Administrator in £1.7bn taxpayer bailout of Bulb has tax haven links

In January 2022, Teneo bought big four accounting firm KPMG’s Cayman and British Virgin Islands (BVI) business restructuring arm. BVI and the Caymans are ranked first and second in the Tax Justice Network’s global tax haven index.

Teneo also provides a tax advisory service to other businesses helping them “create value through tax efficient structuring and planning”.

Finance experts said that The Ferret’s findings “raised several issues” including whether Teneo was “a suitable company” to carry out the Bulb administration.

There is no suggestion that Teneo is breaking the law with its tax arrangements. It is yet to respond to a request for comment on the tax haven links.

The UK Government directed The Ferret to Ofgem when asked for comment. The energy regulator said that Teneo had won a tender to carry out the special administration and had relevant resources and experience to conduct the role.

A major hike in energy prices has taken its toll on energy suppliers and consumers in recent months. An increased energy price cap means household fuel bills are set to rise by more than fifty per cent from April.

Bulb was the first energy firm put into special administration, a scheme devised by Ofgem to ensure continuing supply if a major provider goes bust.

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Teneo became the default administrator of Bulb after purchasing Deloitte’s restructuring business in February 2021. Deloitte won a competitive tendering process to win the role in 2019.

The UK Government has given Teneo access to £1.7bn of public funds to carry out the administration. This money will be used to ensure continuity of energy supply while Teneo finds a potential buyer or customers move to another supplier.

The total sum Teneo will be paid to carry out the administration is not currently public knowledge.

But in the pre-appointment period - which lasted between October and November 2021 - the company was paid nearly £3.2m. This money was used to pay administrators’ fees and for legal counsel ahead of Teneo becoming administrator.

Teneo’s ultimate parent company is registered at an address in Wilmington, Delaware, which is home to an estimated 300,000 firms. The US state is attractive to companies because it charges no corporation tax on business that takes place outside its borders.

This so-called ‘Delaware loophole’ means some of the biggest multinationals incorporate in the state. Two thirds of Fortune 500-listed companies are registered there, for example.

Dexter Whitfield, a private finance expert who is director of the European Services Strategy Unit, told The Ferret that the findings raised “several important issues”.

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Whtifield said: “Teneo acquired a company from Deloitte which had won a Ofgem contract but this does not automatically mean that Teneo is a suitable company to deliver the tasks required.

“Two months later Teneo acquires KPMG's tax haven based business restructuring company which raises questions about whether it was a ‘business opportunity’ or they needed additional skills to fulfil the Ofgem contract?

“Or will Teneo be advising electricity companies to 'restructure' their corporate headquarters to the same tax havens?”

The SNP’s Westminster energy spokesperson, Stephen Flynn MP, said that when spending public money “there must be absolute transparency as to those involved and a clear expectation that their business is entirely above board”.

“If it’s the case that a company involved in this bailout is benefiting from being located in a known tax haven then the Tories must explain their motives,” Flynn said.

Teneo’s website says that the firm is “focused on being actively involved in both our local and global communities” through “partnerships, volunteer work and philanthropic giving”.

Its tax advisory section notes that “tax is a key component of any business restructuring and should be considered at the earliest opportunity to ensure efficiency and preserve maximum value” for stakeholders.

Priced Out is an investigation by The Ferret, co-published with The Herald, exploring the impact of - and reasons that lie behind – the cost of living crisis in Scotland. Support their journalism by becoming a member for £3 a month. Use discount code PRICEDOUT to get your first month free.