Guzzling for gold: Junketing is new Olympic sport
Businesses scrambling for a slice of the £9.3bn budget for London 2012 have spent an estimated total of £1.3m on hospitality for Olympic officials. Jane Merrick reports
Sunday 24 August 2008
Senior officials overseeing the building of London's Olympic venues were criticised last night after awarding lucrative contracts to a number of firms which had given them generous hospitality.
An investigation by The Independent on Sunday has uncovered an estimated £1.3m lobbying effort by companies competing for a share in the £9.3bn budget for the 2012 Games.
The junkets have included VIP tickets to the opera and England football, rugby and cricket matches, champagne receptions, garden parties and extravagant lunches and dinners.
The Olympic Delivery Authority (ODA) has a strict policy of refusing hospitality from firms while tendering negotiations are active, and denied suggestions that contracts were awarded on the basis of hospitality.
But official documents seen by the IoS show that, on a number of occasions, ODA executives were wined and dined by firms who were later given multi-million pound deals. There is no suggestion of wrongdoing by either party, but smaller contractors – especially those outside London and the South-east – have complained that they cannot compete with some of the multinationals involved.
The ODA's corporate hospitality register dating from January 2006 to June 2008 records a total of 930 individual lunches, dinners, drinks parties and sport and theatre tickets accepted by 51 executives – more than one event a day throughout the two-and-a-half-year period.
Some firms provided hospitality after contracts were signed while others were not awarded any contracts. Yet £6bn worth of contracts, including security, overseeing the legacy of the Games, and more building work, are still available.
The sheer scale of the hospitality lavished on ODA officials also raised concerns that they are spending too much time enjoying free gifts when they should be focusing on ensuring the 2012 Games are delivered on time and within budget.
As Great Britain celebrated winning 19 gold medals in Beijing in its best performance for 100 years, London Mayor Boris Johnson yesterday said he would attempt to deliver an "intimate" Games and bring the total cost under the current price tag of £9.3bn.
There are concerns that the rising cost of building supplies and a predicted slump in the value of Olympic Village apartments to be sold off after the event means that the budget will exceed £10bn.
The ODA, a public body, is responsible for delivering the venues and infrastructure of the Games, including transport links and security. There are 60 senior officials, including a 13-strong board. The total wage bill, paid for by the taxpayer, comes to more than £2m a year, not accounting for junior-ranking employees. Nine ODA officials declined hospitality.
The hospitality accepted was offered by 250 companies, lobbyists and organisations with varying levels of interest in the 2012 Games.
It includes 11 breakfasts, 130 lunches, 243 dinners, 79 drinks parties and 167 receptions. There were also 92 tickets to sport events, often including VIP hospitality and the best seats, 73 tickets to the theatre, opera or art exhibitions and 133 seminars or conferences. One executive recorded two nights of hotel accommodation. The estimated total cost, including expenses, is £1,347,825.
The construction firm Lend Lease, heading a consortium selected in March 2007 as the preferred bidder to build the £1bn Olympic Village, gave hospitality on seven occasions, at least one of which pre-dated its being chosen.
Lend Lease said yesterday that it did not offer hospitality to anyone from the ODA before it was selected as preferred bidder.
But the ODA's own documents show that ODA chief executive David Higgins accepted dinner paid for by Lend Lease on 10 February 2006. They also paid for dinner on 7 March 2007, two days after they were chosen. Mr Higgins is a former group chief executive of Lend Lease.
Mark Channon, an ODA project sponsor, accepted tickets from Sir Robert McAlpine Ltd to see England vs Ireland at rugby in Twickenham on 18 March 2006. McAlpine won the £500m contract to build the main Olympic stadium in July 2007.
Mr Higgins, the former chief executive of regeneration quango English Partnerships, who earns £372,600 a year before bonuses, accepted a total of 102 offers of hospitality, the highest of the organisation.
They included cricket matches, seats at the Royal Opera House in Covent Garden and champagne receptions.
Sue Kershaw, the head of programme management, accepted 76 offers, including tickets to the last night of the Proms on 9 September 2006 and a charity ball on 21 November 2006, both paid for by construction company Costain. Costain also paid for a champagne reception attended by Mr Higgins on 1 September 2006. In 2007 it was bidding for a contract to build roads and bridges around the Olympic Park, but lost to Skanska in January this year.
Alison Nimmo, director of design and regeneration, accepted 39 offers, but there is no evidence that they were provided before any contracts were signed.
Companies are invited to use an online agency to compete for contracts, but the documents reveal how much lobbying takes place over dinner or in the best seats in the house.
Firms outside London – who cannot as easily offer dinners in the capital – complain that companies based in the South-east account for 70 per cent of contracts won.
ODA officials and employees have also claimed expenses worth £109,307 over two years.
The Conservative spokesman for Culture, Jeremy Hunt, said: "As the budget for 2012 has already trebled, and with ongoing concerns about the progress of projects, I'm sure most people would rather the ODA officials spent their time ensuring London 2012 comes in on time and on budget rather than being wined and dined."
The ODA defended the acceptance of the hospitality, saying it was essential to meet representatives of companies who were interested in contributing to the 2012 Olympics.
Asked how many contracts were awarded to companies who had been given hospitality by ODA staff, a spokeswoman said: "None." She added: "Due to the nature and scale of this project, it is vital to foster good working relationships with contractors, sometimes through occasional hospitality.
"However, it is ODA policy that staff should be careful to consider the appropriateness of accepting any corporate hospitality and that they do not accept any form of hospitality from a prospective contractor or supplier in any active tendersituation."
She said that, in the period between April and June this year, two out of three offers of hospitality were declined.
"We actively help businesses, particularly small and medium sized companies, identify and compete for opportunities to work for London 2012.
"Over 650 contractors have won work supplying the ODA worth over £2bn in total, and of those, 46 per cent are based outside of London and 70 per cent are small- and medium-sized."
Spokesmen for Sir Robert McAlpine Ltd and Costain Ltd were unavailable for comment.
A spokesman for Lend Lease said: "No hospitality was offered to the Olympic Delivery Authority from Lend Lease until we were selected as preferred developer. Proportionate hospitality can be important in building relationships in what is a huge project to be completed against a tight deadline.
"Lend Lease and the ODA have agreed a Development Management Agreement to ensure the Athletes Village is delivered for the London 2012 Games.
"This development management agreement is separate to the discussions on the long-term financing of the project which the ODA and Lend Lease remain committed to and expect to finalise at the end of the year."
Mr Johnson said yesterday that 2012 would not match the scale of Beijing and would be more "intimate". Asked how the Games would come in under budget, he told Radio 4's Today programme: "By showing some flair for economy... we are going to have a more intimate games, don't forget.
"We are looking at what we can do with the various sites and venues to make sure that we don't have a significant waste of taxpayers' money.
"I am absolutely determined to make sure that we come in under the £9.3bn. I have no reason to think that we will have any difficulty in doing that."
The Mayor said contingency funds of around £2bn would be used and he would find ways of "moving things around".
However there are concerns that accommodation for athletes in the Olympic Village will be cramped. There will be 3,000 apartments, with five competitors in each.
The security budget could be much higher than the £838m already earmarked, as experts have predicted that the two-week event will be a major terrorist target. There is no breakdown of what security is needed, and insiders predict it would exceed £1bn.
Leading supporters of 2012, including the former 400m silver medallist Roger Black, and Mr Johnson, have said that the experience of London will be more open than Beijing. But because of security concerns it is likely that three royal parks holding events, including Regent's Park, Hyde Park and Greenwich Park, will be closed to those without tickets for the summer of 2012.
Gordon Brown, in Beijing for the handover of the Olympic flag to London today, threw his weight behind the campaign to bring in private sector sponsors.
The Government is aiming to raise at least £80m in sponsorship on top of the £520m promised in Lottery funding and direct support from the taxpayer as part of a six-year package announced in 2006.
The Secretary of State for Culture, Andy Burnham, conceded that funding levels for elite athletes had still not been finalised, fuelling fears that a £100m shortfall in sponsorship may not be met.
And it emerged yesterday that four of the top Olympic sponsors are set to axe their financial support after the Beijing Games close today. The Olympic "worldwide partners" include Kodak, the Chinese computer group Lenovo and Canadian financial services company Manulife.
The Government is contributing £6bn to the cost of the Games, London council taxpayers £1bn, and more than £2bn has come from Lottery funding.
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