Commentary on Political Economy

Thursday 29 February 2024

Shifty Sunak on Fraud Flight

Sunak’s jet ride raises questions about access to highest levels of government

Tories urged to explain gift from entrepreneur facing legal battle over lossmaking medical start-up

JIM PICKARD · Feb 29, 2024

When Rishi Sunak attended two Conservative conferences in Wales and Scotland on the same Saturday last April, he travelled by private jet — a mode of travel often favoured by the multi-millionaire prime minister.

His round trip came courtesy of an entrepreneur and minor Tory donor called Akhil Tripathi, co-founder of a heavily lossmaking start-up that hopes to sell an anti-snoring device to the NHS.

Later, Sunak sent a handwritten letter to Tripathi expressing his gratitude: “Dear Akhil, thank you for arranging the use of your plane.”

But the cream-seated Embraer Legacy 500 jet did not belong to Tripathi — he rented it, with the prime minister recording it as a £38,500 gift.

A few months after the trip, the entrepreneur became embroiled in a civil fraud case surrounding his start-up.

The episode has prompted questions about the due diligence that Sunak and the Conservative party carried out on Tripathi before taking his money and giving him access to the prime minister and senior officials.

Emily Thornberry, shadow attorneygeneral, said Sunak and the Tories needed to give “a full and honest account” of how the prime minister ended up on the plane. “They must explain on what basis Mr Tripathi gained access to the highest levels of government and what checks were made on his background before he did so,” she said.

Since gaining close access to the prime minister, Tripathi has been pursued through the courts by unhappy investors in his start-up, Signifier Medical Technologies (SMT). They include Alan Howard, the billionaire co-founder of Brevan Howard Asset Management — himself a big Tory donor.

One investor claims the entrepreneur had committed a “fraud” in relation to the company.

Tripathi’s first donation to the Conservative party was £50,000 made on July 13 2021. In total, he has given the party £153,475, including the flights. His lawyers said his donations were inspired by the Tories’ focus on enterprise.

In November 2021, just months after his first donation, Tripathi met then health secretary Sajid Javid in a meeting that has not appeared in the government’s transparency records. A spokesperson for Javid said there were numerous “party supporters” at the event and it did not need to be declared because it was not “official business”.

In April last year, the day before Tripathi ferried Sunak, the entrepreneur attended a dinner at the Haymarket Hotel with four Treasury ministers including chancellor Jeremy Hunt.

One person who attended the dinner said it was around this time that Tory treasurer Graham Edwards introduced Tripathi to the prime minister. The Conservative party declined to comment.

A month later, Tripathi received an invitation to a “Business Leaders Reception” at Number 10 hosted by Oliver Dowden, now deputy prime minister.

Tripathi’s donated flights was initially recorded under his name before being attributed to a business called Balderton Medical Consultants, and later changed back to Tripathi again. Balderton has only one director, Richard Kent, who, according to an acquaintance of Tripathi is an old friend of the entrepreneur.

The Conservative party said: “The donation has been properly declared.”

There are few clues to the early background of Tripathi, although he is an Indian national born in January 1985, according to Companies House.

His spokesperson, Laura Slater from Reputation by Maverick, refused to give any details of his background, schooling or previous business record. She did not respond to any of the FT’s questions.

The company’s website describes Tripathi as a “serial medical device entrepreneur”. But some of his start-ups have left little trace. He was director of wheelchair company Flomed International: its UK accounts for three successive years described it as “a dormant company” before it was struck off in 2019.

Another, Armighorn Spine, said to have made a cervical spinal implant, similarly filed dormant UK company accounts before being dissolved.

Signifier, which he co-founded in 2015, caught the imagination of the City, raising tens of millions of pounds from investors including Howard, Sweden’s Segulah Medical Acceleration and Waha Capital of Abu Dhabi.

The company’s anti-snoring device, eXciteOSA, sits on the patient’s tongue, strengthening its muscles by sending electrical currents — which it says help prevent the tongue collapsing into the airway at night. It was invented by Professor Anshul Sama, an ear, nose and throat surgeon in Nottingham, who is Signifier’s other co-founder.

eXciteOSA has approval for sale in the US by the US Food and Drug Administration and Signifier has talked up the prospect of selling the device to the NHS. The company said it was not “currently trying to acquire NHS contracts”.

At the time of Tripathi’s hospitality to Sunak, Signifier had reported losses of $42.3mn on revenue of just $3.1mn for the year to March 31 2022.

Although it carried out a “significant restructuring” to slash costs, the company’s accounts admitted to “a material uncertainty which may cast significant doubt on the entity’s ability to continue as a going concern”.

Despite Signifier’s losses, Tripathi lived a glamorous lifestyle with a chauffeur-driven Bentley and an estimated £20mn townhouse in Belgravia owned through a British Virgin Islands shell company, according to Companies House records.

Yet relations were about to break down dramatically with some of his directors and shareholders. On June 26 last year, Tripathi was suspended as chief executive at the behest of the independent directors pending an investigation into misconduct allegations.

Julian Wilson, a barrister instructed by board members to investigate claims against Tripathi, produced a report on the allegations last July.

But on August 2, Tripathi and his allies ousted four directors, appointing seven new ones in a move they described as “shareholder democracy”.

The entrepreneur now faces two civil actions in the High Court of Justice in London.

The first is by Waha Capital, which is trying to claw back $20mn it spent buying a stake in the business from an “early investor” called Jyoti Pandey, who is Tripathi’s sister — a fact that the entrepreneur failed to disclose, according to Waha’s legal claim.

Waha claims in the court documents that this equated to a “fraud”, adding: “Tripathi is liable in deceit for the false representations made knowingly or recklessly and which induced Waha Capital to enter into the share purchase agreement.”

The second action involves more than 30 shareholders and former directors, including Howard, and also criticises the lack of disclosure around Tripathi’s sister. The action claims there was a potential conflict in Tripathi’s “close connection” to another company — dubbed “Co V” — which was regularly invoiced by Signifier for “items that were not properly payable by . . . SMT”.

It also claims that two of the new directors appointed last summer were Signifier staff whose pay had been more than doubled by Tripathi in April even as other workers were laid off because of SMT’s financial woes.

Law firm Proskauer Rose, which is representing the petitioners, declined to comment. Tripathi’s legal representative, Mishcon de Reya, declined to comment on record.

Tripathi, in his defence filing to the court, denied all of the allegations and said he was not asked about the precise relationship with his sister when her $20mn shareholding was sold.

He pointed to $5mn in loans he gave the company while it was “at risk of becoming insolvent”. Tripathi also said he never received any benefits from sums paid by Signifier into Co V, which was owned by a close friend.

It is now up to the court to decide whether to believe Tripathi’s version of events or that of the former independent directors, who wrote to shareholders last August warning: “Trusting Mr Tripathi has been a terrible mistake.”

One Conservative party official said that, on reflection, Sunak should have “maybe thought twice” before taking to the skies with Tripathi.

Steve Goodrich, head of research and investigations at Transparency International UK, said: “Until we take big money out of politics, stories like these will continue to make headlines and diminish trust in our politicians.”

No comments:

Post a Comment