Tory donor Frank Hester raised complaint about NHS contract with health secretary | Frank Hester

The Conservative mega-donor Frank Hester complained to the NHS and the health secretary last year over problems his IT business had bidding for a contract, documents show.

The Leeds businessman, who owns a healthcare tech firm responsible for 60m UK medical records, raised a complaint about procurement in December 2022 with the chair of NHS England, copying in Steve Barclay, the then health secretary, saying he was an “interested party”.

An NHS investigation that concluded in February 2023 found Hester’s allegations about bias against his company were “unfounded”. When Hester asked how he could escalate it further, he was told the complaint had “already been considered at the highest levels within NHS England”. He was also asked by Richard Meddings, the chair of NHS England, to desist from repeating “manifestly false and defamatory” accusations about senior NHS officials.

The correspondence, released under freedom of information (FoI) laws, raises questions about why Hester brought his complaint to the attention of the health secretary as well as the NHS on a matter of procurement.

Asked why he had copied Barclay into the email about procurement and whether he had wanted the health secretary to intervene in the complaint, Hester and his company, the Phoenix Partnership (TPP) did not respond to a request for comment. A source close to Barclay said he had not taken any action and had no involvement in the investigation.

Hester and TPP have given at least £10m to the Conservatives in the last year, which has made him the party’s biggest ever donor.

He has been under the spotlight over comments about Diane Abbott, Britain’s longest-serving black MP, which have been widely condemned for being racist and misogynistic.

He said in 2019 that seeing Abbott on TV made “you want to hate all black women” and that she “should be shot”. Hester later apologised for making “rude” remarks about Abbott but denied they were motivated by race or gender, saying he “abhorred racism”.

The letters and emails released under FoI laws show that Hester had a dispute with the NHS about bidding for work between December 2022 and February 2023.

In Hester’s initial complaint to Meddings in December 2022, which was copied to Barclay, the businessman claimed his company was being blocked by the NHS from going ahead with a multimillion-pound deal with three hospitals in Norfolk.

As part of the complaint, he called for a pause in the programme to digitise hospital systems while his allegations of bias against TPP by three senior officials were investigated.

After being told that Meddings would launch an inquiry on 18 January last year, Hester asked for one official to be suspended or “reallocated” away from his job.

Meddings asked the NHS’s chief financial officer to conduct an investigation and found that it was clear Hester’s allegations were “unfounded”, according to his reply to Hester on 7 February 2023.

When Hester persisted in raising the complaint and asked how he could escalate it further, again copying in Barclay as the health secretary, Meddings wrote another letter on 22 February last year, saying the businessman had made “manifestly false and defamatory” statements about senior NHS officials in his original complaint, and asking him to stop repeating his allegations. Hester had asked the NHS for the correspondence to remain private and confidential but Meddings said in his 22 February letter that the NHS did not agree to that.

Hester’s firm did not ultimately win the Norfolk contract. The businessman is the sole owner of TPP which has won more than £440m of contracts to supply computing systems to GPs, hospitals and prisons since 2016.

Hester is now the Conservative party’s biggest donor, having given £10m and potentially another £5m, which could mean he has contributed almost half of the £34m permitted to be spent by each party in the year before an election.

His company started giving money to the party on 2 February 2023, with a donation of £11,300 followed by a £145,000 donation on 28 March that year. This was followed by a major £5m tranche from Hester personally in May 2023 and a further £5m from his company last November. A further £5m donation is believed to be under discussion.

In a sign of the political access he has had, in November the prime minister, Rishi Sunak, was flown by helicopter to Leeds at Hester’s firm’s expense to tour the company’s offices.

The businessman has said that he gave the money to the Tories because of Sunak’s engagement with artificial intelligence. In an interview with the Telegraph last month, when asked if was giving money to help secure more contracts, Hester said politicians did not interfere in hospital procurement.

He said: “So GPs, most people don’t know this, but they’re actually not part of the NHS. They’re private organisations, they’re private companies.

“GPs decide which software they’re using, not Rishi Sunak. Then, of course, hospitals – again it’s not Rishi’s decision.

“And I think it would be very well known if Rishi were to try and influence the decision, to say my local hospital in Leeds [needs this software]. People would find out.”

Since Hester’s remarks on Abbott were made public by the Guardian, Amanda Pritchard, the chief executive of the NHS, has criticised the comments, saying they were “racist, sexist and violent”.

Wes Streeting, the shadow health secretary, said on Tuesday that he had written to Victoria Atkins, the current health secretary, to ask her to look at TPP’s contracts and say whether they were fulfilling what the NHS had commissioned them to do and whether they were consistent with the values of the health service.

The documents obtained under FoI laws by the Guardian also show TPP was issued a “remedial notice” in a contractual dispute with the NHS over its failure to deliver agreed changes to its software.

An internal NHS report from January 2023 said TPP was in breach of contract over several agreed changes to its computing system for holding medical records used by GPs, known as SystmOne.

The document said: “There are a range of agreed roadmap changes to the system that TPP have already been paid for, that remain undelivered, and despite significant efforts to bring them into compliance, they [TPP] remain unwilling to commit to new delivery timetables. These sit alongside other breaches of standards, capabilities and contract provisions.”

In an email to Meddings in January 2023, Hester described the alleged breach of contract as a “small number of inconsequential matters” and questioned the timing of the notification, after he had raised his complaint about procurement in December 2022. The NHS investigation found the timing of the remedial notice to be “entirely separate and unrelated”.

Hester and TPP did not respond to a request for comment. The NHS declined to comment.