The giant Unite union has commissioned an independent QC-led inquiry into a £100million hotel and conference centre built on the orders of former general secretary Len McCluskey.
Mr McCluskey’s successor as general secretary of the UK’s biggest union, Sharon Graham, yesterday revealed the complex was now worth less than the cost of building it.
The project – revealed by the Daily Mail last year – has been dubbed Red Len’s Folly and was built amid claims of cronyism.
Paul Flanagan was a friend and colleague Liverpudlian who won the contract for construction of Birmingham’s 4-star complex.
But costs, funded by Unite’s 1.4 million members, spiralled from £35million to £57million before construction even started. The seven-storey building eventually cost £98million to complete.
The giant Unite union has commissioned an independent QC-led inquiry into a £100million hotel and conference centre built on the orders of former general secretary Len McCluskey. The complex of the Birmingham Hotel and Conference Centre is shown in this photo
Mr McCluskey’s (pictured) successor as general secretary of the UK’s biggest union, Sharon Graham, yesterday revealed the complex was now worth less than the cost of building it
In August McCluskey, a left-winger, was elected general secretary. It became apparent that the members would have to continue to fund the project for at most two more years in order to prevent it from going bankrupt.
Yesterday Miss Graham revealed the complex was now valued ‘considerably lower than the costs incurred in developing the site’.
She stressed: ‘This represents a potentially significant loss to Unite and has to be investigated.’
She said the union was commissioning an independent inquiry to ‘review the costs incurred and address the question of how and why this difference has arisen’.
‘These questions need to be answered in a timely fashion and in order to ensure transparency the outcome of the inquiry will be made public. I will also be doing everything possible to recover all monies due back to the union.’
She said an audit had given the completed project’s accounts a ‘clean bill of health’.
This hotel complex also features new union offices, an education centre and a conference center. It was designed to reduce hotel room and conference costs.
Local Labour MP Khalid Mahmood, a Unite member, said: ‘This is my fellow members’ subs which pay for schemes like this. I applaud the general secretary’s commitment to get to the bottom of what has gone on here and where the money has been wasted, if that proves to be the case.
‘But it is regrettable that the previous regime were not as transparent as the new general secretary seems to be.’
The hotel development’s key contract was awarded to Liverpool-based Flanagan Group. SSC, owned by David Anderson (son of Joe Anderson), was awarded the health and safety contract.
In a corruption investigation not related to Unite, Mr Flanagan was arrested along with both Andersons last year. They were all released after being investigated and denied any wrongdoing.
There is no suggestion of any criminal wrongdoing in the union’s dealings with either company.
Mr McCluskey previously said the hotel’s costs rose because the union used contractors which paid national rates of pay. As a response to Grenfell’s tragedy, McCluskey also cited health and safety factors.
In April he claimed the project was a ‘sensible investment of members’ money, resulting in a world-class facility that will return an income for our union for generations to come’.