Millennium fraud

Those tasked with delivering the 2012 Olympics need look no further than events at the turn of the century in Greenwich for an example of how not to deliver a high-profile, time-sensitive public project. Further proof of just how chaotic and panic-strewn the struggle to finish the Millennium Dome ahead of its opening in time for the New Year’s celebrations was laid bare at a fraud trial held over the summer at Southwark Crown Court.

Simon Brophy, 39, was last week jailed for four and a half years for taking advantage of the frenetic sprint finish to get the attraction ready on time. The former head of lighting at the Dome executed a bare-faced fraud – he awarded lighting contracts worth a total of £3.9m to a company he had secretly set up himself with friend and fellow director David Gordon, who acted as front man for the company, called Pro Design.

Brophy is reckoned to have earned himself over £1m from the scam, which the police said last week they were trying to recover. He admitted to a total of nine counts of corruption, furnishing false information and removing the proceeds of crime from the UK. Gordon, 42, was also sentenced to nine months in prison for conspiracy to defraud last week.

Brophy, from Wakefield, West Yorkshire, and Gordon, an Australian, were two out of nine individuals charged back in 2003 after a three-year investigation carried out by the Metropolitan Police’s public sector corruption unit into the fraud. Brophy’s wife Margaret, who was deputy head of lighting at the Dome, was cleared of similar charges of corruption, conspiracy to defraud, fraudulent trading and money laundering after a two-month trial in the summer. QS News spoke to the legal team involved in Margaret Brophy’s defence, which included dispute expert David Kyte, a vice president at international QS and project management firm Hill International. Kyte’s 80-page report into the procurement of the contract that Brophy awarded himself is credited by the legal team as being crucial to Margaret’s successful defence. “It was beyond doubt that the expertise brought to bear in this area significantly assisted the defence in refuting many of the key allegations made against Margaret Brophy,” according to defence solicitor Gary Lesin-Davis, from Liverpool firm EAD Solicitors.

The contract

Brophy was appointed as head of lighting in September 1998, which was the same month he set up Pro Design with Gordon (his mother Ruth Barclay was also a director and the company secretary was named as Edward Clark, a nom-de-plume for Brophy himself).

By that winter, having convinced the company that oversaw the whole project, the New Millennium Experience Company (NMEC), that the lighting maintenance needed to be outsourced, Brophy went about overseeing that process. Both he and Margaret were two of the four people on the tender board charged with deciding who would win the project.

The maintenance contract was a bespoke one drafted by NMEC. “It was pretty traditional with a detailed bill of quantities for where the design was complete and indicative prices for where it wasn’t,” explains Kyte. Four firms were short-listed but only two tendered for the job – Pro Design and the Lighting Technology Group, a firm that went into administration subsequently in 2002.

On paper the values of the tenders were wildly divergent in value. Pro Design bid at £1,924,152, while LTG bid at a whopping £12,983,120. Yet Kyte established that the difference in price was more due to LTG’s massive overestimation than Brophy’s firm dramatically underbidding the job. “LTG made some big errors on labour costs,” he explains. “For example, the tenderers were asked to price a maintenance team to be on standby if any essential repairs were needed. LTG priced for three permanent crews, one available every three shifts, 24 hours a day and seven days a week. It was way over what was necessary, like having an RAC van permanently parked at the bottom of your drive.” Lesin-Davis claims there was not “a wild difference” between the two bids. “No-one checked,” he adds.

“The actual conclusion was that someone made some serious maths errors. The LTG price was nearer £2.5m.” Whatever the reasons for the price difference, Pro Design won the job, which allowed Brophy through his fictitious firm to rig the subcontractor packages for lighting equipment and services. Evidence also emerged that Brophy received payments from a separate firm which was supplying lighting services.

The Kyte report’s conclusion

The report assessed whether the basic procurement process was adhered to, in other words whether a tenderer was able to price it. “It concluded that the invitation to tender was a valid one,” Kyte says. “It was a pretty good tender in the circumstances.” The report also found that barring a couple of “minor errors” the Pro Design bid was “properly formulated”, according to Kyte. And crucially for Margaret Brophy’s case Kyte and the rest of the defence team could show that her role in the procurement was less crucial than the prosecution case had claimed. “She had been responsible for collating the information rather than the overall process,” stresses Kyte. “She adhered to internal procurement guidelines accurately and competently... We were able to show the job she did as opposed to the job specification given. The two were very different,” adds Lesin-Davis. The report was uncontested by the prosecution and Simon Brophy’s defence used it as part of their case as mitigation.

The tip of the iceberg?

Kyte was able to access internal audit reports on the running of the Dome, which included several thousand separate projects. At a late stage he was also able to access an archive held by the Department of Culture Media and Sport – the job’s ultimate client. From this Kyte concludes that, unsurprisingly, “shortcuts were taken to ensure that the project was completed”.

A damning report by government spending watchdog the National Audit Office in 2002 underlined the chaotic running of the Dome claiming that no paperwork existed in relation to 129 separate deals with contractors.

And troubleshooter David James, who was appointed to rescue the scheme in late 2000, claimed many staff were on the edge of nervous breakdowns and that systems to keep the board running the Dome informed of difficulties were missing.

“The project was pretty unique,” Kyte adds. “If it had been millions of pounds less and completed a week late, no-one would have appreciated that. A tension always exists in almost every project between taking the time to do the process absolutely right versus the time constraints.” In this case the deadline was absolute, forcing some procedures, such as proper due diligence on contract tenderers, out of the window. And in Lesin-Davis’ mind this case may not be the only one to emerge from the Dome. “I doubt that we have heard the last of the fallout from the Millennium Dome.”