Len McCluskey, the former head of Unite, accepted private jet flights and football tickets arranged by the company building a multimillion pound hotel for the union, according to an internal dossier.
The Flanagan Group, which is run by friends of McCluskey, overcharged Unite by at least £30m for the Birmingham hotel and conference centre project, the interim report said.
It also found that McCluskey “overruled” advice from staff and the union’s lawyers in signing the construction contract with the Flanagan Group.
Unite’s report said the flights and tickets were “consistently organised and paid for by” the company and there was “no indication” that McCluskey later reimbursed them.
He denied he had overruled staff or lawyers. The Flanagan Group did not respond to requests from the BBC and the Guardian for comment.
McCluskey, who was Unite’s general secretary between 2010 and 2021, was a key player in the labour movement and the leading financial backer of Jeremy Corbyn when Corbyn was Labour leader.
The spiralling costs of the Unite hotel in Birmingham, which was supposed to be a financial investment, have hung over the union for years. The Serious Fraud Office launched an inquiry into the project last year.
Sharon Graham, who replaced McCluskey as general secretary, commissioned a specialist construction lawyer, Martin Bowdery KC, to investigate the project’s costs and accounts.
A summary of his interim report, seen by the Guardian, said:
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Unite awarded the Flanagan Group the contract to build the hotel with “no competitive tendering process” and despite the company “having a history of poor performance, delays … and cost overruns on previous contracts”.
A statement from Carter-Ruck said McCluskey was “deeply disappointed” by the statements and report published by Unite, which McCluskey claims were issued without any prior reference.
Regarding the flat loan, his lawyers said it was made in accordance with Unite’s home equity scheme. “At all relevant times, this scheme was open to all officers of the union, in recognition of the expectation that most, if not all, of Unite’s officers would (at that time) work from the union’s central offices in London,” the statement said.
“We are instructed that the scheme did not require prior approval from the Executive Council on a case-by-case basis.”
McCluskey’s lawyers said he was not aware of the concerns of staff or union lawyers at the time the construction contract was signed, did not recall signing the main contract and was not involved in the decision to select the Flanagan Group.
His lawyers have said he categorically rejected any suggestion of improper dealings.
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McCluskey took flights to watch his team, Liverpool FC, play in the 2018 and 2019 Champions League finals in Kyiv and Madrid, according to Unite’s report. It said McCluskey received tickets for five Liverpool games in the UK, four of which included matchday hospitality.
It said “the evidence for this comes from tickets and flight information sent to Len McCluskey’s Unite email”.
McCluskey’s lawyers told the BBC he paid for his travel in full and recalled travelling with a commercial carrier on one of the flights.
They said he occasionally attended football matches with the Flanagans but invariably paid his way and did not believe he attended all the domestic matches detailed in Unite’s report.
Initial estimates for the hotel project in 2012 suggested it would cost around £7m.
In the end, Flanagan Group was paid a £96m for its work on the four-star hotel and conference centre, which opened for business in 2021.
In his report, Bowdery said £30m of that was overcharging and the company submitted bills “massively over the original estimates”.
In one instance it is claimed the company charged £1.3m for work that should have cost £90,000.
The Flanagan Group was also paid £3.7m for adverse weather delays even though it was “not entitled to extra payments for adverse weather”, the report states.
The company did not respond to repeated requests for comment but has previously told the BBC it was proud of its work on the scheme and costs had risen because of “radical changes to design and working practices”.
According to the report, McCluskey said the decision to appoint the Flanagan Group was made by Unite’s former finance director, Ed Sabisky, who died in March 2020. The report said that McCluskey signed the main contract.