The Olympic Village., A legacy of corruption or mismanagement?

The Olympic Village., A legacy of corruption or mismanagement?

Going once, going twice……

In August of 2011 before the Olympics and Paralympics were held the Olympic village was sold to a Qatari backed consortium for £557million. The consortium contains Qatar’s sovereign investment fund and the Delancey investment group. The Olympic village which cost £1.1billion to construct contains 2,800 homes of which the consortium purchased 1,439. The deal also includes six plots of land and ten hectares of parkland. The additional land could lead to a further development opportunity of 2000 more homes. The deal is expected to return three quarters of the £1.1billion spent by the taxpayer, so instead of losing £550million we would actually just lose £275million. However, at the moment it’s clear that the taxpayer has only received just over fifty percent of what it cost to construct the village.

The Olympic Delivery Authority who had responsibility for the sale of the Olympic village did suggest that the government would receive a slice of future profits from the development and that this would equate to millions. Apparently the champion of virtue Jeremy Hunt thought that the sale was a fantastic deal that would give the taxpayer a great return.

It might be worth mentioning at this point that Delancey and the Qatari diar have no concrete deadline to build any property on the plots of land they purchased.

The government has not ruled out selling the rest of the Olympic park. Now it wouldn’t be surprising if once again the Qatar backed consortium won that bid. So, let’s delve into why the consortium was successful.

Qatar Investment Fund:

As previously mentioned in my BAA blog Qatar has a growing influence in the UK. The list of assets in both property and shares within companies are impressive. Qatar started to really invest in the UK after the 2008 economic downturn. When prices fell and investors were looking for buyers, Qatar stepped in and made some very shrewd investments. In February 2011 David Cameron as part of his UK for sale tour visited Qatar in an effort to find investment for the UK. Qatar is a very important ally for the UK and is also the country’s biggest liquefied gas supplier.

It might also be worth mentioning that the company sponsoring the Paralympics namely Sainsbury’s is 50% owned by the Qatar investment authority.

The government has tried very hard to increase foreign investment in the UK. Qatar being one of the main investors it favours.

Bell Pottinger

According to the website PR Weekly, the Qatar foundation has been using the PR firm Bell Pottinger. The firm have been managing Qatar’s interests since 2006. Lord Bell a member of the board wouldn’t disclose what work was being done on behalf of Qatar but it was believed that strategic advice for global and regional issues was being sought.

According to the electoral commission Bell Pottinger have, given the conservative party the following donations:

£1,800 on the 16/05/2008

£1,490 on the 17/03/2009

£17,900 on the 29/06/2009

£7,700 on the 18/11/2009

£2,690 on the 17/12/2009

£11,900 on the 18/08/2010

£10,200 on the 17/08/2011

£3,300 on the 03/02/2012

That’s a total of £56,980 since 2008.

Articles from the Bureau of Investigative Journalism have revealed questionable actions and a lack of moral responsibility by the firm.

In the articles, Bell pottinger demonstrates that they are willing to represent countries with appalling human rights records, willing to edit information to improve the image of a client and finally willing to edit information in an attempt to criticise opponents.

It would also appear from some of the claims that Bell Pottinger has contacts within the very heart of the government, maybe even the cabinet. For a lobbying firm to have this kind of access raises serious questions about how much influence they hold and what exactly they are influencing.

I wouldn’t suggest for a moment that Bell Pottinger lobbied on behalf of Qatar for the Olympic village. I am sure they were hard at work lobbying for something else. I just thought it would be helpful to remind everyone that Bell Pottinger did represent Qatar and its interests and that they have strong ties to the conservative party and have donated to that party over many years.

For additional reading on Bell Pottinger please have a look at these articles from the Bureau of Investigative Journalism:

How the Bureau investigated Bell Pottinger
http://www.thebureauinvestigates.com/2011/12/05/how-the-bureau-investigated-bell-pottinger/
Bell Pottinger targeted campaigner on Wikipedia
http://www.thebureauinvestigates.com/2011/12/08/bell-pottinger-targeted-environmental-campaigners-website/
PR Uncovered: What Bell Pottinger said
http://www.thebureauinvestigates.com/2011/12/07/pr-uncovered-what-they-said/
PCC rejects Bell Pottinger’s complaint against Bureau investigation
http://www.thebureauinvestigates.com/2012/07/26/pcc-rejects-bell-pottingers-complaint-against-bureau-investigation/

Delancey:

The Delancey group is owned by the property tycoon James Ritblat. James made a £50,000 donation to the conservative party in April of 2011 and a few months later he was lucky enough to secure along with the Qatar investment fund the Olympic village bid. The Olympic Delivery Authority who is chaired by Sir John Armitt believed that the bid represented good value for money.

Sir John Armitt was nott the first choice as chairman of the Olympic Delivery Authority, they did ask one other person before hand and that was James Ritblats father. Sir John Ritblat. John declined to take that position and instead was appointed to be the chairman of the Olympics Oversight Committee by David Cameron. That’s probably quite lucky because if Sir John Ritblat was the chair of the Olympic Delivery Authority then there would be a direct conflict of interest in the bid as opposed to an indirect conflict.

Rival bidder:

The consortium of Delancey and Qatar managed to beat rival bids from both Hutchison Whampoa and the UK Charity, The Wellcome Trust.

The Wellcome Trust offered £1billion to purchase the Olympic park, on the condition that their Olympic Village bid was accepted by the ODC.

The wellcome trust wanted to turn the Olympic park into a science and technology hub creating 7000 new jobs and providing further investment into the Olympic park area, in the process creating a provision for social housing and social infrastructure. This would have been highly beneficial as unemployment in east London can be considered the highest in London and as a whole the need for social housing is a high priority for the government.

The ODA rejected the welcome trusts bid on the grounds that the offer did not represent value for money for the taxpayer. The welcome trust published a response on their website (According to the spectator) to the ODA’s decision.

‘The Wellcome Trust is disappointed that the Government and the Mayor of London did not wish to take our proposals for the Olympic Park further. If our bid had been successful, our holistic vision for the Olympic Park and the legacy would have delivered a world-class centre for technology and innovation and up to 7000 high-quality new jobs, and it would have made a substantial contribution to the regeneration of East London’

A good deal

Delancey and the Qatar consortium won the Olympic village bid. They paid 50% (£557million) of what it cost the taxpayer (£1.1billion) to build and while we are expected to believe that a further quarter of a billion is in the pipeline the reality is that we will not see that money any time soon. Remember that the consortium has no deadline for construction and therefore, no obligation to develop that area until it sees fit.

Questionable Influence!

The consortium won the bid under more then suspicious circumstances, both Qatar’s overall influence in the UK and James Riblat’s donation of £50,000 to the conservative party would have raised concerns on their own but with his father Sir John Ritblat chairing the Olympic Oversight Committee. It would be impossible to not conclude that a conflict of interests, whether direct or indirect did not occur.

The taxpayer’s choice

The Wellcome trust’s bid provides far more value for money to the taxpayer then the bid of the Delancey and Qatar consortium. The Wellcome trust did not disclose their bid for the Olympic Village. However, it would be safe to assume that the bid must have been in the region of £200 to £500million. This would have been followed up by an additional bid of £1billion in an effort to secure the remaining assets of the Olympic park.

The Wellcome Trusts Vision:

“Our vision is predicated on the premise that the whole of the Olympic Park is substantially bigger than the sum of the parts. At the heart of our proposal is the creation of an iconic hub – the Life Sciences Innovation Centre. This would be the anchor to support jobs, create new businesses, and enable us to develop residential accommodation across the Park to provide homes for the workers and others who want to live there. It could become the Silicon Valley of Europe.”

The key elements of the proposition are as follows:

• Purchase of the freehold.
• Purchase of the Athletes' Village.
• Conversion of the Media Centre into an international hub for world-class research and innovation. Its focus would be technology, application of research for health and innovation, and sports science. It would introduce potentially two academic facilities, a central auditorium and conference centre, shared meeting places, incubator space, space for small and medium-sized businesses, a data centre, and shops and restaurants. It would create up to 7000 jobs within the new facility and stimulate additional new jobs elsewhere on the Park and across east London.
• The financing of the first phase of residential development on the Park.
• Recognition of the needs of the community by establishing a community endowment, to be agreed, to support the wider Park.
• Support for commercial applications of scientific research by establishing venture capital funds targeted on the Olympic Park and health and technology businesses.
• Using our extensive connections across the sciences and the arts to create a visitor experience bringing sport, health and science to life.

At a minimum the Wellcome trusts bid must be worth £1.2billion to the taxpayer, at a maximum £1.5billion. (Please be aware this is an estimate) The creation of jobs in the construction industry, in addition to the 7000 jobs promised by the trust and the additional jobs created as a result of their investment would provide substantial returns to the taxpayer that would only increase year upon year.

In my personal opinion, I feel the entire process needs to be re-evaluated.

All information in this blog is accurate to the best of my knowledge. Sources can be supplied on request.