Customers of the collapsed foreign exchange (FX) firm owned by Labour candidate Rajesh Agrawal are set to recover as little as ten per cent of the £15m they lost when it collapsed into administration last year, administrators have revealed.
RationalFX, co-founded in 2005 by Rajesh Agrawal, the former deputy mayor of London for business and current Labour candidate for Leicester East, claimed to have handled over $12bn worth of international payments before it folded in November.
According to administrators’ documents filed in January, the company’s collapse left its clients nearly £15m out of pocket due to a “shortfall” in safeguarded funds.
While creditors had been hoping to recover that cash through the administration process, a new progress report has now revealed they are expected to receive as little as £1.49m of the total £14.9m lost.
“We currently estimate a return of between 10p/£ and 20p/£ for those with claims to safeguarded funds,” administrators said in the report, published late last week.
News of the recoverable cash has enraged creditors to the company. One customer spoken to by City A.M. labelled the management of the firm a “disgrace on every level”.
“It is very disappointing to hear about the news of such small expected returns to customers,” the person said.
“We trusted our funds with Rational FX in good faith, and given what we have heard from the special administrators, there is an extremely large shortfall in the so-called ‘safeguarded funds’ that should have ensured customer money was untouchable and safe in case of any insolvency.”
They added that many customers they had spoken to were “private individuals or small business owners who have said that they will never recover from these losses.”
Agrawal stepped down as the company’s chief executive in 2016 and resigned as a director in 2022.
However, according to Companies House filings, he still held over half of its shares when it collapsed last year.
The latest report from administrators comes after City A.M. revealed the firm 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 in the scheme, sometimes transported into branches in bin bags. Documents from a case against Natwest in 2021 reveal that millions were whisked out of the Natwest accounts onto Rational FX‘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.
The revelations come as Agrawal has been talking up his past as a fintech entrepreneur on the campaign trail in Leicester East.
“As a fintech entrepreneur, I built a team that challenged the status quo by lowering the cost of moving money for migrant workers and businesses alike,” he writes on his campaign website.
Agrawal did not respond to a request for comment. After City A.M. contacted him for a response to a previous story, a Labour Party spokesperson replied: “Rajesh Agrawal stood down as CEO in 2016 and took up a role as non-executive director and was not active within the business. He stood down as a non-executive director in 2022.”
City A.M. understands that police have not investigated Agrawal. A spokesperson for Agrawal claimed the company complied with all anti-money laundering regulations while he was in charge.
The Financial Conduct Authority is working with the company’s administrators and is looking to understand the circumstances that led to its insolvency, City A.M. understands. The FCA says it cannot comment on individual companies.