Unite the Union paid a firm owned by a friend of its leader Len McLuskey £95 million for a hotel project that was only supposed to cost £7 million, it has been reported.
Flanagan Group – run by McCluskey’s friend Paul Flanagan – received the money as the primary contractor for the building of a conference centre and hotel in Birmingham for the UK’s largest trade union.
A crisis meeting is set to be held on Friday at which the union’s ruling council will receive a report into the financing of the project, after further evidence of the raising costs of Unite’s flagship project was reported in The Times.
Last month, the newspaper was accused of an ‘astonishing level of inaccuracy’ when it was put to Unite that the total expenditure on the project was now significantly higher than £50 million.
Now, The Times has said that it has seen confirmation that the union’s spending on the complex has already reached £96.5 million – £94.9 million of which has gone to Flanagan Group, included money for subcontractors.
Questions have been raised over the funding of a luxury hotel and conference centre in Birmingham for Unite the Union – the UK’s largest trade union. The project – which includes a 170-bedroom Marriott-branded hotel, a conference room, an education centre and regional offices for Unite – has now reportedly cost £95 million, after it was only supposed to cost £7m
Of that, the newspaper says that 24.5 per cent was paid directly by Unite, while 75.5 percent was paid for by Black horse HCC, a company that is fully owned by Unite.
Its directors are McCluskey and four members of the union’s executive council.
It is believed that the overall profit for the Flanagan Group will be more than £15 million, despite work finishing last year significantly late and over budget having begun in 2016.
Questions are likely to be raised at Unite’s Friday meeting about how the contracts were awarded and the level of scrutiny that was applied to the fees charged by contractors during the project’s four years.
Flanagan Group is a Liverpool-based company run by Flanagan. Merseyside Police is investigating the firm amid an inquiry into the sale of council land – and Mr Flanagan himself was arrested in September on suspicion of conspiracy to commit bribery.
Another contract for the hotel project went to a company owned by David Anderson, the son of Liverpool mayor Joe Anderson. Both men were also arrested by Merseyside Police last year.
There is no suggestion that the Unite contract is linked to the police inquiry.
There is also no suggestion of any wrongdoing in the decision to award the contract to The Flanagan Group – or that Mr McCluskey had anything to do with the tendering process.
Mr McCluskey has previously described Flanagan Group as ‘a working class family who have made good and never forgotten their roots.’
Unite’s chief Len McCluskey (pictured) called a crisis meeting into the financing of the building after details of the project came to light. Mr McCluskey has previously described Flanagan Group as ‘a working class family who have made good and never forgotten their roots’
Merseyside Police is investigating Flanagan Group amid an inquiry into the sale of council land – and Mr Flanagan himself was arrested in September. Pictured: Paul Flanagan (left) with Len McCluskey (right) at the unveiling of the artwork at the St Thomas Street Hotel, Victoria Street, Liverpool [File photo]
The furore over the deal was first revealed by the Mail in December, while Unite’s executive council was told in 2012 that the total cost of the proposed Birmingham venue would be ‘in the region of £7 million’.
Unite has around 1.1 million members who contribute more than £150 million every year. The Union said the contract was awarded to Flanagan following the ‘strictest competitive tendering process.’
Gerard Coyne – an ally of Sir Keir Starmer who wants to succeed Mr McCluskey as general secretary of Unite having narrowly lost a 2017 leadership bid against him – called for ‘openness and transparency’ on the eve of crisis talks.
In an open letter to Unite’s members on Thursday, Coyne wrote that its leadership must answer ‘widespread criticism and serious questions over the hugely-over-budget project’.
He added that members had a right to know whether money had been spent ‘wisely’ and ‘properly overseen’; what the scheme’s true cost was; and whether contracts were awarded in the correct fashion.
On the eve of a special meeting of Unite’s ruling body tomorrow – which was called by McCluskey following revelations about the project – Mr Coyne urged the union to clean up its act.
He pointed out that it has ‘no code of conduct, no register of interests and no requirement to declare gifts and benefits’.
Mr Coyne called for the introduction of strict rules on these matters, which should apply to everyone at the top of the organisation, including Mr McCluskey. ‘It is the basic minimum in any well-run organisation, let alone one which should stand for moral authority,’ he said.
Gerard Coyne (pictured) – an ally of Sir Keir Starmer who wants to succeed Len McCluskey as general secretary of Unite – called for ‘openness and transparency’ on the eve of crisis talks over a hotel deal [File photo]
‘This union can be a powerful force for good but only if we embrace openness and are transparent.’ Mr Coyne, who narrowly lost the bitter battle for Unite’s top job in 2017, confirmed he plans to run again when Mr McCluskey steps down next year.
Unite has said of the Birmingham project: ‘Continuing efforts to create the impression that something untoward has occurred with the construction of our Birmingham facility are pathetic.
‘This is a world-class facility, which will provide conference, education and hotel facilities for our entire union and help regenerate a neglected part of the UK’s second city.
‘The costs and management of the project will be considered by our executive on Friday. It would be completely inappropriate for Unite to enter into discussion of these with the media beforehand.’