The former deputy mayor of London shared in a £750,000 dividend from his now-collapsed foreign-exchange firm while scores of the company’s staff were laid off through the pandemic, City A.M. can reveal.
RationalFX, co-founded and majority owned by Rajesh Agrawal, the deputy mayor of London for business between 2016 and 2023, claimed to have handled over $12bn worth of international payments before it collapsed into bankruptcy in November.
Rajesh Agrawal, former deputy mayor of London for business
While the formerly Canary Wharf-headquartered fintech has pointed to the pandemic as a key reason for its failure, City A.M. can reveal that Agrawal and his co-founder Paresh Davdra paid themselves a £750,000 dividend in 2020 while more than 30 staff were laid off.
The job cuts shrank the company’s 55-strong sales and marketing team to just 23 people by the end of 2020, according to Companies House filings. Its total head count fell from 90 to 74 due to hires in its administration division, documents show.
According to its accounts for the year, RationalFX’s pre-tax profits more than halved to £1.26m in 2020, down from around £2.8m the previous year.
Agrawal stood down as chief executive in 2016 but stayed on as a director until 2022 and still owned more than 50 per cent of shares when it went under last year. He and Davdra were listed as the company’s only shareholders with “significant control” on Companies House.
A spokesperson for Agrawal, who ran unsuccessfully as a Labour candidate for Leicester east at this month’s general election, claimed he “was not active within the business” after stepping down as chief executive in 2016.
“Both the COVID19 pandemic and Brexit had a devastating effect on the business and the company did not declare any dividends after 2020,” the spokesperson added.
Davdra, who was chief executive of the firm at the time it went under, did not respond to a request for comment.
The revelation of a £750,000 dividend to Agrawal and Davdra in 2020 is likely to further stoke anger among former staff and customers, who are fighting to claw back cash via the insolvency process.
Customers have been left £14.9m out of pocket and look set to recover just 10 per cent of the funds lost in its collapse, administrators revealed last month.
Central to the collapse of the fintech firm was a shortfall in “safeguarded funds”, administrators have said. Burnt customers of the company have since demanded answers from Agrawal over his role in the downfall and questioned how much he knew of its mismanagement in the run up to its collapse.
“We would like Mr Agrawal like to clear these matters up for the investors who have lost so much money and are facing huge administration costs before he stands to be a Labour MP,” a spokesperson for the RationalFX Customer Group told City A.M. in the run up to the election.
The latest revelation comes after City A.M. revealed RationalFX had worked with a number of clients that raised questions over its compliance processes, including a key player in the infamous ‘bin bags of cash’ scandal involving Natwest, which occurred while Agrawal was chief executive.
Some £264m was deposited in cash into Natwest accounts by a company called Fowler Oldfield, sometimes transported into branches in bin bags. Documents from the case against Natwest in 2021 reveal that millions were whisked out of the Natwest accounts onto RationalFX‘s platform between 2014-2015, while Agrawal was chief executive.
According to creditors documents published in January, Rational FX also owed £2.7m to a Maltese company called MLS Multinational logistics, which was implicated in a major bribery scheme against the US navy.
In the ten months to the end of October last year, the company slumped to a £967,000 loss, down from a profit of £732,900 in an extended 18 month reporting period to the end of June 2022.