The PMI Report (1991)

20 YEARS ago and following a secret inquiry they had commissioned, Haringey Council received a report into the massive re-building cost over-runs at Alexandra Palace.

The loss of control over spending on re-building had followed the devastating fire of 1980, soon after Haringey assumed control.

[one click on above title will load PDF file; or download file to local drive: Mac: Control-Click, Windows: Right-Click ]

As can be seen, it is stamped 'STRICTLY CONFIDENTIAL'.

One might suppose that this was a private matter, rather than involving a Charitable Trust and millions of pounds of tax payer's money. This reflects the 100% control by politicians.

Like other mistakes at our Charitable Trust, this one was kept kept under wraps for as long as possible. It was Haringey's uncontrolled spending on re-building that laid the foundations for the Alexandra Palace bogus debt that the council has generated.

Supposedly, it now stands at more than £40,000,000. And despite the fact that the local council is the Trustee; that it was taxpayers' money it was spending; and not least, that the re-building was a council-controlled project – Haringey nonetheless tried to disclaim responsibility for the cost overruns and sought indemnification from our Charity's funds (!?) It could define chutzpah.

The Independent newspaper published this article mentioning the PMI report.

The Report is now in the public domain as a 92-page Pdf file, together with comments by Dr. Peter Smith, a Haringey Council employee and the subject of some comment in the Report. To read the 1991 report by Project Management International Plc, click on the title at the top.

Probably the most telling – and timeless – phrase in the report is

The fundamental issue that arises from an examination of the Project documentation is the classic conflict of interest that arises when a client and a design team are one and the same.

The Conclusion says inter alia,

It is clear from those items [project documentation] that we have highlighted in this report that the disastrous outcome of the development was inevitable. The manner in which the project was set up, the inexperience of the Development Team, the lack of Project leadership in an economic sense, the poor performance of the Design and Construction Teams were all significant factors in contributing to the enormous cost overruns.

We have concluded that the prime responsibility for this situation lies with the Alexandra Palace Development Team, the Management Team and the Committee must also share some responsibility for allowing this situation to develop when all the warning signs were being flagged for some considerable time.

We have pointed out that the lack of continuity within the Committee was an important factor in the effectiveness of the decision-making process and allowed the project to continue without proper accountability of the key participants.

We have also tried to point out lessons that can be derived from these events. These can be summarised in the requirement of establishing an independent client monitoring facility which would retain continuity through the duration of a lengthy development (10 years) and make recommendations with no vested interest in the design and construction process.

...

“Securing the future”  The conflict of interest observed in 1991 never abated. The London Borough of Haringey retains full control as the Trustee of our Charity. The 1991 PMI Report marked the first great milestone (tax tombstone?) in the local council's history of stewardship of our Charity

• 1980  Haringey Council pays £1 for our Palace and becomes Trustee; Haringey receives from the GLC a dowry of £8,500,000 for repairs; Palace is fully insured. Building burns down – except for the historic east wing
• 1981  Insurance settlement of £18,500,000 is paid to the local council for re-building. In the next few years, these receipts would generate large interest payments for Haringey. All of it will be spent ... and much more (check current values of these sums with converter on right). 
• 1982  A Public Enquiry is held at the Palace (February to May). The outcome was not released until August 1983
• 1983  (and following) Haringey loses control of spending. The £32,000,000 reconstruction grows to about £67,000,000. Much of the overspend is 'loaned' to our Trust
• 1988  Haringey Council commissions Project Management International (PMI) to investigate how & why Haringey Council overspends on re-building, including on unauthorised contracts
• 1989  (July) Mr I. Harris is appointed official Trust Solicitor and secures his future. The lucrative account is kept through switches of firm; currently with Howard Kennedy
• 1991  The landmark PMI Report (above, link in title). Parts of it were leaked to the press at the time; after FoI request, it is now officially in the public domain
• 1991  Powerhouse consortium wins contract to manage Palace. After 12 months it withdraws, citing: uncertainties about ownership of asset; difficulties in dealing with the Council, Trust & General Manager; servicing the alleged debt of £2m p.a.
• 1993  Alexandra Palace Ski Centre Ltd. v Haringey London Borough Council – Trustees are encouraged to defend a weak, losing case in the High and Appeal Court, to the point of failure. Was the main motivation, removal of a viable business and popular facility (and their lease) in order to clear the way for an attempt to sell the Palace and secure the future?
• 1994  The Anne Cardash/Axon Holdings Affair – the council holds secret negotiations with certain investors whose plans included a casino; the council believes the redevelopment deal could be worth £25m and will secure the future
• 1995  £100,000 bid to Millennium Commission falters, despite £58,000 paid to Shandwick Consultants, which sends David Mellor MP to help prepare bid
• 1996  To secure the future, the Trustees select a developer for our Charity's premises – who quickly turns out to be a bankrupt. See The Independent
• 1996  In a damning indictment, the Letter of the Treasury Solicitor refuses most Trustee claims for indemnification – despite the local council claiming it was not liable for the full alleged debt (?!). Haringey picks up a £50m bill
• 1999  District Auditor Report – an investigation into Objections about items of account that are "contrary to law"
• 2000  The Millennium Bid – £95,000 worth of unauthorised and unbudgeted expenditure by the local council on the “millennium bid”. The Auditors and Treasury Solicitor are concerned about this – confirm that this cost should not be the responsibility of our Charity and accordingly is excluded
• 2003  Debate in Parliament on AP; one MP claims that £100m of public funds have gone into AP. How much has gone to lawyers, managers and consultants?
• 2004  The Trustee's get an Order of Parliament that allows them to sell the entire building on a 125 year lease. Total sale was dubbed an "holistic" approach and was seen as the final solution to secure the future
• 2005  A wealthy former slum landlord, with a passion for a casino and a reputation honed on the asset-stripping of Oxford United Football Club, begins to circle our palace, jaws snapping
• 2006  after an exhaustive process, the Trustees select The Developer-of-Last-Resort and proceed to negotiate the sale of our Palace on a 125-year lease for a rumoured £1.5m, to secure the future
• 2007  In the High Court Charity Commission's permission for sale is quashed. Due to their conduct over sale of the Palace, costs are awarded against the Trustees – Justice Sullivan says the Trustees are the authors of their own misfortune
• 2007  Eight weeks after the court case and only following intervention by the District Auditor, the council committee known as the "Trust Board" serves an eviction notice on their Development Partner
• 2008  The local council's Preferred Partner (Firoka) withdraws from purchase of Palace, later begins to sue our Charity for £6,200,000. The council launches The Walklate investigation (first of three)
• 2009  The council launches a second Walklate enquiry – see The Walklate Reports, left (or upper left); this one quantiifies the loss due to the Licence to Firoka (£1.5m to £2m) and assesses possible liability of the disgraced former General Manager. On 20 July, council formally refuses to discharge any part of the bogus debt (£40,000,000) that council claims our Charity owes to the Trustee (the Council) (!?)
• 2010  Walklate 3 – a third investigation by Martin Walklate into the Licence-to-Firoka. This time, a Complaint against the Trust Board Chairman at the time of the Licence
• 2011  Former Alexandra Palace Trust Board Chairman, Cllr. Charles Adje – also a former Council Leader – is suspended for four months due to misconduct over sale of Palace

• Current: municipal plans are developing to sell up to two-thirds of the Palace to a music operator to secure the future – can anyone see where this is going?

Plus ça change, plus c’est la même chose

It is possible that one day, someone in authority (unlikely the Charity Commission) may begin to notice a pattern emerging.
The above list of events – known to the public – is surely unequalled as a record of incompetence in the London Borough for 30 years. Is there anywhere else that matches this list for consistency of waste, failure or poor advice? Has there been a greater want of strategy, imagination, leadership and conceptual thinking?