Examination of Witnesses (Questions 80
- 99)
MONDAY 13 MAY 2002
MR MICHAEL
CUNNAH AND
MR DAVID
JAMES
80. You are at the stage where everything is
actually agreed between the parties and it is now simply for the
bank and their lawyers to go through them and raise questions
and have them answered? Once the bank has completed their review
of the contracts and the conditions are fulfilled, you have a
firm offer?
(Mr Cunnah) There are many more contracts,
with other stakeholders for example, but your analysis of the
process is correct.
John Thurso: I think I have got the answer
I was after but I am not sure.
Chairman
81. ***.
(Mr Cunnah) ***.
82. ***.
(Mr Cunnah) ***.
83. ***.
(Mr Cunnah) ***.
84. ***.
(Mr Cunnah) ***.
85. ***.
(Mr Cunnah) ***.
86. ***.
(Mr Cunnah) ***.
87. ***.
(Mr Cunnah) ***.
88. ***.
(Mr Cunnah) ***.
Chairman: ***.
Alan Keen
89. Frank Doran seemed to be implying that really
the FA had paid too much for Wembley Stadium for a relatively
small amount of land in the middle of a pile of ramshackle old
factory units. If he was right in saying it was too much money,
how much of that money was because it had the Wembley name and
was at the time of the 2006 World Cup bid? Do you think that had
a great influence on the price?
(Mr Cunnah) First of all, can I take
the opportunity to clarify what I know is a boring legal point
but it was Wembley National Stadium Limited that purchased it
and Wembley National Stadium Limited that received the Lottery
money to purchase it. The 2006 World Cup bid did not have any
impact on the timescale. As I said before, the purchase was on
the basis of the valuation of the business and the World Cup 2006
bid was not a part of that.
90. So it was not a part? It did not have an
influence on the price but it was around that time, was it not?
There was a great urgency to be able to say to the rest of the
world "remember historical Wembley". I had the feeling
at the time that that had a lot to do with it. When I visited
it as part of the Committee I was really disappointed with the
outlook from the balcony. When we were going to get an even larger
stadium the outlook from it was going to be even more disappointing.
We were all seriously disappointed that we did not own, for that
money, very much of it. I could not help but think at the time
that the World Cup bid had a lot to do with going for Wembley
Stadium rather than looking for another location.
(Mr Cunnah) I think it is true that the
World Cup bid would have perhaps been even stronger had we Wembley
underway but the advent of the World Cup did not have a bearing
on the investment decision.
91. Right. At that time of the bid did you feel
there was any political pressure coming from somewhere within
Government that you have got to get ahead and do this because
Britain or England wants the World Cup? I wanted it, I am not
disagreeing with it, but I am saying did you feel there were pressures
coming upon the management of Wembley from outside from where
political pressure comes. Government is at arm's length from virtually
everything to do with sport. Tony Banks was not happy and I am
not either. Do you feel political pressure made a difference to
the decisions?
(Mr Cunnah) No, I do not think the pressure
made a difference. I think everybody felt pressure in terms of
wanting the World Cup bid to be as good as it could be, or any
other anticipated event, but that did not affect the decision-making.
Perhaps what was more in mind throughout the process was the timetable
and deadlines relating to the funding and the need to move on
with the project so that we did have a new stadium in the foreseeable
future.
92. I have been pursuing that line of questioning
because I passed the Dome this morning and that is a wonderful
sight and Wembley does not compare with that, as far as prestige
is concerned, other than the name itself. That is why I have always
felt the pressures were based on the World Cup bid and that is
why I am asking those questions.
(Mr Cunnah) We have always seen ourselves
as being slightly different to the Dome because we have the events
for the stadium and those events will always be there when the
stadium is ready to take them. That is how we perceive the difference
between the two.
93. I did not have enough time to read this Tropus
report fully. I made various comments on a piece of paper but
I had to rush through it very, very quickly. It is frightening
really. My approach is one where I prefer—and I worked most
of my life in the private sector—to put the past behind
me and say whatever happened, we have got to look forward and
make the right decisions. In a way this is what Mr James's report
seems to be saying: "It is awful and we have got lots of
criticisms but we have got no alternative but to press forward."
I agree with that and that suits my personality really well. But
when I look at the report it frightens me that we have still got
the same company. Before you answer that, can you tell me how
did BMPX become MPX? Did Bovis drop out?
(Mr Cunnah) That is correct, Bovis did
drop out.
94. Why did that happen? Why did Bovis disappear?
(Mr Cunnah) It is clearly a question
to be directed at Bovis. I think they were unhappy with the terms
that were being negotiated at the time.
95. So it was their choice? It was not something
in the report that made somebody say, "We do not want Bovis
involved", it was the other way round?
(Mr Cunnah) Bovis dropped out voluntarily,
hence my response.[15]
Alan Keen: It might have been connected,
mind, but I do not want to put words in your mouth. Can we really
forget all the problems? One phrase that I noticed particularly
was page 24 where MPX are accused of having built in fictitious
holidays of five weeks. Presumably they put that in to give them
a cushion. Presumably if they had fictitious holidays it meant
if you would accept the five-week holiday that gave them a cushion
and yet the word fictitious must have been used because there
was never a holiday, they were going to carry on working on a
project like this. No one is going to pack in for five weeks of
the school holidays. That is just one example.
Chairman: Scuttling the budget, that
was what it was.
Alan Keen
96. Can we really be happy? Have the people you
say have agreed the finances now seen the Tropus report? Are they
giving money and saying go ahead and build this stadium to a company
that seems to be guilty of these accusations? Have they seen the
Tropus report?
(Mr Cunnah) Yes. The board received the
Tropus report in full. At that point realising that the allegations
that were made were serious, the board decided that they needed
to be properly investigated. Indeed, that is when Mr James was
approached in order to do that work. On Mr James's recommendation
WNSL appointed Berwin Leighton Paisner, a very eminent law firm.
The board took very seriously the allegations and most particularly
acted on the findings and the recommendations of Mr James. We
as a board have to acknowledge that there were mistakes that were
made. I, as a member of that board at the time, accept my part
of the responsibility, but what we have since done is put in place
every one of those recommendations to make sure that going forward
the Government, and indeed the country, can have confidence that
this project is now being run very correctly. We have had the
value for money test that Cyril Sweett, the quantity surveyors,
have undertaken to show that the contract is value for money.
I think that can reassure you that the price that we are paying
is appropriate for the work that is being done. We have also addressed
the other concerns such as on corporate governance we have a board
now which has been chosen on the skill sets required to deliver
a stadium of this type rather than perhaps as representatives
of the FA and Sport England as was designed before. So now we
have people who are expert through their experience on marketing,
finance and construction.
Chairman
97. Presumably you felt you had those before
otherwise you would not have proceeded? You would not have proceeded
on the basis of not having these people whom you felt you could
trust and who were capable. How can you be more confident now
than you were then when you presumably were confident?
(Mr Cunnah) In reviewing the corporate
governance with the Government, Sport England and the major stakeholders,
the old board (which was made up of representatives of each organisation)
had certain skills which were appropriate to the project but it
was felt that—indeed Mr James recommended—for example
that somebody with specific construction expertise should be appointed
as a non-executive director. We three stakeholders picked up that
recommendation and not only implemented Mr Jeffries as the new
Chairman from the construction industry, but followed that logic
through in order to get people in each of those areas in order
to take the project forward to better effect. What we have also
done is create some specific sub-committees that they and the
executive directors will sit on to look in detail at those areas
so that there is more co-ordination between the board and management
team, and we believe that to be very productive as well.
Mr Doran
98. Is that an admission that the contents of
the Tropus report were accurate and are the people who were responsible
for what went before still in post or have they moved on?
(Mr Cunnah) Mr James identified in his
report that there were some errors that had been made and, as
I say, we acknowledge those. Some of the people who were involved
are no longer with WNSL.
99. But are the senior people still there?
(Mr Cunnah) Again there are some senior
people who are no longer involved and some who are. We have moved
on with a revised team and we believe now that we are well set
to move forward successfully. In addition, we have the Office
of Government Commerce come to review our business in March and
indeed they concluded that the project was well managed, tightly
controlled and viable and recommended that it move forward to
contract stage.
15 Note by WNSL: the position of BMX (the Bovis/Multiplex
joint venture) is that the preferred contractor status was terminated
by WNSL but WNSL indicated that should either Bovis or Multiplex
wish to recommence negotiations with WNSL on an independent basis,
WNSL would of course be willing to treat either party separately.
Multiplex took up this opportunity but Bovis did not. Both were
aware of the other's position. Back
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