Professional services firms named amid Brexit ferry storm

Two professional services firms have been tied into the unfolding controversy surrounding the awarding of a government contract to a ferry company which does not own any ferries. Mott MacDonald and Deloitte were tasked by the Department for Transport with assisting on due diligence for the deal, alongside law firm Slaughter and May.

As the UK prepares for the culmination of its withdrawal from the European Union, a concrete agreement between the British Government and Brussels seems as elusive as ever. With the much anticipated Parliamentary vote on Theresa May’s proposed Brexit accord due later in January, many inside and outside of the House of Commons are tipping a heavy defeat for the Government, leaving just two months to hammer out a new agreement, or face a No Deal scenario.

The Government’s plans for the dreaded No Deal have themselves been the source of growing public ire in recent months. In late 2018, it emerged that building refrigeration capacity to store stockpiles of medicines in the event of a so-called cliff-edge Brexit was expected to cost “tens of millions”, while a rehearsal for channel traffic in Kent after a possible No Deal was branded “a waste of time” by angry motorists participating, as a mere 89 trucks were used to trial an emergency traffic system designed to cope with 6,000 vehicles.

At the turn of the year, the succession of political storms surrounding these plans escalated further, as it emerged that a £14 million cross-Channel ferry contract had been handed to a company without any ferries. Furthermore, Seaborne Freight, which is one of the companies now contracted to charter ferries in the event of a No Deal Brexit, has not previously operated a ferry service and is not planning to do so until close to the UK’s scheduled departure date from the EU.

The contract is one of three agreements worth a total of £107.7 million signed by the Department for Transport, without a tendering process to help ease “severe congestion” at Dover by securing extra lorry capacity. Concern over the contract has grown consistently however, particularly in relation to Seaborne Freight, after it emerged that its Chief Executive, Ben Sharp, previously ran a business that was liquidated for owing money to the UK tax authorities.

In response to mounting criticism of such a controversial choice for an emergency ferry provider, Transport Secretary Chris Grayling refused to make “apologies for supporting a new British business.” Speaking to BBC Radio 4’s Today programme, he added, “We have looked very carefully at this business, we have put in place a tight contract that makes sure they can deliver for us. I don’t see any problem with supporting a new British business.”

Due diligence

A further statement from Department for Transport officials told the press that, in addition to due diligence by senior Department staff, checks on Seaborne Freight were conducted by three leading independent companies. These were performed by law firm Slaughter and May, as well as professional services giant Deloitte, and global engineering consultancy Mott MacDonald. Due diligence on the firm and its leadership found that there were no significant issues, with Grayling stating the team behind the investigation had “reached a view [Seaborne] can deliver,” however the claims did little to appease those scrutinising the deal.

Paul Messenger, a Conservative County Councillor for Ramsgate, who has been a major critic of the plans, questioned whether sufficient checks on Seaborne Freight had indeed been completed. He told the BBC, “It has no ships and no trading history so how can due diligence be done?... Why choose a company that never moved a single truck in their entire history and give them £14 million? I don’t understand the logic of that.”

Barry Lewis, a Labour County Councillor for Margate, added, “I’m very worried about the consequences for taxpayers, as there’s no news about who will pay for the upgrading of the port and the staffing levels, given that there has been no due diligence on the project. If the government is making a £13.8 million local hand-out, surely some cash should have been given to the hospital?”

Scottish MEP Alyn Smith meanwhile wrote to the European Commission requesting an inquiry into the procurement process. While the Government continues to insist it followed standard procedures and carried out due diligence checks, these claims are subsequently sure to come in for deeper scrutiny in the coming months.