Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 355 - 359)



  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.


  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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