Watchdog asked to probe Barts PFI bid

The involvement of two former trust chief executives in a private finance initiative bid for their previous employer looks set to be referred to the Committee on Standards in Public Life.

Barts and the London Hospital trust is considering a bid by Skanna/Innisfree, which is managed by Health Care Partnerships, for the£600m PFI deal.

HCP was set up by Gerry Green, who was chief executive of Barts (then called Royal Hospitals trust) until 1997. Ray Pett, who was chief executive of Barts until 2000, became a director of HCP the same year (2000). This July, a trust board meeting heard that two then-current members of Barts' staff were also doing consultancy work for HCP.

Patients' groups have told HSJ they believe it is 'unethical' that the ex-NHS managers, who could exploit their knowledge of the trust's financial plans, should be involved in a bid. HCP stands to make around£350,000-a-year in management fees if its parent company's PFI bid is successful.

City and Hackney community health council chair John O'Loughlin said he was referring the proposed deal to the Committee on Standards in Public Life.

'Whether it is illegal or not, it is my view that it is unethical, ' said Mr O'Loughlin. 'These people have got an awful lot of inside information and are employed for that very reason.'

'It is of great concern that people who were on£100,000-plus salaries when they worked for the NHS, will receive large chunks of cash if this deal is successful.'

Commons health select committee chair, Labour MP David Hinchliffe, backed the call for a standards committee investigation. He said: 'Whether or not these former employees stand to gain a financial benefit, I think that with their previous key roles in the same trust there will be questions to ask.'

At a board meeting in July, the trust described an association between HCP and two individuals then working at the trust as 'a potential conflict of interest'. Barts director of facilities Peter Holden, who retired in August, and deputy director of facilities Barry Clarke, had both worked as HCP consultants. To ensure 'fair and open competition', the board put these relationships on the record in a memorandum giving assurances that current employees would not be involved in the Barts bid.

The trust said the consultancy work that Mr Holden and Mr Clarke had been involved in was declared in a document seen by all bidders, and that the other bidder, Renaissance, had no objections. A trust spokesperson said: 'They fulfilled their contractual obligations in declaring it.'

London Health and Social Care Directorate director John Bacon said he was concerned about close ties between HCP and the trust but he was pleased they had been put on record.

He said he was not happy to learn that two employees had acted as consultants for HCP while still working for the trust. 'I am seeking assurances from the trust that it will not happen again, ' he commented.

Jackie Cardiff, who was trust director of operations until January 2001, is also an HCP employee and Sir Derek Boorman, who was chair of the trust from 1994-97, is a director.

Innisfree director Tim Pearson said allegations of any conflict of interest between HCP and the bid for Barts PFI were 'completely unfounded'.

'It has cost us£6m to bid so far and the idea that we would gamble that in such a way is very remote indeed, ' he said.

He added that Mr Pett, Ms Cardiff, Mr Holden and Mr Clarke had not been involved in the Barts bid and that Mr Green was not directly involved. But the trust said that as Mr Green is chief executive of HCP, 'some oversight' of the bid is 'acceptable'.

Mr Pearson said that although Mr Green and Mr Pett had 'small' shareholdings in HCP, they would make no direct gain if the bid were successful. He said HCP would not be making big profits. 'The yearly repayments would be in the region of£60m-£70m - the HCP fee would be half of 1 per cent of the yearly total.'

Mr Green told HSJ that he had 'no problems' with an investigation by the standards watchdog and denied that the deal was unethical. 'Some of my staff were ex-Barts and the London and that was known to the trust. If it had been an issue, we would not have been selected as one of the preferred bidders.'