Examination of Witnesses (Questions 355
- 359)
TUESDAY 21 MAY 2002
MR DAVID
MOFFET, MR
IAN FYTCHE
AND MRS
BRIGID SIMMONDS
Chairman: John Thurso.
John Thurso
355. Good afternoon. We have heard this morning
a considerable amount of evidence relating to what has happened
in the past. The key point, as the Chairman has pointed out before,
is the fact that this project had £120 million of Lottery
money which was given through Sport England. During the course
of your examination of how that money was used there is, in fact,
a note in one of the documents which says that you had two representatives
present at every board meeting of WNSL. Can I therefore ask what
is it that satisfies you that you have been the proper custodians
of £120 million of public money?
(Mrs Simmonds) I think we are satisfied in the first
instance about how the project came to us in the first place.
We had extensive consultations with lawyers and with economists
before we started the project, we did not require there to be
planning permission for the site because there was an existing
use of it, that is outline planning permission, and we had a very
robust Lottery Funding Agreement that if full planning permission
was not granted that money would be repaid to us.
(Mr Fytche) If I could elaborate on that. I think
it is important to go back to the point where this was an open
process, any city could bid, any stadium could bid, and there
were indeed five bidders and Wembley emerged through an open process
involving all the sport that would involve. Subsequent to that,
of course, a grant application came forward for the development
of the project which was thoroughly evaluated and discussed and
approved by the Council on the basis of the financial directions
which applied to all Lottery grants. It is important to remember
that in assessing that application we requested from WNSL a thorough,
comprehensive valuation of the stadium business. They presented
that to us, they commissioned it from Coopers & Lybrand and
presented it as part of the grant application. That was independently
assessed for us by a range of consultants looking at the value
of the business. In addition to that, as Mr Coward alluded to
earlier, we did require the Football Association to enter into
a contract for its events for 20 years with Wembley National Stadium
Limited. That contract was signed on the same day as the Lottery
Funding Agreement. So a range of thorough steps had been taken
first of all to assess the applications on the sites that came
forward, secondly to require the applicants to put forward a thorough,
competent, professional business valuation of the site and, thirdly,
to ensure that contractually appropriate security packages were
put in place over the stadium and its business, including obviously
the staging agreement which Mr Coward referred to earlier.
356. Thus far so good. That is up to the point
at which you committed funding, and I do not think anybody particularly
argues about that although I think some might argue about the
valuation of the actual business. I am more concerned with what
happened thereafter. It is perfectly clear from the James and
BLP reports that the corporate governance of WNSL was woefully
inadequate. It was miles below that which would be appropriate
in a plc and way below that that would be expected in any public
finance. You had two representatives at every board meeting, you
had Citex Consultants who were also looking at it, you had WNSL
coming back to you asking for modifications of the LFA and yet
none of this seems to have rung a bell with you or caused you
any concern.
(Mrs Simmonds) Can I start with where we are with
the Tropus report. The Tropus report was at the board and we did
have representatives there. We are not members of the board, we
are represented there, and quite clearly at the time Sir Rodney
Walker made it clear that he would commission an independent inquiry
into this, which was done.
Chairman
357. So you are not partners?
(Mrs Simmonds) We are not partners, we are monitoring
the project.
358. So Mr Cunnah was wrong to say that you
are partners?
(Mrs Simmonds) Yes. What happened was Sir Rodney Walker
commissioned an independent report which made it quite clear that
although there were issues about best practice there was no impropriety
and in fact there was no fraud involved. We heard quite clearly
this morning from Tropus that they did not believe there was anything
corrupt about it. There were issues about corporate governance
which needed to be taken up, one of them was the changes in the
board at WNSL which was to reflect how the projects would be taken
forward, and we were satisfied that was done. That does not mean
to say that we do not admit that the way that we might have monitored
that project was inconsistent but, as I think you have also heard
from Michael Jeffries this morning, a lot of what was said this
morning is about is professional approach. There are thousands
of project managers in this country, they have all in many ways
a different way of taking these contracts forward and, in fact,
one of the things that Tropus recommended to us, and was a reason
why we stopped the grant for a while, was that it should be packaged
in three separate packages rather than the one that we wanted
to go forward at the end which we considered to be much better
value for money with what has happened.
John Thurso
359. Do you not feel that in the way in which
the procurement process was done, if you read the James Report,
and I do not know if you have had an opportunity to do that,—
(Mrs Simmonds) Yes, we have.
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