Firm 'proud' of £112m hotel linked to fraud probe

The construction firm behind a £112m hotel complex under investigation by the Serious Fraud Office (SFO) says it is "proud" of its work on the scheme.

Liverpool company The Flanagan Group built the hotel and conference centre in Birmingham for Unite The Union.

It said it had completed the job to the union’s "very specific and changing requirements" and disagreed with a valuation of the complex at £29m – about a quarter of the build cost.

Unite said it was pursuing legal claims "to recover money lost to the union".

The project was intended as an investment for Unite that would also help to save the union – Britain’s biggest – on the cost of hotels and conferences.

It includes a four-star, 195-bedroom Aloft hotel, a conference centre able to accommodate more than 1,000 people and office space.

It has been reported that the original expected cost of the complex was £57m, about half of the final bill.

The Flanagan Group said there were many reasons why costs had changed, including "radical changes to design and working practices".

The company said the hotel had originally been planned as a five-storey, three-star scheme, but this was changed to a six-storey, four-star specification.

The Flanagan Group added the union had issued "a 'contract instruction' requiring that all workers must be trade union members, all workers to be paid national agreed rates, with no agency labour whatsoever, and that British construction materials were to be used wherever possible".

The building firm said it had "embraced the challenges and we delivered the project, through the Covid-19 lockdown, whilst including all these changes that clearly would affect original costs".

The hotel and conference centre scheme was conceived and built under the tenure of former Unite general secretary Len McCluskey.

He has described it as a “fantastic investment”, and has since said Unite’s internal inquiries into the scheme were "sensible" and "would answer any questions".

One KC-led inquiry, commissioned by Unite’s current general secretary Sharon Graham, identified a missing £14m which has been described as a "mystery" and does not feature in the project’s final accounts.

While Unite has said it was trying to recover money, The Flanagan Group said it was still owed "substantial amounts" by the union and was taking its own legal action to get them.

The union claims Ms Graham has been subjected to "three years of sickening attacks" from inside and outside the union, and that its own investigations had uncovered "serious financial wrongdoing during the previous regime led by Len McCluskey and supported by the United Left factional group".

A Flanagan Group spokesman said: "We cannot comment on any internal Unite political machinations or speculate on the ambitions of the current Unite general secretary, but we would like to make it clear that this scheme was delivered fairly and should be regarded as an exceptional asset for the union."

The spokesman added the company had never been contacted by the SFO in the two years since it was first suggested the agency was looking into the scheme.

A Unite spokesman said Ms Graham had "kept her promise to leave no stone unturned in uncovering any wrongdoing that took place prior to her election".

The spokesman did not respond to the Flanagan Group's claims.

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