relevant messages from the WhatsApp groups, and ministerial messages relating to the contracts.
“Certain suppliers were informed of certain opportunities that others aren’t,” he said.
Mr Coppel said messages would “shed light on what ministers and officials believed at the time to be the purpose, intended operation and effect of the VIP lane”.
But he told the court in written arguments: “Not a single text message has been disclosed by the defendant in these proceedings.”
He continued: “It appears that the defendant used a WhatsApp group of 200 CEOs, and another WhatsApp group for CPOs (chief procurement officers), in order to provide special communications - apparently unavailable to other suppliers - about its forecast PPE requirements.”
He added: “It seems highly likely that there would have been communications with Ministers regarding the establishment and intended and actual operation of the VIP lane, and potentially also in relation to the particular contracts in issue.
“For example, there is a reference in the Ayanda disclosure to the involvement of Greg Hands, minister in the Department for International Trade, and the very purpose of the VIP lane included progressing offers from suppliers who had been referred by Ministers and the Secretary of State himself.”
PestFix, a family-run firm from West Sussex, was awarded six contracts by the government, Ayanda landed one, and Northern Irish confectionary firm Clandeboye received two deals.
Mr Coppel said evidence in the case shows that officials “dedicated to ‘VIPs’ usually responded to VIP offers ‘within the hour’, which contrasts starkly with non-VIP offerors who received no response, or a long-delayed response, to their offers, and tends to suggest that the defendant dedicated proportionately more resources to VIP offerors than to non-VIP offerors.”
The Good Law Project says £209 million worth of masks, provided by Ayanda and PestFix, were later deemed “unusable” by the NHS, as they did not meet the required specifications including having head straps instead of ear loops.
In its statement to the High Court, PestFix says it “met in full the technical specifications for the goods PestFix contracted to supply”, while Ayanda insists its contract “has been fully performed”.
The Good Law Project argues it is relevant to explore the alleged failure of the contracts when investigating whether the deals were properly entered into by the government.
“There has been a repeated pattern of obfuscation, delay, denial, wait and see, failure to provide, and now we are told it is too late,” said Mr Coppel, of efforts to see the undisclosed material.
The Department of Health is defending the legal claim, and says the VIP Lane was “widely advertised across government as a way of more quickly triaging offers of support”.
It contends the deals were entered into lawfully.
A National Audit Office (NAO) investigation found no evidence that ministers were involved in procurement decisions or contract management, and said many VIP Lane leads came from opposition MPs and Peers.
The NAO also said all offers to supply PPE went through the same assurance process, quality checks, and price controls.
This afternoon Mrs Justice O’Farrell ruled that the government must search material including WhatsApp and text messages from late March and April last year on the devices of seven officials involved in PPE procurement and the VIP Lane.
She refused to order a wider search of internal government communications, but said documents relating to ministers’ knowledge of how PPE was being sourced should be disclosed.
“The instructions, directions, and decisions by ministers or the Secretary of State as to the establishment and criteria for selecting potential suppliers for the high-priority lane is a material issue in this judicial review”, she said.
“It would be reasonable, necessary, and proportionate to ensure that the defendants had carried out a sufficient search for that category.”