Britishvolt owner blames business problems on ‘sabotage’ by tax officials, media and staff

The owner of Britishvolt has blamed a tax raid, critical media coverage and “deliberate sabotage” of its workers for the collapse of its global business as it faces legal action by workers demanding months of back pay.

David Collard’s Recharge Industries was selected by accountants EY to acquire the UK-based battery plant earlier this year, although it has yet to pay the full amount for the company or acquire land for a potential factory in Blyth, Northumberland.

The Britishvolt deal has put an Australian entrepreneur with no experience in battery manufacturing at the forefront of his ambitions to develop the UK’s domestic battery industry.

But within a few months since then, the enterprise collapsed.

More than a dozen current or former employees of Recharge, its owner Scale Facilitation, and Collard’s business partners from the UK, New York and Australia told the Financial Times that promises of reinvestment never materialised.

Collard is also named in lawsuits from employees seeking back wages in New York, as well as an eviction notice from the luxury apartment and a $746,000 American Express account.

This week, a former Britishvolt employee launched a “legal claim” against Recharge for back pay, which could lead to weeks of outages if the debt is not cleared.

Collard told the FT that the negative views of former employees “represent part of the overall employee sentiment”.

He stressed Britishvolt’s funding was “carefully planned” but ran into trouble after Australian tax authorities raided his other business, SaniteX, in June.

He said the “media coverage” of the raid “linked it to Operation Britishvolt”, which “not only disrupted our financial planning but also put us in a precarious position to raise capital and debt”.

Nevertheless, he added: “We are securing a strategic funding pathway to manage the fallout from these events in the days ahead.”

According to the lawsuit filed in New York and former employees, Collard often promised that the investment was about to appear, though it never did.

Businesses including Collard’s Recharge and its parent Scale Facilitation have been using funds from the previous coronavirus pandemic venture for months.

Recharge Industries has yet to pay the full amount for Britishvolt or buy land for a potential factory in Blyth, Northumberland. © Joseph Gaul/Alamy

SaniteX, which he founded in early 2020, has made tens of millions of dollars selling Australian-made disinfectant to local authorities. The windfall allowed Collard to cash in on an apartment in New York and an office in the One World Trade Center building, according to the three people.

Collard said housing is “the primary workplace. . . along with my residence” before the company moved into the One World Trade Center building. He said the business had always planned to leave the apartment, but had not paid rent over the summer due to a “lack of funds”.

At first, Scale Facilitation employees were impressed with its office — an entire floor of One World Trade Center — prompting employees to question whether the space was too much for a business with just 150 employees worldwide. “You could play cricket there,” said one.

The January decision for Britishvolt, which collapsed after running out of funds and in need of a deep-pocketed investor, caught the board by surprise just months after Scale began work on a potential Australian battery plant.

“It was a madman’s call, obviously we didn’t have the money,” said one former senior employee.

EY moved the sale process faster than usual, meaning less time for other investors to do due diligence on the collapsed battery startup, according to three people with direct knowledge of the matter. The accountants had already been criticized for their deep involvement with Britishvolt, which they later profited from its collapse by overseeing its management.

Recharge was chosen as the buyer after Collard offered EY a “personal guarantee” that he had the money, the three people said.

A report published by EY in March said the decision to pursue an accelerated process was driven by a “combination of factors”, including limited cash, risks of leaving the remaining staff and the need to raise money to make “critical payments in the short term”. .

A separate due diligence report on Collard and his businesses by UK accountants Grant Thornton for Northumberland county council in the weeks following EY’s snap selection raised many “red flags” about Collard, his businesses and his ability to finance, according to the five. knowing the report.

These concerns raised by Grant Thornton were either missed or ignored by EY when it handed over the reins of the UK business to it. Grant Thornton declined to comment and Northumberland county council did not respond to a request for comment.

EY, which says it “undertakes a comprehensive and competitive sales process,” declined to comment on the Grant Thornton report.

A person involved in the Britishvolt administration process said Collard was charismatic but ultimately “he could never demonstrate that he had the money”.

According to several people, the decision to pursue Britishvolt used up the remainder of SaniteX’s windfall. Shortly after, some workers at the facilities stopped receiving wages, something the company initially blamed on a faulty payroll system.

As stocks dwindled, the company prioritized paying UK wages ahead of others because of Britishvolt’s importance, while deliberately delaying payments to workers in Australia because of media leaks about the tax raid, the three said.

Collard said: “I understand the concerns and frustrations and have been transparent with the team, especially at the start, although leaks and damaging media coverage have forced a need-to-know basis to protect employees and the organization. “

He added that “there were cases of intentional sabotage that affected not only the company, but all employees, and these cases are being investigated and will be resolved by the relevant legal entities.”

At that time, Scale implemented several methods to bring short-term relief to its finances, according to current and former employees.

One of the measures involved the immediate recovery of VAT, a legal practice. However, two former employees said some lawsuits were filed despite unpaid invoices.

Collard said the VAT documents were handled “by a third-party compliance firm” and that “a full audit of the original documents (by the authorities) did not reveal any issues”.

Despite the lawsuits and claims of bankruptcy by employees, Collard insisted he was confident the companies had a future: “The recent impact on our efforts is disappointing, but the determination to rebuild that vision remains unwavering.”

Additional reporting by Harry Dempsey in Singapore and Nic Fildes in Sydney

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