Major fraud investigation under way into £112m hotel built by Unite union

The Serious Fraud Office is investigating the construction of a hotel and conference centre owned by one of the UK’s biggest trade unions, the Guardian understands.

Unite the union spent £112m of its members’ money under its previous leadership on the project in Birmingham, which has since been valued at just £29m.

Sharon Graham, who took over as Unite general secretary in 2021, commissioned two separate inquiries into the hotel project and affiliated services provided to members such as car and home insurance.

Unite confirmed that the Serious Fraud Office was now looking at the case, as first reported by the BBC. An SFO spokesperson said: “In line with long established practice to avoid prejudice to law enforcement activity, we can neither confirm nor deny any investigation into this matter.”

Graham would “leave no stone unturned” to establish whether there had been any financial wrongdoing, a Unite spokesperson told the Guardian, adding that she had now put “guardrails” in place to make sure it could never happen again.

Unite shared the two independent reports – one by a senior lawyer and another by a firm of accountants, Grant Thornton – with police after they uncovered what the union said were “very serious concerns about potential criminality”.

The trade union’s plan to build the 195-bedroom complex – which began under the leadership of former general secretary Len McCluskey – had been forecast in 2015 to cost about £35m, but ended up more than three times that.

The hotel project was intended to be an investment for Unite, as well as saving costs for its own events, with a 1,000 person capacity conference centre. It was completed in 2020.

Employment tribunal documents, seen by the Guardian, show that the union believed its ruling executive council had been misled over the true value of the Birmingham project.

In April 2022, South Wales police and HM Revenue and Customs raided Unite’s offices in central London as part of a separate investigation into allegations of bribery, fraud and money laundering connected to the hotel project.

Police took away files and a computer from the union’s office, and also searched a number of other addresses in south Wales, Merseyside, Cheshire, north Wales, Greater London and Northamptonshire. The investigation is still under way.

A Unite spokesperson said: “It is important to note that Sharon Graham has had to endure repeated attacks by those with much to lose since she launched these inquiries, from both inside and outside the union.

“These have been sickening and horrendous but she has remained determined to get to the truth.

“We are also pursuing legal claims to recover money lost to the union and the general secretary has put safeguards in place to ensure that such things can never happen again.”