Labour candidate under fire after collapsed FX firm left clients £15m out of pocket
A Labour parliamentary candidate is facing questions over his past business career today after the FX firm he founded collapsed and left customers millions of pounds out of pocket.
RationalFX, which was founded in 2005 by Rajesh Agrawal, who is the Labour candidate for Leicester East and former deputy mayor of London for business, claimed to have handled over $12bn worth of international payments before it folded into administration late last year.
The Canary Wharf-headquartered outfit shuttered its customers’ accounts and blocked them from withdrawing cash before calling in administrators in November. A report from the directors overseeing the insolvency in January then revealed a £14.9m blackhole in its finances due to a “shortfall in safeguarded funds”.
Questions have been swirling around the collapse of the firm since then as customers look to claw back cash via the administration process.
Agrawal stepped down as chief executive in 2016 and moved into a non-executive director role when he was appointed a deputy mayor of London for business by mayor of London Sadiq Khan.
While he resigned his directorship in April 2022, burnt clients are demanding answers over his role in the company’s downfall and questioning how much Agrawal knew of its financial mismanagement before his exit.
“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, a collective set up after the company’s collapse, told City PM
Central to the group’s questions are a series of posts from an internal whistleblower on social media, who alleged that customer funds had been misused and Agrawal was aware of the practice.
“Does Mr Agrawal want to respond to any of the accusations in the whistleblower posts about what he knew about customer funds going missing?” the group said.
The calls come ahead of a crunch report from the administrators in the coming weeks, which will reveal the likely outcome for creditors to the firm.
After City PM contacted Agrawal for comment, 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.”
After its collapse in November, the Financial Conduct Authority warned that funds were not protected by the Financial Services Compensation Scheme, which protects customer funds in regulated banks but not in payment services.
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.
“When Rajesh Agrawal left the company, the business was in a healthy state,” a source familiar with the matter told City PM “However, the impact of leaving the EU did have financial implications for investors.”