Nadhim Zahawi tells Labour to hand back Unite donations until police finish investigations

The chair of the Conservative Party has called on Labour to return £750,000 of donations to Unite The Union and not take any more funds until police have concluded investigations into the organisation, Sky News has learned.

On Thursday, Sky News’ political correspondent Joe Pike reported that two bombshell independent reports – one conducted by a senior lawyer and the other by an accountancy firm – into alleged corruption at Unite were going to be handed to the police after “potential criminality” was discovered.

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Sky News understands that the two separate probes into Unite found evidence of “eye-watering” overcharging on large contracts, with a source telling him: “There was pricing and overcharging that would make your eyes bleed.

“There are such discrepancies in the money that the police may want to take things further.”

Unite, which is the Labour Party’s biggest donor, is already the subject of a fraud, bribery and money laundering investigation. In April, the union’s London headquarters were raided by police.

This week, general secretary Sharon Graham told senior officials that the internal reports will now not be published until police conclude their investigations.

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Nadhim Zahawi has written a letter to his Labour counterpart, Anneliese Dodds – seen by Sky News – calling for her to act so as not to “open yourself up to charges of hypocrisy or double standards in politics”.

The Tory minister wrote: “Your party has still accepted more than £750,000 from Unite in the months since the raid, even though the union was implicated in potential criminal activity and under police investigation.

“In the past, you have called for political donations by individuals related to companies under government investigation to be returned, despite all the donations being received before any investigation was announced, and the individual involved later being cleared.

“I therefore hope that you will now hold your party to those standards by returning the £750,000 that your party received since Unite was raided by the police, and that you will stop talking future donations from Unite until the police have concluded their criminal investigation into your largest donor.”

£70m of members’ money may have been wasted

Soon after taking over from Len McCluskey in 2021, Ms Graham commissioned Martin Bowdery KC to investigate her union’s vastly over-budget Birmingham hotel and conference centre development.

Initial estimates in 2012 suggested the project, which is now complete, would cost around £7m. The final bill is in excess of £100m.

In one instance a contractor quoted around £90,000 for proposed work, but was eventually paid £1.2m, an unexplained increase of more than 1300%.

Insiders concede the gap between the union’s spending on the building and its value is “minimum £31m, but could easily be more”.

Earlier valuations of the development suggested £70m of members’ money may have been wasted.

Ms Graham separately instructed accountancy firm Grant Thornton to launch an “external forensic investigation” into Unite’s affiliated service providers.

Accountants discovered one such company had been awarded a contract worth around £100,000 per month for eight years, suggesting a total value of £9.6m.

Last month Sky News reported that the union had severed ties with a long-term supplier due to concerns it may have been involved in criminality.

Unite staff were told that decision was “primarily due to the risk of committing an offence under the Proceeds of Crime Act 2002”.

A spokesperson for Unite told Sky News: “The newly elected general secretary of Unite pledged to find out if there was any wrongdoing in the construction and spending related to the Birmingham Hotel and conference centre.

“True to her word, after her election, Sharon Graham, commissioned an independent QC (now KC) inquiry into the Birmingham development and later a separate inquiry and external forensic investigation into Unite’s affiliated service providers.

“Due to very serious concerns about potential criminality that have emerged, both these reports are now being shared with the police. The police have requested that Unite does not release the contents of the reports while they are conducting their inquiries. Whilst these are ongoing Unite will not be making any further comment.

“The general secretary is committed to doing all in her power to recoup any monies lost, by all means necessary and holding anyone responsible to account. It is clear this transparency would not have happened without the determination of the general secretary to ‘leave no stone unturned’ to get to the truth”.

Sky News asked Labour’s shadow chancellor Rachel Reeves about the allegations against Unite earlier on Thursday.

She said: “It is welcome that Sharon Graham the new general secretary of Unite has done this investigation and has handed it over to the police, [but] I am not aware of any of the details of that investigation.

“I look forward to the police doing their work. But the fact that Sharon Graham has done this work, has handed it over to the police has shown that change is happening in Unite the union.”

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