Ex-Tory Treasurer and major party donor handed lucrative government contract to advise the Post Office

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An organization run by a major Tory donor and former party treasurer was handed lucrative government contracts to advise the Post Office, The Independent can reveal.

Malik Karim, who has given the Conservatives £1.6m since 2014, gained two major offers final yr via his finance agency Fenchurch Advisory, which had been value £1.5m and £175,000 respectively.

Documents uncovered by this publication present Fenchurch was handed the funds to supply the beleaguered Post Office “advice on banking services and the retail banking market”.

Critics complained that the contracts “smack of cronyism” and raised questions on how government contracts are awarded.

The revelation comes as the Conservatives stay embroiled in a row involving the party’s largest donor, Frank Hester, who allegedly stated MP Diane Abbott makes you “want to hate all black women” and that she “should be shot”.

The feedback by Mr Hester, who has donated £10m to the Tories and whose firm has gained greater than £400m of NHS and jail contracts in the final eight years, had been labelled “racist and wrong”, however the Conservatives have refused to return the cash.

Rishi Sunak was additionally caught up in a row for handing a knighthood to a major Tory donor who gave £5m to the Conservative Party final yr.

Businessman Mohamed Mansour, who’s a senior treasurer at the party and a former Egyptian government minister, was knighted for enterprise, charity and political service.

Mr Karim’s Fenchurch contracts had been awarded whereas the Post Office was grappling with the rising fallout of the Horizon IT scandal and warning of the danger of department closures due to spiralling prices.

Weeks later, the government dominated that each wrongly convicted sub-postmaster can be given the choice of receiving £600,000 in compensation or pursuing a proper declare for extra.

But regardless of being beneath appreciable monetary strain, the Post Office introduced in Fenchurch Advisory for 5 months to advise on the retail banking market – that means it was paid round £336,000 monthly for the work.

The awarding of the contract by the Post Office, which is owned and managed by the division for enterprise, raises questions on Mr Karim’s entry to Conservative ministers and whether or not it represented worth for cash.

Labour peer Prem Sikka advised The Independent the award needs to be investigated by the National Audit Office (NAO) to guarantee the contract offered worth for cash for taxpayers.

“The question that arises is what this guy was offering that others were not, and how do we know taxpayers were getting value for money?” he stated.

“Clearly, with a donor getting the contract, there should be extra transparency because inevitably it smacks of cronyism.

“The NAO should look at whether taxpayers got value for money. Inevitably there is a conflict of interest, so the government must publish minutes of meetings and correspondence relating to this contract, and the NAO should investigate whether it was value for money.

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

The Communications Workers Union stated it was “ominous” that the contract was awarded in the midst of the Horizon IT scandal.

General secretary Dave Ward stated: “The awarding of this contract should raise serious questions about proper process.

“At a time when the Horizon scandal has eroded public trust in the Post Office, it is ominous that such a lucrative contract has been awarded to a senior Tory activist and bankroller.”

Mr Karim has been lauded as certainly one of the most profitable Muslim businessmen in the City, having come to Britain in 1974 aged 12 as a refugee from Uganda.

He studied economics at the University of Manchester earlier than launching a profession in finance in the Nineteen Eighties, organising Fenchurch in 2004.

The 62-year-old father of two was made co-treasurer of the Conservative Party, a robust place in its organisational construction, in October 2021, serving for round a yr.

He has earned greater than £70m since organising the discreet funding financial institution and, of this, has donated £1.6m to the Conservative Party since 2014. Much of the cash was handed over throughout this parliament.

Mr Karim offered a controlling stake in Fenchurch to French financial institution Natixis in 2020, however stays the agency’s chief government.

The major Tory donor has courted controversy in the previous, together with via his membership of Ingenious Film Partners 2 between 2006 and 2011, an funding scheme accused of being a approach of avoiding tax by HMRC.

His agency suggested on the controversial tried takeover of mutual insurer LV by a US personal fairness agency, which was thwarted after a marketing campaign in opposition to the £530m deal.

Labour MP Clive Lewis advised The Independent the awarding of contracts to Tory donors is “just so commonplace now”. He added: “Something turned during Covid, since the VIP lanes, but it just feels like standard practice now for this government.

“Nobody knows what conversations are going on, but you give a donation and you get a contract… but the public aren’t stupid, they can see what is going on.

“If you were the international development department of another country looking at how to give money to Britain, all the dashboards would be flashing for state-level corruption.

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

Mr Lewis blamed the repeated awarding of contracts to Conservative donors on the “mass outsourcing of every sphere of public life”.

Allies of Mr Karim burdened that Fenchurch started working with the Post Office in 2018, earlier than he was the treasurer of the Conservative Party. His agency suggested the physique on a partnership with the Bank of Ireland, permitting it to supply Post Office-branded financial savings, mortgage and private mortgage merchandise.

Fenchurch Advisory advised The Independent: “Fenchurch began working with the Post Office in 2018 after a competitive selection process. We completed the first stage of the work to the Post Office’s satisfaction and the second stage was completed recently.

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

However, data present Mr Karim started donating to the Conservative Party in 2014, when he gave the party £25,000.

The Post Office stated it adopted public procurement guidelines in its work with Mr Karim and Fenchurch. A spokesperson stated: “Fenchurch Advisory were engaged on the basis of their expertise as a financial services advisory firm.

“Post Office’s retail banking services include highly complex arrangements that require specialist expertise to ensure the services we offer deliver the best for our customers and postmasters.”

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

As well as the £10m donation in the past year, the Conservatives are reportedly sitting on another £5m donation from Mr Hester, which ministers have refused to confirm or deny. Mr Hester has apologised for the comments, which he described as “rude”.

The Department for Business and Trade declined to remark.