Revealed: the full inside story of the Michelle Mone PPE scandal

On the sunny spring evening of 7 May 2020, in the lethal first wave of the Covid pandemic, the Conservative peer Michelle Mone and her husband, Douglas Barrowman, had themselves filmed for Instagram. Standing between the stone pillars at the front door of their mansion on the Isle of Man, they clapped for NHS staff, carers and other key workers, as they did weekly from different parts of their Ballakew estate.

“As always, Doug and myself would just like to say a massive thank you tonight to everyone … that are keeping the country going,” Lady Mone posted. “We appreciate each and every one of you.”

Two years later, officers from the National Crime Agency (NCA) were investigating PPE Medpro, a company that received more than £200m of government Covid contracts weeks after Mone referred it to ministers.

The Ballakew estate, a nine-bedroom property nestled amid 154 acres of manicured grounds, with a spa, tennis court and helipad, was one of several places raided on 27 April this year as part of the NCA’s inquiry into potential fraud by PPE Medpro.

Lawyers for PPE Medpro have declined to comment on the NCA investigation, which is continuing. However, this week the company was at the centre of a political storm.

The prime minister, Rishi Sunak, said he was “absolutely shocked” by a bombshell report published by the Guardian two weeks ago revealing that Mone and her husband secretly received tens of millions of pounds originating from PPE Medpro’s profits, according to bank documents.

MPs voted to force Sunak’s government to release documents relating to PPE Medpro, which Mone had helped to secure a place for on a “VIP” lane that the government used to prioritise politically connected suppliers at the start of the pandemic.

Meanwhile, the Guardian revealed that Mone had been “aggressively’” lobbying ministers on behalf of a second company, LFI Diagnostics, which was another secret entity of her husband’s family office in the Isle of Man.

Now, the Guardian can reveal previously unreported details about the PPE deal at the heart of the Mone controversy and the enormous profits it appears to have generated – mostly on the back of supplies that have been rejected by the Department of Health and Social Care (DHSC) in a dispute with the company.

Mone, Barrowman, PPE Medpro and three other intermediary companies in the supply chain appear to have made in excess of £100m in profits from government contracts worth £203m, according to a Guardian analysis.

It is a business chain that stretches from the Isle of Man to Cyprus, Hong Kong and then China, and it resulted, it seems, in vast fortunes that were moved offshore.

The string of revelations appears to have taken its toll on Mone, who announced this week that she was taking a leave of absence from the House of Lords with immediate effect – according to her spokesperson, “in order to clear her name of the allegations that have been unjustly levelled against her”.

The only speck of good news for the peer this week appears to have come in the 1.17pm race at Newcastle on Thursday, won by Monbeg Genius, a horse she bought for her husband as his “second wedding gift”.

The six-year-old gelding, bought for £80,000, was one of a number of acquisitions that Mone and her husband made in the months after they secretly received at least £65m from profits originating from PPE Medpro. In a change of direction, several of those assets are now for sale.

In March 2020, when the horror of the pandemic was setting in and the government began frantically trying to fill PPE stockpiles that had been allowed to dwindle dangerously low, normal requirements that public contracts must be competitively tendered were abandoned.

The DHSC would end up spending £12bn on PPE, much it acquired via the “VIP” lane, which prioritised contracts for companies recommended by MPs, peers and other politically connected people.

It was the day after Mone and Barrowman filmed themselves clapping for the NHS, on 8 May 2020, that Mone wrote an email to her fellow Tory peer Theodore Agnew, then a minister in charge of procurement, copying in Michael Gove, at the time the Cabinet Office minister. For both, she used their private email addresses.

Mone, who was appointed to the House of Lords by David Cameron in 2015, explained that she could supply PPE “through my team in Hong Kong”. She appeared to have already communicated with Gove about this offer.

PPE Medpro had at that stage not even been incorporated as a company in the UK. But Lord Agnew’s officials added Mone’s offer to the “VIP” lane. Within weeks, the government had awarded PPE Medpro two huge contracts. In the first, the DHSC committed £80.85m for the supply of 210m face masks. The second involved paying £122m for 25m sterile surgical gowns.

Back then, there were some clues that PPE Medpro was linked to Mone and her husband. The company’s directors, Anthony Page and Voirrey Coole, both work in senior roles for Barrowman’s Knox group, a collection of Isle of Man-based financial services firms. Page had a connection to Mone too, as the registered secretary of her personal brand company, MGM Media. Curiously, he stood down from that role on the same day that PPE Medpro was incorporated, 12 May 2020.

Page worked for the Knox House Trust, which has two divisions. One provides offshore wealth management services to high net worth clients. The second, which was run by Page, is Barrowman’s “family office”, also known as the Knox family office, which oversees his and his family’s financial affairs.

This week it emerged that Page is the person who prepared a key document seen by the Guardian that lists PPE Medpro and LFI Diagnostics as “entities” of the Barrowman’s family office.

However, in 2020 the links between PPE Medpro, Mone and Barrowman were not fully known. And they were denied, dismissed or downplayed by lawyers representing all three parties. Asked about PPE Medpro, lawyers for Mone and Barrowman insisted the couple were not involved and had “no role or function in PPE Medpro, nor in the process by which contracts were awarded to PPE Medpro”.

Deploying the language of aggressive legal threats, Mone’s lawyers have repeatedly denied that she was “connected in any way” to the business. One said in December 2020 that “any suggestion of an association” between Mone and PPE Medpro would be inaccurate, misleading and defamatory.

That same month, Page, in his capacity as PPE Medpro’s director, gave a fuller account of the mysterious company, and denied that it had been awarded contracts because of connections with the government or the Conservative party.

He said the “group behind” PPE Medpro had set up the new UK-registered company “solely to supply the NHS and in order to pay UK tax”.

In a press release, Page added that PPE Medpro comprised “a consortium of successful entrepreneurs” who had “in excess of 40 years’ combined experience in the supply and provision of medical supplies”. The UK government had “requested assistance” from this group, he added, to protect the country from “counterfeit or unreliable products” and to avoid “grossly inflated prices from numerous opportunist operators”.

One person with detailed knowledge of the PPE Medpro operation told the Guardian more than a year ago that Page’s press release was misleading. They said: “As far as I knew of the people involved in the supply chain for PPE Medpro’s contracts with the DHSC, they had zero experience of PPE before the pandemic.”

Another well-placed source came forward around the same time to dispute Mone and Barrowman’s repeated denials of links to PPE Medpro. They were not the kind of person who would normally talk to a journalist. But they felt increasingly uncomfortable reading the claims that were being made by lawyers representing the couple. Holding their silence, they said, was “morally untenable”.

However, the source warned that establishing a link between the Tory peer and PPE Medpro would prove exceptionally difficult given that the family’s financial affairs were cloaked in offshore secrecy.

On the same day as PPE Medpro was incorporated in the UK, a company with the identical name was registered in the Isle of Man, an offshore financial centre where ownership of companies can be kept secret and no corporation tax is charged on profits.

While the UK “PPE Medpro” secured the contracts with the government, its Isle of Man sister company entered into agreements with a London-based business, Loudwater Trade and Finance, according to documents seen by the Guardian last year.

In one of the agreements, PPE Medpro stated that the company’s role in the deal was to “use their extensive network” to seek to secure contracts with the NHS and “other government bodies within the British Isles”. It did not stipulate who exactly at the company had “an extensive network” that could help to secure government contracts, but Mone is the only such figure publicly known to have lobbied for the company.

According to the agreement, Loudwater committed to “manage and secure the supply chain of key PPE items from China and abroad”. A family-owned importing company, Loudwater is principally run by one of its directors, Maurice Stimler. In its annual report for the year to 30 September 2020 – the period covering its deals with PPE Medpro – it stated that its “principal” business activity “continued to be … international trading in coffee, consumables, edible nuts and fruits”.

In its agreement with PPE Medpro, Loudwater said it would source PPE via “the Eric Beare network of factories and compliance capabilities”. Eric Beare is a company based in Hong Kong, owned by a businessman originally from South Africa, Andrew Sack. On its website, even now, Eric Beare states that it specialises in trading small electrical goods out of Hong Kong, such as speakers, alarm clocks and kettles. There is no reference to PPE.

Eric Beare, which has not responded to requests for comment, procured the PPE from Chinese factories.

Interestingly, Loudwater does not appear to have had a direct relationship with Eric Beare. Rather, Loudwater is understood to have paid a third company, Neumer Trading, owned by Evan and Ricky Neumann, two brothers resident in Israel, for the introduction, according to a legal source familiar with the details of the supply chain.

Neumer Trading, which did not respond to requests for comment, was registered in Cyprus, another low-tax jurisdiction. Loudwater paid the money to bank accounts in Cyprus.

There is no suggestion of wrongdoing by Loudwater, Eric Beare or Neumer Trading. The supply chain they were part of was complex, involving cuts taken at each stage in the process, which is not in itself unusual in the global PPE market. But what does stand out is the vast profits that appear to have been made from the deal – particularly by Mone and Barrowman.

In March, the Guardian reported that it had seen the purchase agreements with the Chinese manufacturer of the surgical gowns, showing that Eric Beare and Loudwater had bought the 25m gowns for just £46m. That meant a £76m top-line profit from the £122m that the DHSC paid PPE Medpro, although that figure does not account for costs.

Further leaked documents seen by the Guardian indicate that the top-line profit on the face masks contract was £26.5m. On paper, that would suggest that PPE Medpro and its partners stood to make as much as £102.5m profit from its £203m contracts with the UK government – a roughly 50% profit margin. No relevant parties responded to requests for comment on that figure.

Documents from HSBC, which investigated the flow of PPE Medpro profits that went to Barrowman, shed further light on how those profits were divided up. Barrowman was paid £70m by PPE Medpro in September 2020, at least £65m of which he told the bank were “profits”, and then distributed the funds through a series of offshore accounts, trusts and companies.

One of the recipients, bank records indicate, was a trust of which Mone and her adult children were the beneficiaries. It received £29m in funds originating from PPE Medpro profits in October 2020, the documents state.

According to the Guardian’s analysis, the huge profits shared between the couple suggests that about £30m was then shared between the three other companies in the supply chain.

There is no suggestion that Loudwater’s profits went offshore. Its UK accounts record that the year in which the deals were done was a bountiful one, with pre-tax profits increasing by £10m. The following year, turnover and profits dropped back to their pre-pandemic level. Stimler noted in the accounts that 2020 had been an “exceptional year” for his company.

Contacted for comment, Stimler replied: “Loudwater has no comment to make at this time.” None of PPE Medpro’s supply chain partners responded to requests for comment from the Guardian.

That includes new questions now being asked of Andrew Sack, of Eric Beare, about LFI Diagnostics, the second company over which Mone lobbied ministers. Sack owns 30% of LFI Diagnostics, which Mone tried to help in its ultimately failed effort to sell the UK government Covid lateral flow tests. At Companies House, the other 70% shareholder is listed as “PPE Medpo” (sic).

Meanwhile, in parliament there is now growing scrutiny of the entire PPE Medpro deal. In its press release of December 2020, the company said it was “proud” that its face masks and gowns had “undoubtedly” helped to “keep our NHS workers safe”. But the surgical gowns it supplied – items whose sterility is vital to protect from infection in critical healthcare settings such as operating theatres – were rejected by officials on inspection in the UK. The DHSC is still trying to recoup its money through mediation, a dispute resolution process. The gowns have never been used by the NHS, although PPE Medpro insists the gowns passed inspection and it is entitled to keep the £122m paid under the contract.

There are also questions about tax. PPE Medpro said it created a UK division to pay UK tax because it was “the right thing to do”. In Companies House filings, PPE Medpro recorded less than £4m in profit and stated it had only £900,000 in UK tax to pay. But questions remain about at least £65m in profits distributed offshore in the Isle of Man. Asked about PPE Medpro’s apparent offshore profits in February, Page replied: “You again raise the issue of some profit being booked offshore. I remind you that this does not make any such profit unlawful or improper.”

That may be so, but the large offshore distribution of PPE Medpro profits raises moral and practical questions. Was UK tax paid on the full profits of a deal with the UK government to supply PPE to protect NHS workers in the pandemic? And with so much money now offshore, how will PPE Medpro repay the DHSC if a court rules that it needs to return some or all of the £122m it received for unused gowns?

In November 2020, five months after PPE Medpro secured government contracts, and two months after Barrowman and Mone received at least £65m of its profits, Hello! magazine ran glossy spreads of photos from the couple’s wedding on the Isle of Man, attended by 90 guests.

The following month, Mone posted on Instagram idyllic shots of their honeymoon at a five-star resort in the Maldives. Life looked good for the couple, who appeared to be on something of a spending spree.

In January 2021, Barrowman’s firm bought a new private jet, an 11-seater Cessna, M-KNOX on its tail, for a price estimated in airline databases to be approximately $10m.

Between August 2020 and July 2021, Mone’s three adult children were reported to have bought four handsome properties in Glasgow for more than £3m. Companies in the Knox family office are also understood to have bought at least eight properties for £9m in Glasgow’s prestigious Park Circus, a favourite residential area for Celtic and Rangers footballers.

Mone and Barrowman also promoted a new office business, Neo Space Aberdeen, in which she said they intended to invest £18m.

In August 2021 Mone posted on Instagram a picture of herself and Barrowman on the yacht, renamed Lady M, that her husband had bought in May 2021 for £6m. “Business isn’t easy,” she posted. “But it is rewarding.”

The Guardian has asked Mone and Barrowman if the jet, yacht, properties, investment in Neo Space, wedding and honeymoon were paid for directly or indirectly out of the PPE Medpro profits. Barrowman’s lawyer did not reply. Mone’s lawyer said: “We are advised there is no truth in what appears to be entirely speculative ‘guesses’ on your part.”

Whatever the ultimate source of the funds, it now looks as though the couple are selling their assets almost as quickly as they acquired them. Both of their well-appointed residences, the grand Ballakew estate and their Eaton Terrace London home, are now up for sale. So too is the Lady M yacht.

One source familiar with the couple’s financial plans said they have been considering leaving the UK and the Isle of Man and relocating to southern Europe.

The couple may decide to leave the UK, or the tax haven island protected as a British crown dependency. But they are unlikely to escape the scrutiny of the UK parliament. Mone remains under investigation by the Lords commissioner for standards. That inquiry has been paused owing to the separate NCA investigation into PPE Medpro.

And in Westminster there are calls for full disclosure about Mone’s interactions with four key ministers – Gove, Agnew, Lord Bethell and Matt Hancock.

There are also growing questions about the government’s insistence, repeated so many times since the start of the pandemic, that “ministers did not and do not have any role in awarding contracts”, and that civil servants were the ultimate decision-makers.

One official working on the critical effort to develop the UK’s testing capacity has told the Guardian that because of Mone’s links to PPE Medpro, the company was given special treatment when it tried to sell lateral flow tests. The company required more personal attention from officials, the official said, a culture they found “improper, and personally abhorrent”.

“Ministers are now saying that the VIP status was irrelevant, because civil servants ultimately made the decisions on which companies were awarded contracts,” the official said. “But that is disingenuous: it is corruption of policy, process and procedure. Ministers made clear that politically connected people should be given special treatment. So we were forced to spend extra time with these companies – such as PPE Medpro, which had no apparent expertise and should not have got through the door.”

The DHSC has always said – and maintains today – that due diligence was followed in all cases of procurement during the pandemic.

Meanwhile, Mone, Barrowman and PPE Medpro are no longer responding to requests for comment from the Guardian. Last month, in response to questions about her receipt of PPE Medpro profits, a lawyer for Mone said: “There are a number of reasons why our client cannot comment on these issues and she is under no duty to do so.”

A lawyer who represents Barrowman and PPE Medpro said last month that a continuing investigation limited what his clients were able to say on these matters. He added: “For the time being we are also instructed to say that there is much inaccuracy in the portrayal of the alleged ‘facts’ and a number of them are completely wrong.”

The Guardian stands by its reporting.

Additional reporting by Henry Dyer