Britishvolt owner blames taxman, media and ‘sabotage’ by staff for business woes

The owner of Britishvolt has blamed a tax crackdown, critical media coverage and “deliberate sabotage” by employees for the near-collapse of his global business as he faces legal action from employees demanding months of back pay.

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

The Britishvolt deal put the Australian entrepreneur, who had no experience in battery manufacturing, at the forefront of the UK’s ambitions to foster a domestic battery industry.

But in the following months 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 repeated promises of investment never materialised.

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

This week a former Britishvolt employee filed a “statutory claim” against Recharge for back wages, which could see the business out of business within weeks if it does not clear the debt.

Collard told the FT that the negative views of former staff “represent a small part of the general mood of staff”.

He stressed Britishvolt’s funding had been “carefully planned” but had fallen into disarray after Australian tax authorities raided another of his businesses, SaniteX, in June.

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

However, he added: “We are providing a strategic funding pathway to deal with the fallout from these events in the coming days.”

According to a lawsuit filed in New York and former employees, Collard often promised the investment was on the way, even though it never did.

For months, Collard’s businesses, which include Recharge and its parent Scale Facilitation, used funds from an earlier venture tied to the coronavirus pandemic.

Recharge Industries still needs to pay the full amount to Britishvolt or buy the land for a potential factory in Blyth, Northumberland © Joseph Gall/Alamy

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

Collard said the apartment was “the main place of business. . . 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 flat but had not paid its rent due to the “financial meltdown” over the summer.

At first, Scale Facilitation employees were amazed by its office space—an entire floor of One World Trade Center—leading workers to question whether the space was too much for a business with only 150 employees worldwide. “You could play cricket in it,” said one.

Just months after Scale began work on a potential Australian battery plant, the decision in January to bid for Britishvolt, which collapsed after running out of funds and needing a deep-pocketed investor, surprised staff.

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

According to three people with direct knowledge of the matter, EY conducted the sale process faster than usual, which meant less time for other investors to conduct due diligence on the collapsed battery startup. The accountants had already been criticized for their deep involvement in Britishvolt before further profiting from its collapse by overseeing its administration.

Recharge was selected as the buyer after Collard offered a “personal guarantee” to EY that it had the funds, three of the people said.

An EY report published in March said the decision to fast-track was “driven by a combination of factors”, including tight cash, risks that remaining staff would leave and the need to raise money to “critical payments in short order” are made. .

A separate due diligence report by British accountants Grant Thornton on Collard and his business, for Northumberland County Council in the weeks after EY’s snap election, raised numerous “red flags” about Collard, his business and his ability to raise funding, according to five people with knowledge of the report.

Those concerns raised by Grant Thornton were either missed or ignored by EY when it put him in charge of the UK business, the people said. Grant Thornton declined to comment and Northumberland County Council did not respond to a request for comment.

EY, which said it had “conducted a thorough and competitive sales process”, declined to comment on Grant Thornton’s report.

One person involved in Britishvolt’s administration process said Collard was charismatic but ultimately “he was never able to demonstrate that he had the money”.

The decision to pursue Britishvolt has consumed much of the rest of SaniteX’s windfall, according to several people. Shortly after, some employees at the businesses stopped receiving wages, something the company initially blamed on a faulty payroll system.

As reserves dwindled, the company prioritized paying UK wages over others because of the importance of Britishvolt, while deliberately delaying payments to staff in Australia because of media leaks about the tax raid, according to three of the people.

Collard said: “I understand the concerns and frustration and have been transparent with the team, especially at the beginning, although the leaks and damaging media coverage have necessitated a move to a ‘need to know’ principle to protect employees and the organisation. “

He added that “there are cases of deliberate sabotage that have affected not only the company, but also all employees, which are being investigated and will be addressed by the relevant legal entities.”

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

One measure included an immediate refund of VAT, a statutory practice. However, two former employees said some claims were filed even though the invoices had not been paid.

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

Despite legal claims and accusations from staff that the businesses were insolvent, Collard insisted he remained confident the companies had a future: “The recent impact on our efforts has been disheartening, but the determination to reconstruct that vision remains unwavering.”

Additional reporting by Harry Dempsey in Singapore and Nick Fields in Sydney

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