Examination of Witnesses (Questions 300
TUESDAY 21 MAY 2002
300. In legal status what is the golden share?
I have not heard of it done this way before.
(Mr Jeffries) It is rather like a restrictive covenant
in that WNSL is restricted from doing certain things without the
approval of Sport England.
301. Thank you for that. Lastly, how was the
Government kept in the loop over the last four years over this?
Did you send them regular monthly reports? Did they send a civil
servant to attend all the meetings? How were they kept in the
(Mr Cunnah) The Government involvement has varied
over that four year period as you describe. Initially the project
was Government sponsored. Then of course it was transferred to
the FA in the shape of WNSL, when the FA became the lead stakeholder.
During that period up to December 2001 Sport England were the
representatives of what are called government bodies on the board
of WNSL and indeed they had an observer, so we worked closely
with Sport England, particularly relating to the Lottery Funding
Agreement. Since April last year when it became clear that the
original financing proposals were not successful we have worked
very closely with the Government on such an important project
and therefore I would say that from then there has been a lot
of co-operation and we have worked closely with DCMS.
302. The question I asked was, has one person
from DCMS, one Permanent Secretary or one Under Secretary, been
(Mr Cunnah) Not attending board meetings, but we have
worked closely with one particular team within DCMS.
303. At the weekend there was very heavy press
speculation about West LB. Does it worry you that your preferred
supplier of finance is retrenching?
(Mr Cunnah) What is written in the press is not always
absolutely accurate, of course. However, it did cause us to check
that and the bank have assured us that they are not retrenching.
304. What is the name of the principal investment
banker that you have been dealing with?
(Mr Cunnah) Do you mean our advisers?
305. No, I mean the deal maker at West LB that
you have been dealing with. Who is the bank's principal individual?
(Mr Cunnah) Somebody called Robin Saunders.
306. A female?
(Mr Cunnah) She is.
307. There is press speculation that if West
LB go ahead with this retrenchment she might walk out.
(Mr Cunnah) That is the article that we clarified
with them and we were told that there was no substance to that
308. By the banker herself?
(Mr Cunnah) By her colleagues.
309. Right. I am also worried about the third
contractor. First of all, we had MPX as a preferred contractor,
then it was Bovis/MPX, and then there was no Bovis, and the Tropus
report says that was hasty. Would you like to comment?
(Mr Cunnah) If I may correct you, Bovis/Multiplex
was the preferred contractor and ultimately during the negotiations
Bovis dropped out leaving Multiplex on their own. As I understand
from the process at the time and being a board member at the time,
that was a certain natural process in the negotiations. Bovis
dropped out knowing that Multiplex would carry on and indeed that
was amicable between the two companies.
310. Did Bovis give their reasons to you as
(Mr Cunnah) Not me personally.
(Mr Jeffries) No. I think we could speculate by saying
that of course in December 1999 Bovis was acquired from P&O
by another Australian competitor of Multiplex and that may have
had something to do with it.
311. It may be completely unimportant, but what
you are saying is completely the opposite from the previous people.
They said that the letter was written to Bovis telling them to
go. You have just said the opposite.
(Mr Jeffries) I did say I was speculating. That may
be a cause.
312. Mr Jeffries, is it not true that everything
up till the recent negotiations has been really exciting and fascinating
and a shambles, but that we all hope that the boring bit has started
now where it is going to go through, it is going to go through
smoothly and then only the football will be exciting? Is that
really the situation? Just for clarification, it is very easy
for people hearing all this interesting stuff to think that it
is still a shambles now. Can you assure us that it is not?
(Mr Jeffries) Since my arrival, which was a little
over a month ago, I have ploughed through an enormous amount of
paperwork and reports, particularly the Patrick Carter report
and the David James report, and I cannot help but affirm my conclusions
that the conclusions that they reached were ones I agree with.
Those reports were presented in December 2001 and a huge amount
of work has been done to try and regularise the position. There
has been concern expressed this morning about the appointment
of MPX. The irony for me is that the value for money report which
was produced by Cyril Sweett I thought as a professional was a
very thorough and competent piece of work and that came with the
view that this position we find ourselves in today does represent
value for money. The irony is that had we gone through a more
normal procurement process we might have found ourselves more
or less in the same position, albeit significantly earlier than
with the deadline of the reversion of the seven acres of land
hanging over our heads. I commend Mr James for his pragmatic conclusion
in his covering letter to Sir Rodney Walker which says that had
he been given a clean sheet of paper he would perhaps have recommended
a re-tendering process but, given the constraints of the December
2002 reversion, that was simply not a feasible proposition. The
value for money report that Cyril Sweett has done has vindicated
that view and strengthened it. If I can refer back to the Chairman's
question about confidence, from what I have seen so far in terms
of what has been done and in terms of corporate governance, the
management procedures in the project, the personnel that I have
interviewed and talked to, and particularly the situation on the
banking, I am confident that I can support the conclusions reached
by the OGC that we do have a competent management team in place
and the resources to deliver this project now going forward.
313. I am obviously very happy with that response.
I do not like looking backwards, but it is clear from answers
given this morning, both from Tropus and from all of you, that
it is hard to work out why so much money was paid for the stadium
site and the business. I understand commercial accountancy very
well and it is used in different ways. Frequently it is used just
as a balancing figure between what the assets are valued at and
what the purchaser has to pay. Sometimes it is just the business
and that would be the figure in the books. Why did we payI
say "we" because I am a member of the public who buy
the Lottery ticketsso much for it? The Chairman asked are
the FA and WNSL not paying for their own goodwill, because if
they decided not to play the games then the business was not really
worth very much.
(Mr Jeffries) For me it is a very difficult question
to answer. Clearly, assets have different values in different
timescales. Even if one buys shares in the Stock Market they can
vary in value subsequently. One normally buys a business or an
asset in the expectation that one will do something with it, and
sometimes the assets of a business are worth more to one organisation
than they do to another, so clearly there was an awful lot of
judgement taking place and also, I can only presume, it was an
open market position in terms of other bidders for the site and
the expertise that was brought in to value the business and the
assets at the time.
314. I have asked this question in many a way
to try to find these things out but I have never been successful
in getting the answer back that I wanted. Having listened very
carefully to all the responses, it is clear to everybody that
the site is not worth the money. My fear has always been that
we got over-excited over the 2006 World Cup and that is really
why so much money was being bid for Wembley at that time, because
there was a real need for speed, and then we have tried to justify
it afterwards for different reasons. Do you think there is any
truth in that?
(Mr Jeffries) It is very difficult for me to answer
(Mr Cunnah) No, I do not believe that the 2006 World
Cup bid had an impact. The price of any business is judgement
and there is a point at which in the negotiations one company
will say they will sell and another company wishes to purchase.
At the time we believed that was a market price for the business.
That was evidenced first by the valuation report; that was ascertained
at the time, and also the fact that there were other potential
purchasers in the market.
315. Coincidentally, yesterday the Evening
Standard said that the Government were going to get nowhere
near the £125 million they hoped from a sale of the Dome
site, and yet I think if any of us were property developers and
we had the choice of buying the Wembley site or the Dome site
where the football was involved in one or the other or neither,
I think we would all choose the Dome site because we can sell
desirable houses on the Thames to cover the costs quite easily
when it is properties because the Wembley site is factory premises
and that does not affect anyone here.
(Mr Jeffries) As I have some specialist knowledge
of the Dome site, I believe the environmental remedial standards
would not render it suitable for housing without a substantial
amount of money being added to the cost of the land.
316. I have heard people trying to justify the
price of the site on the basis that it was a business and there
was going to be income from it. Can I ask what income there has
been since the purchase of the site roughly?
(Mr Maslin) The ongoing income stream was in the order
of £12-14 million per annum. We basically ran the stadium
from March 1999 to October 2000. In that period we made just under
317. When I asked the question on the income,
was it income you were answering on, £14 million income,
(Mr Maslin) Profit.
318. Should Sport England not have drawn up
an agreement that any profit made from that would go back to them
or should it not go back now?
(Mr Maslin) No. It is quite clear that all the funds
that were realised by the stadium would be channelled into the
project going forward; that was absolutely understood.
319. Can I say to Mr Jeffries, thanks for your
first answer to Alan Keen because, to be honest, that was the
first time today that I started to have some confidence about
the future. Some extraordinary things have been alleged about
what has happened in the past which are of major concern to every
member of this Committee; otherwise we would not be focusing so
much time and energy to this. To be honest, that was the first
time I have heard anybody in any sense be contrite about what
has happened in the past. It is not so much that it was not transparent;
it was not even pearlescent. I have just a niggling question at
the back of my mind which is still about the difference between
ENSDC and WNSL. Is there any technical difference or are those
just different names for the same thing?
(Mr Maslin) They are different names. Up until 19
March 1999 it was the English National Stadium Development Company
Ltd. The name was then changed on 19 March 1999 to Wembley National
4 Footnote by witness: (ie the Bovis/Multiplex
joint venture) position as the preferred contractor was terminated
by WNSL but WNSL indicated that "should either Bovis or MPX
wish to recommence negotiations with us on an independent basis,
we would of course be willing to treat with either party separately."
MPX took up this opportunity but Bovis did not. Both were aware
of the other's position. Back