Unite is launching an independent inquiry into how the building costs of a hotel and conference centre in Birmingham spiralled into a “potentially significant loss” for the trade union.
The inquiry follows reports at the beginning of the year of leaked accounts seeming to indicate that the union had overspent on the 170-room hotel and 1,000-person conference centre.
Unite, which is Labour’s most generous backer, later confirmed that the initial projected costs had been £57m, but that this had soared to £98m, an increase it defended as the result of safeguarding employment practices on site.
Sharon Graham, the recently elected Unite general secretary, said: “While the audit of the Birmingham hotel and conference centre gave the accounts a clean bill of health, a recent expert valuation has now estimated its value as being considerably lower than the costs incurred in developing the site. This represents a potentially significant loss to Unite and has to be investigated.”
She said she had commissioned a QC to lead the inquiry, supported by an external law firm, to review the costs and establish the reasons for the gap. She added that the terms of reference for the inquiry would be agreed in January and that an update was scheduled for March, although no other information would be available in order not to prejudice the investigation.
The outcome will be made public “in a timely fashion”, Graham said, pledging that if any moneys were found to “do everything possible to recover all moneys due back to the union”.
In April, Labour MPs, including the party leader, Keir Starmer, called for an independent inquiry into the Birmingham scheme.
Questions over propriety were raised after it emerged that the contract to build the hotel and conference centre was awarded in 2015 to the Flanagan Group, a Liverpool company run by Paul Flanagan, an associate of Len McCluskey, the union’s then general secretary. Another contract on the project was given to a company owned by the son of Joe Anderson, Liverpool’s former Labour mayor.
Flanagan and Anderson have since been arrested on suspicion of bribery as part of a Merseyside police corruption investigation not linked to Unite.
A Sky News documentary that drew a connection between these events was labelled a “shallow attack on our union” by Unite, which described them as “unrelated”. The union said accountability had been “built into the process to ensure that … we got value for this union’s money”.
In a letter written to the Guardian, McCluskey said the project was a “sensible investment” that would build income and save money on expensive commercially run premises. “This project bears no resemblance to the systemic rinsing of the country going on in Westminster and Whitehall, and it is ridiculous to claim equivalence,” he wrote.
