Fraud culture was ‘pervasive’ at union, auditors say

There was a “pervasive fraud environment” at one of the UK’s largest trade unions, an auditors’ report obtained by the BBC has concluded.

Unite, which used to be Labour’s biggest donor, also faced an “impairment” – effectively a financial hit – of £53.8m related to the building of a hotel in Birmingham, the report said.

In a highly critical 35-page document, auditors BDO said in the 2021 financial year “dominant personalities and a weak control environment facilitated opportunities to commit fraud” at the union.

The probe was ordered by Unite’s general secretary Sharon Graham shortly after she was elected in 2021. It was presented to the union’s ruling executive council by the auditors today.

The BDO report says there were “unusual relationships” between former senior staff and Unite’s customers and suppliers, as well as a culture that “did not challenge” financial transactions and “failed to ensure” appropriate financial reporting.

Ms Graham said: “On behalf of Unite’s 1.2 million plus members, I promised on my election that I would uncover the truth about historic alleged corruption related to the Birmingham hotel project.

“This process has quite frankly been an ugly one, where I have endured attacks and smears from those with much to lose, but they have not deterred me.

“The re-audit is in its final stages and as we move to completion, I will ensure steps are taken so that this can never happen again and we have already started the process of getting our money back.”

The BBC previously reported that the Serious Fraud Office has launched an investigation into the hotel construction project.

South Wales Police and HMRC are investigating historical allegations of fraud, bribery and money laundering linked to the union. Officers raided Unite’s London headquarters in April 2022.

Auditors BDO identified “properties, made available to certain staff and senior management that appear to have facilitated a financial upside… with the Union taking on disproportionate risk”. It is unclear which staff benefitted.

The report said members of the union’s executive council “are not required to provide details of all business interests” and other relationships meaning Unite is “unable to determine whether conflicts of interests have occurred”.

Sharon Graham has committed to tightening governance procedures including those involving expenses, gifts and hospitality.