Why was a ‘luxe’ firm £9,000 in debt given a £26m PPE contract?

·7-min read
<p>Face mask deals: Covid nurses changing their PPE</p> (PA)

Face mask deals: Covid nurses changing their PPE

(PA)

On April 28 last year, as the Government scrambled to source personal protective equipment, the Department of Health and Social Care (DHSC) agreed to pay a tiny company called Luxe Lifestyle Ltd

£25.8 million for the delivery of 10 million FFP2/KN95 face masks and 1.2 million gowns. On the face of it, this deal — fast-tracked through the Government’s “high priority VIP lane” — made no sense at all. Luxe Lifestyle was a recently-formed company with no staff and no experience in buying and selling PPE. Accounts filed at Companies House show it to have negative equity of £9,017. It is a micro entity with one director and no official trading history.

The very next day, on April 29, DHSC bought another 200 million face masks, this time contracting to pay £252.5 million to Ayanda Capital, a Tory party-linked firm also bumped into the VIP lane despite having no previous PPE experience. It is an investment company specialising in currency trading, offshore property and private equity.

Each contract raises questions, but a little digging reveals something distinctly curious. It turns out that there is a historic link between the family running Luxe Lifestyle and the one behind Ayanda. The latter is run by Tim Horlick and his son-in-law Nathan Engelbrecht, 38.

Luxe Lifestyle is owned by Karen Brost Whyte, 52, an American-born, London-based fashion designer who in 2008 briefly made a name for herself by designing “power woman outfits” that featured in Vogue and were said to be popular with Hollywood stars. Ms Brost Whyte is married to financier Timothy James Whyte, 46.

Karen Brost WhyteES Published Images
Karen Brost WhyteES Published Images

Back in 2017, it emerges that Mr Whyte and Mr Engelbrecht were both shareholders and directors of a company called Times Place Brasseries Ltd. According to Companies House, Mr Engelbrecht and his mother-in-law Nicola Horlick are still significant shareholders, although no longer directors. Times Place Brasseries was crowdfunded with around £150,000 in 2013 on the back of Ms Horlick’s plan to buy out and run a restaurant in Chiswick.

We asked DHSC whether it was aware of this family connection between Luxe Lifestyle and Ayanda Capital at the time the contracts were signed and, if not, whether such knowledge would have caused alarm bells to ring. DHSC declined to address this or to answer further questions about why Luxe Lifestyle won a contract.

A spokesman, referring to the case brought in the High Court by the Good Law Project and EveryDoctor to challenge several PPE contracts, including Ayanda Capital’s, said: “We do not comment on ongoing legal proceedings.”

Nathan EngelbrechtPA
Nathan EngelbrechtPA

So did Ayanda and Luxe work together to secure their contracts or is it just a coincidence? An Ayanda Capital spokesman said: “There is no relationship between Luxe Lifestyle and Ayanda Capital and neither party offered or accepted any assistance from the other in relation to PPE contracts. The principals of Ayanda, Tim Horlick and Nathan Engelbrecht, were not aware Luxe Lifestyle had bid for business with DHSC until their contract was publicised in August 2020 and a mutual acquaintance mentioned this in passing.”

A spokesman for Luxe Lifestyle said it “was not aware of the existence of Ayanda Capital, or its operations at the time of the PPE contract award from the DHSC. Luxe Lifestyle has never communicated with Ayanda Capital on PPE or any other business venture”.

The bigger question remains. Why did DHSC prioritise two companies with no PPE experience and hand them contracts collectively worth almost £280 million? Ayanda’s links to the VIP lane have been well publicised. We know that Andrew Mills — an adviser for Ayanda and formerly one of 12 advisers to the Board of Trade within the department run by International Trade Secretary Liz Truss — was a fixer for the Ayanda deal. Greg Hands, a minister in Ms Truss’s department is also mentioned in court papers as having “involvement” in the deal. We approached Mr Hands for comment and a Department for International Trade spokesman confirmed that although correspondence between Mr Hands and Ayanda had emerged as part of the High Court hearing, it was standard practice for Mr Hands to engage with, and support stakeholders to promote UK trade.

Ayanda Capital has previously said it was not aware of a high priority lane. It is still unknown who manoeuvred Luxe Lifestyle into the VIP lane. High Court papers mention that Luxe Lifestyle was “processed through the VIP channel” after being “referred by an MP” whose name has remained secret. Investigations by the Evening Standard point to the Luxe Lifestyle link to the VIP lane as being via officials in the Cabinet Office. A Cabinet Office spokesman declined to confirm or deny this and deferred instead to the “no comment” from DHSC as buying agent. Campaigners have called on the Government to name all 47 companies that “queue jumped” via the VIP lane and secured Covid contracts worth £1.7 billion, as well as the source of the referrals. Only a handful of these firms have so far been identified.

The vast majority of VIP contracts were overseen by the DHSC, headed by Matt Hancock. Last month, he was ordered by a judge to hand over his texts and WhatsApp messages relating to the establishment of the VIP lane and to the selection of suppliers.

A summary of a government internal audit agency document disclosed in court papers reveals further that there were deep misgivings inside DHSC about Luxe Lifestyle and that this led to “further due diligence after the contract had been signed” which caused the contract to be flagged “Red”. The papers note: “The company was only established in 2018 and had only filed abbreviated accounts which gave limited information on the company’s financial viability.” Despite this, the contract was approved, although the upfront payment was halved to £12.8 million due to nervousness inside DHSC.

Liz TrussPA
Liz TrussPA

This payment in turn “alarmed the bank who immediately put it on hold and notified the police”, with payment “subsequently cleared”.

Luxe Lifestyle — a company with no website, no apparent trading platform and no telephone or email contact details — had somehow overcome the red flag thrown up by the internal auditors and bagged itself a contract worth £25.8 million.

There is no evidence of any wrongdoing by Luxe Lifestyle or Ayanda Capital. The National Audit Office (NAO) found that ministers were not involved in PPE procurement decisions or contract management. The NAO also said all offers to supply PPE went through the same assurance process, including quality checks and price controls.

What do we know about Luxe Lifestyle and the family that run it? Mr Whyte is a former Goldman Sachs commodities trader who in 2008 joined Bevan Howard Asset Management, one of the largest hedge fund firms in Europe. He later co-founded his own $100 million natural resources hedge fund, Lodestone Natural Resources.

Karen Brost Whyte’s LinkedIn page lists six enterprises she has been involved with over the years, but makes no mention of Luxe Lifestyle. Her latest venture is the website ZaZaBoom, founded in March 2020, which sells designer rugs, cushions and throws and pledges to donate a portion of profits “to support charities in crisis” — although no charity beneficiaries are named.

Greg HandsPA
Greg HandsPA

In publicity linked to her LinkedIn page, she says this fundraising effort was inspired by the family raising £10,000 in public donations from making and selling designer face masks. She says the funds raised were used to buy “2,600 surgical gowns and 4,500 K95 respirator masks” for “frontline NHS heroes”. Her Instagram account has daily updates of this charitable drive and includes video pleas from her nine-year-old daughter Coco for people to give generously — including one such plea the very day after Ms Brost Whyte secured the £25.8 million contract with the Government.

A Luxe Lifestyle spokesman told the Standard: “Luxe Lifestyle acted as agent and contracting party between [Chinese supplier] Shanghai Nutextra and DHSC due to contracting difficulties for new overseas suppliers at the time of the purchase order award.

“Full disclosure of our supply chain was provided to DHSC as part of the due diligence. Our contract was completed ahead of time and to contract specification.”

Ayanda Capital told the Standard its owners made £17 million net profit from their PPE deal. Luxe Lifestyle declined to divulge its profit but said it was modest and in keeping with their position as an agent.

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