The business secretary, Jonathan Reynolds, has been asked to refer Vodafone to the Covid corruption commissioner, after a legal claim alleged the £18bn telecoms group benefited from government pandemic support intended for small businesses.
The request to examine the conduct of the FTSE 100 company follows last month’s high court claim by current and former Vodafone franchisees, which alleged the company “unjustly enriched” itself at the expense of scores of vulnerable small business owners who were running the group’s high street stores.
In a letter to Reynolds, John Hayes, a Conservative MP and former minister, said: “Given the allegations about potential misuse of government Covid financial assistance, will your department refer these allegations to the ongoing inquiry into potential misappropriation of public funds during the pandemic, and the Covid corruption commissioner?”
Last month Rachel Reeves appointed Tom Hayhoe, a former Conservative cabinet adviser, as her Covid corruption commissioner with the remit of clawing back billions of pounds in fraudulent contracts.
While Hayhoe is initially reviewing the procurement of personal protective equipment (PPE), he has powers to scrutinise general government pandemic spending to ensure “everything possible has been done to recover public funds in other Covid schemes including furlough, Covid grants and bounce back loans”.
Last month a group of 61 of about 150 Vodafone franchise operators filed a £120m-plus legal claim alleging the company acted in “bad faith” by unilaterally cutting fees to its franchisees; imposed swingeing fines on them totalling thousands of pounds for seemingly minor administrative errors; and then cajoled them into taking out loans and government grants to keep their businesses afloat.
The legal papers add that “Vodafone gathered information on state relief that had been awarded to some of the claimants” – and then used its knowledge of the small business grants to reduce the commission payments it was making to franchisees. These actions, the legal papers allege, effectively meant Vodafone took the benefit of government support intended for small businesses.
Some of the franchisees have told the Guardian how they had suicidal thoughts because of the pressure exerted by the telecoms group. Many have been left with large personal debts of more than £100,000.
Vodafone has previously said “the uptake of [government support] was at the discretion of the franchisee”, and “at no point did Vodafone UK receive government funds”. However, it stopped short of denying Vodafone had benefited from taxpayer-funded schemes.
The company also said last month that it “strongly refutes” it “unjustly enriched” itself and added it had conducted “a number of investigations” into the allegations, which resulted in the company making “a number of improvements to our franchise partner programme”.
“In 2022, a full assurance review was conducted into our franchise estate, taking over 400 hours. The review did find questions to be answered in relation to the franchise programme, its process and communication. It concluded with clear actions to make improvements in the areas identified,” Vodafone said.
