Failed energy f irm fat cats STILL raking in big salaries
…after scandal of ‘hipster’ Bulb boss firm’s £6.5billion bill to the taxpayer
BOSSES at Britain’s failed energy suppliers walked away with up to £75million and have landed plush new jobs – despite leaving taxpayers with a bill of more than £9billion.
A Mail on Sunday investigation into a dozen collapsed firms has uncovered lucrative payments made to company directors in the years before bankruptcy – and discovered many have since landed well-paid jobs.
Almost 30 companies have imploded since 2021, plunging millions of customers into uncertainty and forcing the Government to step in. They include Bulb, whose bailout a year ago cost the taxpayer £6.5 billion, making it the largest state rescue since the implosion of RBS in 2008. Propping up Bulb is estimated to have cost each household in Britain £230.
Founders Hayden Wood and Amit Gudka, a former management consultant and Barclays energy trader respectively, pocketed nearly £10million between them in director salaries and windfalls from sales of company shares.
Since its collapse Wood and Gudka have both snapped up houses worth £2.5 million each in East London’s ‘hipster havens’.
Gudka has also set up a battery storage company, Field Energy, which has been handed £77million in funding.
Among his financial backers is Giant Ventures – a firm that welcomed Wood as a partner only two month ago. Giant’s board members include Labour MP David Miliband and former BP chief executive Lord Browne.
Our audit can reveal that huge salaries were not unusual among energy suppliers, despite many of the companies making little or no profit. Recipients included Jake Brown who founded Avro when he was still a student studying law at Birmingham University. Payments from the firm include £4.25 million in ‘management fees’ handed to a separate company owned by Brown and his father, Philip, which continues to operate. There is no suggestion of any impropriety.
David Pike and Karin Sode, founders of People’s Energy, could benefit from around £50million worth of leftover cash in their business. The Mail on Sunday has learnt the cash could be contested by officials, but it is believed they could still receive a chunk of the money.
The scandal has put regulator Ofgem in the spotlight. Its role is to protect energy customers and taxpayers, which critics say it has failed to do. Furious MPs have called for bosses to repay the money taken out of the businesses.
Dame Angela Eagle, a member of the Treasury Committee, said the bosses of failed firms were able to ‘run away with fortunes while leaving all their debts and liabilities to other people’.
AVRO ENERGY:
580,000 customers
Founder: Jake Brown
Cost to taxpayer: £700 million Payments: At least £4.25m
Jake Brown set up Avro in 2014 while studying law at university his dad joined the board four years later. Turnover soared to more than £400million and Avro had nearly 600,000 customers at its peak. But it collapsed in September 2021 and its failure has cost consumers £700 million. Documents seen by The Mail on Sunday show management fees paid to a separate firm run by Brown and his father amounted to at least £4.25million over two years. Brown told MPs earlier this year that bosses at the firm shared a total of £250,000 a month. The 28year-old denied it was just ‘an opportunity to make millions’.
PEOPLE’S ENERGY:
350,000 customers
Founders: David Pike and Karin Sode
Payments and potential windfall: Up to £50 million David Pike and Karin Sode, foundUK’s ers of People’s Energy, could benefit from around £50 million worth of leftover cash in their business, according to reports.
The husband and wife founded the firm in 2017, only for it to collapse four years later. Enquiries made by The Mail on Sunday reveal the potential £50million windfall may be in doubt – though a source said they could still receive a handsome sum.
Sources close to the administration process at People’s Energy said their payout could be much lower or nothing at all. Pike and Sode have been contacted for comment. Pike is now looking to raise cash from investors for new ethical retailer Ethibuy.
TOGETHER ENERGY:
176,000 customers Founder: Paul Richards Salay payments: At least £1million
Where are they now?
Consultancy Clyde Ventures Paul Richards, the former chief executive at Together Energy, once said he was ‘capable of exceeding the achievements of some of the biggest household brands’. But instead he guided his energy firm to bankruptcy in January this year, despite revenues of nearly £100 million. Together Energy paid more than £1million to its executives in the years after 2018. A payment of £659,273 was made in 2020 alone, documents show.
An investigation by the MoS in 2019 revealed that many energy suppliers had been set up in run down industrial estates, often surrounded by derelict buildings.
Outfox The Market still appears to operate from its base on Frog Island, by a canal in Leicester, despite revenue of more than £100million.
Analysis by The Mail on Sunday today has found other energy bosses have secured new positions since their firms’ collapse.
PFP Energy’s Adrian Leaker has emerged as an industry consultant and claims on LinkedIn to have built a business of 90 employees with revenues of £70 million.
Pure Planet’s Steven Day has emerged as a doctoral researcher at the University of Cambridge. He also sits on the board of Smart Energy GB, a smart meter firm.
Zebra Power’s Mark Royle is also now offering ‘consultancy services to energy companies in the UK’.
Dame Angela said some of the bosses ‘founded these companies on a wing and a prayer and paid themselves colossal amounts of money working out of tiny little offices. It is about time it stopped.’
Mr Wood said: ‘I’m very sorry for the way things turned out.
‘I’m disappointed in the outcome, and did everything I could to avoid it, and protect consumers and taxpayers.
‘This has been an extremely challenging time for the energy industry, with 29 suppliers failing since the beginning of the crisis.
‘While I was still at Bulb, I worked extremely hard with my team to minimise costs to the taxpayer, protect jobs and continue serving our customers.”
ENERGY Secretary Grant Shapps has written to energy suppliers warning that they should not be dramatically increasing direct debit payments.
In the letter, he said that consumers’ bills should reflect the amount of energy they used, and voiced concerns that many were seeing their monthly payments soar.
He said he had asked the regulator Ofgem to report on how energy suppliers could make their systems more ‘responsive’ to consumers trying to reduce energy.