Cherie Blair, a failed high-street health firm and a messy trail of £5m in debts
Scale of disastrous venture is revealed, and one investor of $250,000 is now considering his legal options, writes Robert Mendick
While Cherie Blair’s legal business, advising among others the despotic governments of Kazakhstan and the Maldives, has thrived, her health company took an irretrievable turn for the worst.
Last June, the doors shut on 11 health centres dotted about the UK, which Mrs Blair helped to set up with her American business partner. But details of the failure – and the scale of the debts it left in its wake – can be disclosed for the first time today. A series of documents seen by The Sunday Telegraph show that the business, called Mee Healthcare, went bust, owing creditors more than £5million. The taxman alone was owed just over a quarter of a million pounds and a further £180,000 was owed in wages to staff.
Mrs Blair and her business partner Gail Lese had promised to revolutionise health care on the high street. Instead the company has left behind a messy trail of debts that is still being sorted out by the liquidator.
The dossier is potentially deeply embarrassing for Mrs Blair, who has earned millions of pounds running a private legal consultancy offering commercial advice to clients across the globe. In the years after she and her husband left Downing Street in 2007, the Blairs have enjoyed enormous commercial success. Their property portfolio alone is said to be worth £27million. Staff and investors in the health investment fund of which she is named as a co-founder have fared less well. Mee Healthcare, a venture established through an investment fund – called the Allele Fund, which itself was based in the Cayman Islands – stopped trading with immediate effect on June 18 last year. Its private health centres, located inside Sainsbury’s superstores, offered a range of services that included the sale of spectacles, hearing aids and even dental services.
But commentators have suggested that Mee Healthcare got its pricing wrong and, combined with crippling start-up costs, never really got going. It had had ambitions to open 100 health centres in five years. Three years after the launch of its first store in 2012, it had barely managed a 10th of that total. Each and every store, at its demise, was making a loss.
One investor, Matt Bergman, a US lawyer who lost $250,000 after being persuaded to back the venture, said: “I have admired Tony and Cherie Blair for many years and Cherie’s involvement in the company was a major ‘credibility enhancer’ to me in deciding to invest.” Mr Bergman said he was now “considering my legal options”, suggesting Mee’s collapse could now lead to future litigation.
Mrs Blair was the public face of the Allele Fund at launch and on the eve of the opening of its first health centre, in a Sainsbury’s store in Leeds in March 2012, said: “While this venture is a commercial one, it is not about replacing the NHS or profiteering, but complementing the services it already offers.”
She is named as the co-founder of the business on Allele’s website. In prospectuses sent to investors including to Mr Bergman in which Allele was seeking $100million (£69million) funding in the spring of 2012, Mrs Blair is described as one of the two founders of the Allele Fund.
In a second additional prospectus, sent out in the summer of 2013, Mrs Blair is again described as co-founder. “Mrs Blair has provided strategic advice and assistance to Gail Bronwyn Tony Blair and his wife, in her own right a successful human rights barrister, have pursued a series of lucrative business deals since 2007 when the former Labour prime minister left office.
Cherie Blair quit her human rights practice at Matrix Chambers to set up her own legal firm called Omnia Strategy. Established in 2011, Omnia bills itself as “a pioneering international law firm that provides strategic counsel to governments, corporates and private clients”. Mrs Blair, for her part, bills clients £1,150 an hour.
Mr Blair’s own umbrella consultancy, Tony Blair Associates, is run as two parallel businesses – one advising governments and the other advising individuals and sovereign wealth funds.
It is hard to know exactly what the Blairs are worth. Some have put an estimate of £60million on the value of their fortune. Mr Blair claims the valuation is far too high. Lese in respect of the establishment and operation of the Management Company and the General Partner,” the prospectus states, adding: “Mrs Blair is not involved in the day-to-day activities of the Allele Fund, the Management Company, the General Partner or any portfolio companies.”
Allele, at its beginning, was based within Mrs Blair’s corporate headquarters, an office block with sweeping views overlooking Hyde Park. Yet last week Mrs Blair denied she had ever been a founder but rather a “strong founding supporter”. She insisted she was purely an investor who had also lost out, although quite how much she would not say.
The investor documents show Mrs Blair personally owned 2,137 shares in Mee Healthcare, valued at one stage at a little over £430,000 and amounting on paper to 3.66 per cent of the company. Her holding is now pretty much worthless. She also held, according to the documents sent to investors in the summer of 2013, a further tranche of shares in a number of spin-off businesses, with names such as Healthymee, Smile Express and MediFinance Solutions, which do not appear to have taken off.
But in response to a series of questions, Mrs Blair’s spokesman said the former prime minister’s wife had no role in the business and herself was out of pocket like other investors.
The spokesman said: “Mrs Blair made a substantial initial loan to the company. That loan was later converted into ordinary shares, which she was still holding when the company went into liquidation.
“Mrs Blair has never held a position with either the Allele Fund or with Mee Healthcare. She was not a Founder, a Director or a Partner, nor was she responsible in any way for the management of either company, nor did she receive any remuneration of any kind from either source. She is, therefore, in exactly the same position as all the other shareholders.” In a further statement, after The Telegraph pointed out the series of places where she was described as a founder, the spokesman said: “There was one sole founder and general partner, Gale Lese, as the documentation shows.
“Mrs Blair was certainly a strong founding supporter, having made a substantial early investment in the company – putting her in the same position as all the other shareholders – but she was not a part of the legal entity.”
The scale of the debts is contained in documents sent to investors in the Allele Fund on June 8 last year, 10 days before the closure of Mee Healthcare.
In a letter to investors explaining the perilous state of the business, Dr Lese said: “The company is presently in significant distress and may have to enter an insolvency process such as administration, receivership or liquidation; its failure to achieve viability will materially and negatively affect the prospects of the [Allele] Fund.”
The fund, the letter discloses, had raised £18 million, of which £15.75million had been invested in Mee Healthcare, through its holding company Worldwide Health and Wellness Centres Limited.
The Allele Fund took out $1.5million in management fees, although Dr Lese said Allele, which she co-founded with Mrs Blair amid much fanfare, was owed a further $2.9million.
In the letter Dr Lese added: “We attempted to aggressively build up 11 sites within Sainsbury’s with state-ofthe-art, multi-disciplinary centres from scratch. This included significant up-front expenses to establish and build up the sites, including dental services, prior to our being able to bring the intended acquisition dental practices into the sites.
“As a consequence, the Company is significantly cash constrained and none of the sites are presently cash flow positive. This was originally anticipated and presented to you in prior communications. What was not contemplated was the length of time it would take to raise the additional equity required to provide us with the time and the working capital to execute our strategy.”
Accompanying the letter was what Dr Lese described as Exhibit 1 – a list of three options detailing how the business could go forward. One was an immediate shut down costing about £1million to carry out; another was a more gradual closure that would include paying off its debts. This second option discloses what appear to be the debts incurred as of June 8. It includes £251,042 owed to HM Revenue & Customs, which the taxman is now unlikely ever to recover; £183,573 owed to staff and locums; legal fees totalling more than half a million pounds and rent to Sainsbury’s of £41,838. Business loans total £1.6million.
Dr Lese has blamed The Telegraph for Mee Healthcare’s demise. In March last year, an investigation headlined: “Poorly start to Cherie Blair’s venture into healthcare” suggested that the roll out of stores had stalled and that the two health centres for which accounts were available showed losses of £1million. This newspaper sticks by its reporting of Mee’s losses and a complaint made by Dr Lese to the newspaper regulator, the Independent Press Standards Organisation (Ipso), ruled in favour of The Sunday Telegraph. “The newspaper was entitled to express the view that the business had suffered a ‘poorly start’,” Ipso said.
Mr Bergman, a US attorney based in Seattle, accused Dr Lese of “shooting the messenger”, adding: “the truth hurts.” Mr Bergman had been approached in the autumn of 2014 when he was told “the fund was going to receive multi-million-dollar investments from several large institutional investors in New York. However, they needed my immediate investment because the large institutional investors could not close the financing round until the end of the year.”
“I later discovered that the institutional investors had never committed to the company,” said Mr Bergman, the one-time admirer of Mrs Blair who now finds himself a quarter of a million dollars poorer.
‘Cherie’s involvement in the company was a major “credibility enhancer” to me in deciding to invest’