Major Tory donor hands over lucrative government contract to advise post office

A company run by a major Tory donor and former party treasurer has been awarded a lucrative government contract to advise the Post Office, independent can be revealed.

Malik Karim has given £1.6m to the Conservatives since 2014 and last year won two major deals worth £1.5m and £175,000 through his finance firm Fenchurch Advisory.

Documents revealed by this publication reveal that Fenchurch received payments to provide “advice on banking services and the retail banking market” to the troubled Post Office.

Critics complain that the contracts “smack of cronyism” and question how government contracts are awarded.

The revelation comes as the Conservatives remain embroiled in a row involving the party’s biggest donor Frank Hurst, who allegedly said MP Diane Abbott made you “want to hate all black women” , and that she “should be shot.”

Mr Hester, who has donated £10m to the Conservative Party and whose company has won more than £400m in NHS and prison contracts over the past eight years, has been labeled “racist and wrong” for his comments but Conservative The party refused to return the remarks. money.

Rishi Sunak has also been embroiled in controversy over awarding a knighthood to a major Tory donor who donated £5m to the party last year.

Businessman Mohamed Mansour, the party’s top treasurer and a former Egyptian government minister, was knighted for services to business, charity and politics.

Mr Karim’s Fenchurch contract comes as the Post Office grapples with the growing fallout from the Horizon IT scandal and has warned branches are at risk of closure due to rising costs.

Weeks later, the government ruled that each of the wrongfully convicted deputy postmasters could choose to accept £600,000 in compensation or make a formal claim for more.

Despite facing considerable financial pressure, the Post Office has hired Fenchurch Advisory for five months to advise on the retail banking market – meaning the work will pay around £336,000 a month.

The award of the contract by the Post Office, which is owned and controlled by the Department of Commerce, has raised questions about Karim’s access to Conservative ministers and whether it was good value for money.

Labor peer Prem Sikka said independent The contract should be investigated by the National Audit Office (NAO) to ensure it provides value for money for taxpayers.

“The question that arises is, this person is providing something that no one else is providing, how do we know taxpayers are getting value for money?” he said.

“Obviously there should be extra transparency as donors are awarded contracts as this inevitably smacks of nepotism.

“The National Audit Office should consider whether taxpayers’ money is getting good value for money. Inevitably there is a conflict of interest so the government must publish minutes and correspondence relating to this contract and the National Audit Office should investigate whether the contract is good value for money .

“This is not the first time the government has handed out lucrative contracts to Tory donors.”

The Communications Workers Union said it was “ominous” that the contract was awarded during the Horizon IT scandal.

Secretary Dave Ward said: “The award of this contract should raise serious questions about due process.

“It is ominous that such a lucrative contract has been awarded to a senior Conservative activist and financial backer at a time when the Horizon scandal has eroded public trust in the Post Office.”

Mr Karim, known as one of the City’s most successful Muslim businessmen, came to the UK as a refugee from Uganda in 1974, aged 12.

He studied economics at the University of Manchester before founding Fenchurch in 2004 and began a career in finance in the 1980s.

The 62-year-old father-of-two was appointed joint treasurer of the Conservative Party in October 2021, taking a key role in its organizational structure for about a year.

He has made more than £70m since setting up the discreet investment bank, of which £1.6m has been donated to the Conservative Party since 2014. Much of this funding was transferred during this parliament.

Mr. Karim sold a controlling stake in Fenchurch to French bank Natixis in 2020 but remains the company’s chief executive.

The major Conservative Party donor has courted controversy in the past, including through his Ingenious Film Partners 2 Membership Between 2006 and 2011, an investment scheme was accused by HM Revenue and Customs (HMRC) of being a means of avoiding tax.

His firm advised a US private equity firm on its controversial attempt to acquire mutual insurance company LV, but the takeover plan was thwarted after a campaign against the £530m deal.

Labor MP Clive Lewis told independent Awarding contracts to Tory donors is “now commonplace”. He added: “Things have changed during COVID, starting with VIP access, but now it feels like standard practice for this government.

“No one knows what conversations are going on, but you donate money and get contracts… but the public is not stupid, they can see what’s going on.

“If you were another country’s international development department looking at how to provide funding to the UK, all the dashboards would be flashing signs of state-level corruption.

“Labour has a lot of work to do if we form the next government to rebuild trust.”

Mr Lewis blamed the repeated awarding of contracts to Conservative Party donors on “massive outsourcing in every area of ​​public life”.

Mr Karim’s allies highlighted that Fenchurch began working with the Post Office in 2018, when he was the Conservative Party’s treasurer. His firm advised the agency on its partnership with Bank of Ireland to enable it to offer Post Office-branded savings, mortgage and personal loan products.

Fenchurch Consulting tells independent: “Fenchurch began working with the Post Office in 2018 following a competitive selection process. We completed the first phase of the work to the Post Office’s satisfaction and the second phase has recently been completed.

“The initial contact predated Mr Karim’s appointment as Conservative Party treasurer in mid-2021.”

However, records show Mr Karim began donating to the Conservative Party in 2014, when he donated £25,000 to the party.

The Post Office said it followed public procurement rules in its work with Karim and Fenchurch. A spokesperson said: “Fenchurch Advisory’s involvement is based on their expertise as a financial services advisory firm.

“The Post Office’s retail banking services include highly complex arrangements that require specialized expertise to ensure we deliver the best possible service to customers and postmasters alike.”

Mr Sunak has faced further scrutiny since the outcry over Mr Hester’s comments. The prime minister and other senior Conservatives have refused to rule out accepting further donations from the tycoon.

The Conservatives are reportedly sitting on a further £5m of donations from Mr Hester, on top of last year’s £10m donation, but ministers have refused to confirm or deny. Mr Hester has apologized for the comments, which he described as “rude”.

The Ministry of Commerce and Trade declined to comment.