The Tory peer, the Peruvian tycoon accused of laundering cocaine profits — and a £50m PPE bonanza
....the most staggering example yet of how a lucky few cashed in as ministers threw millions at Covid contracts
THE bulletproof truck trundled down the road in downtown Lima, guarded by 18 policemen. They were wearing body armour and wielding high-velocity rifles. No one was taking any chances.
This was a special delivery for Peruvian prosecutor Jorge Cotrina. His next case: the fruits of a mammoth investigation by the elite Dirandro unit, the anti-drug directorate. A document they carefully brought to him back in March 2011 ran to more than a million pages.
Their target? A prominent local clan, the Sanchez Paredes family.
The news electrified Peru, for the business interests of the Sanchez Paredes are vast, r unning to l uxury hotels, f actories, farms, cattle ranches and 15 gold mines. With their wealth have come fame and political influence.
Six years later, five men went on trial, including the family patriarch, Orlando Sanchez Paredes, now 76. They were charged with laundering millions, the proceeds, prosecutors claim, of trafficking cocaine – chiefly through gold mines, of which, more later.
The trial, repeatedly adjourned, continues after three years. The defendants protest their innocence: Mr Sanchez Paredes has always insisted his fortune is derived from legitimate business interests. If found guilty, they will go to prison for up to 18 years.
Cut to a very different scene, 6,000 miles away in the glorious Cotswolds, a year after that armoured truck trundled towards the Peruvian prosecutor’s office. On one of the happiest days of any father’s life, Lord Chadlington – ex-president of the Witney Conservative Association – was celebrating his daughter Naomi’s wedding in the gorgeous village which lent him his title. The sun shone all day.
Chadlington, now 78 – plain Peter Selwyn Gummer before his ascent to the Lords in 1996 – was in his element. There could have been no more vivid illustration of his influence than that day in May, 2012.
Everyone who was anyone was there: the then PM David Cameron and his wife Samantha – who have a home in the village; Jeremy Hunt, about to be promoted to health secretary; and Chadlington’s brother, the former cabinet minister John Selwyn Gummer. Camilla, Duchess of Cornwall, was there as godmother to the groom, Henry Allsopp; his sister, Location, Location, Location presenter Kirstie, was another famous guest.
What, though, connects these very different scenes, and these two septuagenarians, and what, exactly, is the relevance today?
A Daily Mail investigation can reveal firstly Sumner Group Holdings (SGH), the business empire now chaired by Lord Chadlington, is involved via a subsidiary in gold mining in Peru with the Sanchez Paredes family. The initial deal was struck before Chadlington joined the group, but, as we shall see, investors are so furious at how that turned out, they are considering suing.
PPE TO THE RESCUE
Secondly, SGH has struck a new gold mine: another subsidiary has landed enormous PPE contracts this year as ministers scrambled to shore up supply shortages as the pandemic struck. Thanks to taxpayers, the firm’s first PPE contract, for £23.8million, was awarded on April 28 – at least 18 months after Chadlington had joined Sumner Group Holdings as chairman. The second, for £26.1 million, followed a month later.
The firm says its profit is modest, but it is impossible to tell from publicly available information. Just as well, for the subsidiary was struggling at the time. It ended the last financial year £376,000 in debt.
With one £50million leap, it joined that long list of lucky beneficiaries of ministers’ largesse. They include not only PPE firms with little apparent relevant experience – but very good contacts – but also tiny firms working in test and trace, and outside consultants, l i ke Deloittes, also sharing in taxpayerfunded cash bonanza.
Call this new breed, if you will, the Covid oligarchs. They could be said to include Michael Andreou, chief executive of OptiGene, a tiny firm until – as the Mail revealed – it struck gold of its own in Operation Moonshoot when ministers stumped up £387million for its covid testing system. Now we can add Sumner Group Holdings and its subsidiary. As well as its chairman, Lord Chadlington is a paid director of Sumner Group Holdings, with an estimated £5million in shares.
COTSWOLD CONNECTIONS
Chadlington has been disarmingly frank about his limitations. After studying theology at Cambridge, he went into public relations because, he said, ‘I just wasn’t clever enough to do anything else’. But Shandwick, the firm he founded in 1974, was hugely successful, and the root of his political influence. There was the odd misstep. In 1997, he stepped down as Royal Opera House chairman, after a report by MPs accused him and his board of ‘incompetence, disastrous financial planning and misjudgement’. Chadlington’s social standing is as strong as ever – it may have been his connections that led to his association with David Sumner, chief executive and founder of Sumner Group Holdings.
MERCHANT OF DUBAI
Before he met Chadlington, Sumner, 49, had run several businesses, with mixed success. One dealt in solar-powered hot water systems in China. Sumner floated it on the AIM smaller companies section of the London stock exchange. Its initial share price was 40p, making it worth £28million. But in 2014, it crashed, and when its shares were suspended two years later, they were priced at 0.5p. Sumner’s investors had lost their money.
Sumner moved to Dubai. In 2015, he founded the SGH subsidiary that was to win the PPE contracts. Working with wife Liezl he recruited nurses from the Philippines to work in the Middle East and NHS. By 2018, the firm made steady losses. Until the British taxpayer stepped in, he had other fish to fry.
PERUVIAN PARTNERS
Enter the Sanchez Paredes family. Whatever may happen in the Lima trial, there is little doubt certain members of the family have had links to the drugs trade. On December 10, 1987, Orlando Sanchez Paredes’s brother Simón was gunned down at his farm in Mexico. Police found a large cocaine processing lab in the basement.
In 2008, the American Drug Enforcement Administration opened inquiries – leading, in 2012, to a case in New York in which family assets worth £25million were seized. The gold mines, it was claimed, were the main way the clan was suspected to be laundering trafficking profits. They denied the allegations, and some assets were later unfrozen after an appeal.
A GOLDEN DEAL?
How David Sumner first encountered the Sanchez Paredes is unknown. But in the autumn of 2017, his mining subsidiary asked a business intelligence firm, GPW, to produce a report about the possible risks of doing business with members of the family. Chadlington was not yet on the board of SGH. He was, though, chairman and a director of GPW, though it is unclear what knowledge – if any –
he had of the report. The GPW report stated that the clan ‘is a large, high-profile Peruvian family, members of which have been publicly associated with money laundering and cocaine smuggling.’ It noted that Orlando Sanchez Paredes had not been convicted of any trafficking or money laundering crimes and did not appear on any public sanctions or law enforcement lists. But it added he was ‘listed as a “special interest person” by the Dow Jones global register of business risk data... due to considerable negative media coverage i n relation to al l eged f i nancial cri me and drug trafficking’.
GPW had been asked to look into several family members involved in mining. Of them, ‘four have been investigated by Peruvian authorities on suspicion of laundering the proceeds of drug trafficking’.
None had been convicted, the report said. But Orlando and others were ‘currently on trial... facing charges of having used their gold mining businesses for money laundering purposes’.
Many investors would have run a mile. But in February 2018, Sumner agreed to buy two gold mine concessions from the family, and paid millions to Orlando, his wife Isabel and various firms believed to be controlled by members of the family.
A month later he floated SGH’s mining business on the NEX London stock market. It was priced at £5 per share, suggesting the firm was worth £535 million.
The deal he made with the family does not seem to have gone well. Sumner agreed to pay the Sanchez Paradeses a total of £10million in cash and shares, as a ‘down payment’ for two mining concessions, and the firm was supposed to pay a further £32million to complete the purchase of the mines.
But Sumner later announced that ‘following a review of strategy’ the company had determined that continuing with the projects and paying the outstanding money ‘was not in the interests of shareholders’. They agreed to return the concessions to the vendors – who got to keep their £10million.
The SGH mining subsidiary also announced a settlement agreement that would see them form a consortium with one of the vendors. It makes i t clear they intend to have an ongoing commercial relationship with the Sanchez Paredes.
INVESTORS REVOLT
For its investors, the consequences were disastrous. The mining firm’s auditors say in its latest accounts there is ‘a material uncertainty over the company’s ability to continue in operation as a going concern’... Its losses to the end of March were £28 million and it has debts of £6million. By the time shares were withdrawn from the exchange, they were worth less than 1p.
Several investors are planning legal action. One said: ‘I had no idea they had made deals with the Sanchez Paredes, and when I found out, I was horrified. These deals have destroyed the value of the company but seem to have enriched alleged money-launderers.’ Neither David Sumner nor Lord Chadlington responded to our repeated requests for comment.
Perhaps Lord Chadlington, with his impeccable connections, is simply unlucky with business associates in this instance. After all, he came on board at Sumner Group Holdings after the initial deal was struck with the Sanchez Paredes, and has never been on the board at the mining subsidiary.
How fortunate then, that SGH has the considerable solace of that handsome PPE deal. The moral of the story: when in a little local difficulty, never sneeze at £50million of taxpayers’ money.