About 50m face masks purchased by the UK government from a private equity firm cannot be used as they failed to meet basic safety requirements, according to documents filed in a legal challenge over procurement of personal protective equipment during the coronavirus pandemic.
The Department of Health and Social Care bought the FFP2 respirator masks as part of a controversial £252m contract with Ayanda Capital, which advertises that it specialises in “currency trading, offshore property, private equity and trade financing”. It is the largest single deal so far published by the government as part of its £15bn spending spree on PPE from private manufacturers, suppliers and middlemen.
However, subsequent to signing the contract, the government discovered that the FFP2 masks, which have ear-loop fastenings, do not create an adequate seal to protect against the virus, which meant they would not be used by the NHS, according to a letter from the government to legal campaigning group the Good Law Project.
The error could mean £156m has been wasted, according to the campaign group, which is seeking to challenge the government in the courts over three PPE contracts, including the deal with Ayanda Capital.
“The foundational sin of all of this is how slow we were to realise that the crisis was upon us, and that when we did finally realise, we went on a multibillion-pound supermarket sweep buying all the PPE we could, often without proper regard to price or fitness for purpose,” said Jolyon Maugham, head of the Good Law Project.
The PPE procurement process has come under scrutiny since the pandemic swept Britain in March and April, resulting in intense demand for masks, gowns and gloves. The government has been criticised for awarding large sums of taxpayer money to several companies that appear to have no record in supplying PPE, such as Ayanda, or others with small balance sheets or poor recent financial performance. It has prompted concern over the extent of due diligence that was conducted before the contract were awarded.
Documents given to the Good Law Project show the government paid £41.25m to Ayanda Capital at the start of the contract to secure its manufacturing relationship with a factory in China. A person close to the company said it charged typical distributor rates of about 10 per cent on the contract, meaning its profit on the deal could be up to £25m.
Run by Tim Horlick, a former investment banker, Ayanda is controlled via a holding company registered in Mauritius. One of its “senior board advisers” is Andrew Mills, who is also an adviser to the government’s Board of Trade, which helps facilitate investment in the UK.
Mr Mills’ company, Prospermill Ltd, helped set up the PPE deal with Ayanda, according to information disclosed in government documents given to the Good Law Project. “Prospermill had secured exclusive rights to the full production capacity of a large factory in China,” the documents said.
Mr Mills offered to supply the face masks but requested that the contract was signed with Ayanda because it had “an established international banking infrastructure that could be used to effect the necessary payments overseas”, according to the documents.
They went on to say that “of the 50m FFP2 masks ordered, 43.5m have been collected”. However, they added: “some of the masks DHSC had purchased (including the Ayanda FFP2 masks) have ear-loop fastening rather than head-loops, and there was concern as to whether the former still provided an adequate fixing . . . We can confirm that they will not be used in the NHS.”
Ayanda was also contracted to supply 150m Type IIR masks — another grade of medical face masks — which the government said were not affected. However, according to the documents, it added: “Further testing will be carried out on these in the UK before any are released for use in the NHS.”
Ayanda Capital said in a statement: “The masks supplied went through a rigorous technical assurance programme and meet all the requirements of the technical specifications which were made available online through the government’s portal.
“There are provisions in our contract for product to be rejected if it did not meet the required specification as per the contract. These provisions have not been activated.”
Mr Andrews said his position as adviser to the board of trade played no part in the award of the contract to Ayanda and he denies setting up the deal.
“Given my relationships with the Department of International Trade and my long experience in international business and sales, (Mr Horlick) asked me to assist Ayanda with this project which I have done,” he added. “I understand that our offers were benchmarked against all others as part of what . . . seemed to be an extremely rigorous and professionally run procurement process.”
A government spokesperson said: “Throughout this global pandemic, we have been working tirelessly to deliver PPE to protect people on the frontline.
“Over 2.4bn items have been delivered, and more than 30bn have been ordered from UK-based manufacturers and international partners to provide a continuous supply, which meets the needs of health and social care staff both now and in the future.
“There is a robust process in place to ensure orders are of high quality and meet strict safety standards, with the necessary due diligence undertaken on all government contracts.”