Memorandum by Linc Consortium (LU 15)
1. I was asked to be Chairman of Linc with
effect from February 2000 on the introduction of Lord McNally.
He was aware of my previous role as Chairman of the Policy Committee
at the Corporation of London and before that as Planning Chairman
and felt that Linc could do with someone with a City background
but with London-wide involvements. I am Senior Partner of Solicitors
Maxwell Batley and I sit on the Boards of British Land plc and
UBS Warburg Limited. I hold an MBA from City University and have
Honorary Degrees from them as well as London Business School,
South Bank University and the RIBA.
2. I signed a Confidentiality Agreement
with regard to the commercial aspects of the Linc bid but believe
that that no longer applies since both contracts that Linc bid
for went to competing consortia. On the other hand, I was not
privy at any stage to the figures that were under discussion with
LUL Management. This was because my role was to be ready to run
the Board from the moment that the infraco came under our management
when one of the bids became successful. I did not chair the consortium
negotiation meetings but kept in touch with the "political"
aspects throughout the 18 months of my involvement.
3. Having read the Invitation to Tender,
I was aware of the general shape of the likely contract for the
BCV line, which was the first group that Linc bid for. I was also
aware that LUL's examination of the state of the infrastructure
had been taken as given and only a comparatively small amount
of due diligence was carried out on the tunnels, tracks, trains
etc. There where stages at which the ITT was modified at the request
of LUL, eg graffiti cleaning was to be built into the pricing
for 30 years. As a result of these modifications my understanding
was that during the summer of 2000 the aggregate price for the
required works was rising rather than falling.
4. Around Christmas 2000 indicative prices
would have been in the possession of LUL for all of the contracts,
including early estimates for the Sub-Surface Lines. My understanding
is that HM Treasury regarded the aggregate as being unacceptably
high and the message was passed to all bidders to either remove
or delay defined elements of the works so as to bring the aggregate
price down or push expensive work into later years. I believe
the bidders complied with this approach even though it would have
resulted in delayed improvements to the infrastructure and a much
flatter profile of work coupled with a lower quality of improvements.
5. At about the same time Mr Kiley became
involved as Commissioner for TFL with a mission to undermine the
principles and operation of PPP. What face to face meetings took
place with his team generally amounted to a one-sided redefinition
of the works combined with a greatly increased power of intervention
on the part of TFL. Severe doubts were cast on whether the modified
bids (intended to meet these criteria) could raise the required
bank finance to enable the PPP to go ahead. I indicated this to
6. Mr Kiley's appointment as Chairman of
LUL was greeted with incredulity on the part of the bidders because
of the conflict of duty between having to comply with the statutory
requirements to implement the PPP and his political stance on
behalf of TFL which was to destroy it. It therefore came as no
surprise that the rest of the LUL Board threatened to resign unless
Mr Kiley was removed as Chairman and this duly occurred following
the June 2001 election.
7. On 15 September 2001 Linc were advised
that they were again number two in the bidding, were given reserved
bidder status but in effect the team has been disbanded and the
only work currently being undertaken is concerned with securing
their entitlement to part of their costs being reimbursed under
the arrangements for unsuccessful bidders.
Michael John Cassidy, Chairman
15 October 2001