Unite union 'broke law' in hotel construction scandal that left £66m hole in its accounts

Auditors discovered several financial failures by the leading Labour donor linked to Birmingham scheme

- Jon Ungoed-Thomas

One of the country's biggest unions, a leading donor to the Labour party, has been found to have broken the law during a financial scandal that saw tens of millions of pounds wiped off its assets.

Auditors uncovered a catalogue of financial failures at Unite the Union, warning that it broke the law because of the lack of effective controls. There has been a write-down of £66m in the union's 2021 accounts over the construction of a hotel development in Birmingham.

The union is among Labour's largest donors, handing more than £6.5m to the party since 2020. Ministers now face calls for an official investigation into the union, which has not published accounts since 2020.

The certification officer, the independent officeholder who regulates trade unions, said on Friday he was reviewing auditor BDO's findings.

An interim report published by Unite last month alleged the private contractor building a hotel and conference centre for the union had paid for football tickets and arranged private jet flights for former general secretary Len McCluskey. He has criticised the report as "inaccurate, selective and highly misleading".

While McCluskey pushed through the hotel project, which was completed in 2020, BDO has uncovered systemic failures inside the union that allowed the costs of the financially disastrous construction to soar unchecked. The project is being investigated by the Serious Fraud Office.

Auditors found a "culture throughout the organisation that did not challenge the appropriateness of transactions and failed to ensure appropriate financial reporting tools were available to support effective governance of the union".

There were no proper procedures in the union for procuring contracts, no system for purchasing orders thus increasing the risk of error and fraud - and no register for disclosing conflicts of interests.