“A single employee” of one of the UK’s largest trade unions is at the centre of a bribery, fraud, money laundering and tax evasion investigation, South Wales Police have said.
In a statement circulated to staff at Unite the Union, the force explained that their search of the organisation’s London headquarters last April “was specifically limited to one office and other areas controlled by the employee concerned”.
They added: “It is suspected that a contracted-out service and several affiliated services were awarded on behalf of Unite to companies controlled by other linked persons, in return for personal financial and other rewards.”
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The intervention comes five weeks after Sky News revealed that two independent reports into alleged corruption at the organisation had been handed to the police after “potential criminality” was discovered.
One report was conducted by a senior lawyer and the other by an accountancy firm. Both found evidence of “eye-watering” overcharging on large contracts, according to a source.
South Wales Police have said their work is in its “early stages” and a “dedicated team” of specialist officers and HMRC staff has now been set up “due to the seriousness and level of complexity involved”.
Until this statement, it had not been clear that tax evasion was among the offences being considered.
Soon after taking over as Unite’s General Secretary, Sharon Graham commissioned Martin Bowdery KC to investigate her union’s vastly over-budget Birmingham hotel and conference centre development.
Initial estimates in 2012 suggested the project, which is now complete, would cost around £7m. The final bill is in excess of £100m.
In one instance a contractor quoted around £90,000 for proposed work, but was eventually paid £1.2m, an unexplained increase of more than 1300%.
Insiders concede the gap between the union’s spending on the building and its value is “minimum £31m but could easily be more”.
Earlier valuations of the development suggested £70m of members’ money may have been wasted.
Ms Graham separately instructed accountancy firm Grant Thornton to launch an “external forensic investigation” into Unite’s affiliated service providers.
Accountants discovered one such company had been awarded a contract worth around £100,000 per month for eight years, suggesting a total value of £9.6m.
In November Sky News reported that the union had severed ties with a long-term supplier due to concerns it may have been involved in criminality.
Unite staff were told that the decision was “primarily due to the risk of committing an offence under the Proceeds of Crime Act 2002”.
Sky News has approached Unite the Union for comment.