A recently released audit report reveals a “pervasive fraud environment” within Unite, one of the UK’s largest trade unions. The 35-page report, compiled by auditors BDO, details findings from the 2021 financial year, highlighting a “weak control environment” and “dominant personalities” that facilitated fraudulent activity.
The report cites “unusual relationships” between former senior staff and the union’s clients and suppliers, alongside a culture that passively accepted questionable financial transactions and neglected proper financial reporting practices. These issues are particularly relevant to the union’s £112 million investment in a Birmingham hotel and conference center.
The property’s current valuation is significantly lower, resulting in a reported £53.8 million loss for Unite. The union, once the Labour Party’s largest donor, boasts over one million members.
General Secretary Sharon Graham, elected in 2021, commissioned the investigation. Presented to the union’s executive council on Friday, the report prompted Ms. Graham to state her commitment to uncovering the truth surrounding the Birmingham hotel project and rectifying past failings. She emphasized her determination to implement reforms to prevent future occurrences.
The BBC previously reported that the Serious Fraud Office has launched its own investigation into the hotel project. Further probes are underway by South Wales Police and HMRC into allegations of fraud, bribery, and money laundering, following a raid on Unite’s London headquarters in April 2022.
BDO’s audit also uncovered instances where properties were made available to staff and senior management, potentially creating a financial advantage while exposing the union to undue risk. The report noted a lack of transparency regarding business interests and relationships among executive council members, hindering the union’s ability to identify conflicts of interest.
In response, Ms. Graham has pledged to strengthen governance procedures relating to expenses, gifts, and hospitality, aiming to enhance transparency and accountability within the union.