Unite union probe finds alleged £70m black hole from hotel project

One of Britain’s biggest trade unions Unite is sitting on a £70m loss from building a hotel and conference centre in Birmingham, according to a report out today.

An independent investigation by the union has established that its former general secretary Len McCluskey was “good friends” with directors of the main contractor which was given the job without a competitive tendering process.. The contractor, Liverpool-headquartered Flanagan Group, gave the left-wing firebrand Mr McCluskey Champions League final tickets and flew him there by private jet, according to a report published today.

Unite has identified what it claims is £30m in overcharging on the hotel project. Britain’s second biggest union says it spent at least £110m on a project that has been valued at just £37.5m. Flanagan Group told the Mirror that nobody was available for comment on today’s report. Mr McCluskey's lawyers told the BBC that he paid for his own travel in full and that, to his recollection, he always paid the cost of his football tickets.

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Unite’s current General Secretary Sharon Graham commissioned the investigations - dubbed Project Clean-Up - after she took over from Mr McCluskey in 2021. In April 2022, South Wales Police raided the Unite offices of a senior official, as part of an ongoing investigation into alleged “criminal offences of bribery, fraud, money-laundering and tax evasion”. That official has left the union following a disciplinary process.

Ms Graham said: “When I was elected, I pledged to uncover the truth about allegations of historical corruption, particularly in relation to the Birmingham Hotel and Conference Centre. Today I have delivered on that promise. Getting to the truth has been ugly, with those with much to lose and different agendas using abhorrent tactics, in order to frustrate and divert the process. These tactics did not work.

“Regardless of where the ongoing police inquiries lead, the independent investigations are clear: money left our union when it should not have. And other money that should have come into the union did not. I make our members this promise: I will do everything in my power to get our money back.

“Creating transparency through the publication of this report is only the start. We need to ensure that this can never happen again. Looking to the future, Unite is in a very strong financial position. Our substantial resource going forward will be focused on the frontline, the workplace, strike pay, opening offices, and defending workers.”

Unite has more than 1.2m members and says it is in a “very healthy financial position” with liquid assets of over £160m and a balance sheet of around £400m. But an independent inquiry it commissioned from Martin Bowdery KC found that the union had been overcharged at least £30m by the main contractor on Birmingham.

This alleged overcharging included “numerous unexplained bills”, with the union claiming that holes in blockwork walls should have cost £91,000 when in fact Unite says it was charged £1.3m. It accused Mr McCluskey of signing the contracts with the Flanagan Group and claimed he “overruled Unite staff who raised questions, and overruled Unite’s lawyers who advised against the contracts”.

Mr McCluskey has said decisions were made by a former finance director who died in 2020 and that the high costs of the project were justified by the use of union labour. The Flanagan Group has said that it was "proud" of its work on the scheme and blamed "radical changes to design and working practices" for rising costs.

The Serious Fraud Office is investigating the hotel project but a spokesperson said: “In line with long established practice to avoid prejudice to law enforcement activity, we can neither confirm nor deny any investigation into this matter."