Furious MPs tell Bulb energy millionaires who are ‘just hipper versions of Fred the Shred’ to repay millions that taxpayers gave in bailout as it soars to £6.5 billion
- Furious MPs said founders Hayden Wood and Amit Gudka have got off ‘scot-free’
- Bailout amounts to £230 from every household in Britain to prop up business
- Wood still earned a £250,000 salary months after firm went into administration
- Bulb’s state bailout is largest since rescue of Royal Bank of Scotland and HBOS
Two millionaires whose collapsed energy firm has cost taxpayers £6.5billion have got off ‘scot-free’, furious MPs said last night.
The founders of Bulb are being urged to repay millions after figures buried in last week’s Autumn Statement revealed the staggering cost of the company’s demise.
The price being paid for the debacle is the equivalent of every household in Britain coughing up about £230 to prop up the business.
Bulb was founded by Hayden Wood and Amit Gudka in 2014 and was once the fastest-growing company in Europe.
Amit Gudka and Hayden Wood have been accused of getting off ‘scot-free’ after their energy firm, Bulb, collapsed and was bailed out by taxpayers to the tune of £6.5billion
It imploded a year ago and was put under Government control until a takeover was agreed with bigger rival Octopus Energy last month.
The money used to support Bulb is equivalent to 12 per cent of the £55billion in tax rises and cuts to public spending announced by Chancellor Jeremy Hunt.
Wood and Gudka pocketed £4million each after selling shares in a 2018 fundraising and, this spring, it was revealed Wood was still earning a £250,000 salary five months after the firm was seized by administrators.
Dame Angela Eagle, a member of the Treasury Committee, said if ‘they had any shame’ they would return the cash.
She criticised entrepreneurs who ‘dip in and then bugger off, leaving their liabilities to the public’.
Bulb’s collapse doesn’t seem to have stalled Wood or Gudka’s carers. Gudka, a former DJ, exited Bulb before its collapse to launch a battery storage company.
Wood landed a role at venture capital firm Giant Ventures two months ago. It described him as a ‘highly valued venture partner’.
Ed Miliband, Labour’s Shadow Climate Change Secretary, has slammed the ‘staggering’ cost of Bulb’s failure and criticised Government handling of the saga.
Ed Miliband slammed the Government’s handling of Bulb and branded the decision to stop it hedging the purchase of energy for customers while in administration as ‘inexplicable’
He said a decision to prevent Bulb hedging the purchase of energy for customers while in administration – a practice that helps protect energy suppliers from price increases – was ‘inexplicable’.
Ironically, Mr Miliband’s brother David sits on the Giant Ventures advisory board. Lord Browne, the former chief executive of BP, also sits on the board.
Giant Ventures is also an investor in Gudka’s company Field Energy.
When Bulb collapsed as energy prices soared, it had 1.7million customers. Its Government bailout is the biggest since the rescue of Royal Bank of Scotland and HBOS in the financial crisis.
Bulb’s administrators have passed a report on the directors’ conduct to the Department for Business, Energy and Industrial Strategy.
Labour MP Darren Jones, chairman of the Business, Energy and Industrial Committee, said: ‘Again, it looks like billpayers are picking up the tab while many of those who created a problem go scot-free.’
Dame Angela added: ‘Some of them founded these companies on a wing and a prayer and paid themselves colossal amounts.’
Andy Prendergast, of the GMB union, said: ‘Seeing fat-cat bosses of a bust business walk away with fortunes, while the taxpayer foots the bill for their mistakes, is stomach-churning.’
Giant Ventures, Hayden Wood and Field Energy were contacted for comment.
Brazen millionaire pair from Bulb are just hipper versions of ‘Fred the Shred’, writes RUTH SUNDERLAND
Greedy energy bosses are behaving just as despicably as the bankers did in the financial crisis.
The £6.5billion tab being picked up by taxpayers for the collapse of Bulb is the biggest scandal to hit UK plc since the downfall of Royal Bank of Scotland (RBS).
Yet the company’s founders, Hayden Wood and Amit Gudka, have shamelessly pranced away from the wreckage into lucrative new ventures.
This brazen pair are no better than slightly hipper versions of RBS’s disgraced former boss Fred Goodwin.
If there has been any lesson from the banking meltdown, it ought to be that these two must not be allowed to wriggle out of a debacle as rich men with little more than slapped wrists the way ‘Fred the Shred’ did.
Bulb made Wood and Gudka multi-millionaires well before their 40th birthdays. They each extracted shares valued at £4million before things went so badly wrong – and even after the Government rescue, Wood was still paid £250,000 a year.
The Government must recoup these grotesque sums on behalf of taxpayers. Fat chance, I imagine, that the pair will agree to pay back the money of their own accord, as they would if they had an iota of decency.
The idea that they can simply segue into their next venture is unconscionable.
It’s imperative that there is a full-scale investigation into Bulb’s failure and their role in it, along with a wider probe into other 20-plus defunct firms in the energy sector.
The Insolvency Service should examine whether there was any wrongdoing or unfit conduct by Wood and Gudka that would warrant them being banned as directors. In the US, the authorities take a far tougher line.
It’s imperative that there is a full-scale investigation into Bulb’s failure and their role in it, along with a wider probe into other 20-plus defunct firms in the energy sector
Meanwhile, there are other parallels with the banking crisis. When it came to energy companies, for example, watchdogs were so keen to encourage innovation and competition that they took a relaxed approach to regulation.
Attention was focused purely on the belief that consumers were being ripped off by gas and electricity giants who were providing appalling service and high bills, and had an over-reliance on fossil fuels.
That belief was correct. But too little care was taken to vet the shiny new operators boasting about supposed green credentials and cheaper charges.
When the energy crisis hit, it became apparent some new companies did not have the financial resources to cope. Bulb, with 1.7 million customers, was too big for a rival to rescue – but too big as well for Ministers to allow it to fail.
What’s more, the £6.5billion estimated cost to taxpayers, nearly £230 per household, was disgracefully tucked away in the bowels of documents released alongside Thursday’s Autumn Statement.
The Government-backed deal that saw Bulb rescued by Octopus is also opaque, with scant information on how much its bigger rival paid.
We are similarly in the dark about how, when, or, indeed, whether any bailout money will be repaid.
True, there is a profit-sharing agreement attached to the Octopus deal, designed to channel cash back into government coffers.
Only one problem: neither Octopus nor Bulb has ever made a profit. The energy sector is rife with entrepreneurs such as Wood and Gudka.
Prominent among them are the Octopus boss Greg Jackson, and the founder of OVO Group, Stephen Fitzpatrick.
These two men run businesses which, between them, supply around ten million domestic energy customers. That is a huge responsibility.
Yet, because Octopus and OVO are private companies, not listed on the stock market, we know far less than is desirable about their operations and finances.
Shamefully, Ministers do not appear to have taken a proper grip on the wider issues in the industry, any more than they did on Bulb.
Ed Miliband, the Shadow Climate Change Secretary, has lambasted the Conservatives for the ‘staggering’ costs being foisted on the British people.
He’s right, though his criticism might have more force if his brother David did not sit on the advisory board of the venture capital firm that Hayden Wood has now joined.
This time, unlike in the banking crisis, Ministers must come down hard on errant bosses and stop taxpayers being treated as fools.
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