A construction firm owned by the friend of Unite leader Len McCluskey was paid £95m by the union for a project that was originally supposed to cost £7m, according to reports.
The Flanagan Group, a Liverpool-based building firm, was paid the money to act as a private contractor on a new national conference centre and hotel for Unite in Birmingham, the Times reported.
Unite is Labour’s most generous backer, but has cut ties with the party since Sir Keir Starmer took the reins.
McCluskey was one of former Labour leader Jeremy Corbyn’s closest allies, but heavily criticised Starmer’s decision to pay damages to ex-staff who said accused the party of poorly handling complaints of antisemitism.
Unite’s executive council was told in 2012 that the total cost of the union’s proposed building in Birmingham would be “in the region of £7m”.
However, costs for the project, which opened last year well behind schedule, are understood to have ballooned to £96.5m.
Almost 25 per cent of the money was paid directly by Unite, while more than three quarters was paid by Blackhorse HCC, a company wholly owned by the union and whose directors include McCluskey and four members of Unite’s executive council.
Flanagan’s overall profit from the project is estimated be more than £15m. Work began in 2016 and was finally completed last year, significantly late and over budget.
McCluskey has previously described the company as “a working-class family who have made good and never forgotten their roots”.
The Flanagan Group did not immediately respond to requests for comment.
Unite has vehemently denied any wrongdoing and insisted McCluskey had nothing to do with the tendering process.
A Unite spokesperson said: “These continuing efforts to create the impression that something untoward has occurred with the construction of our Birmingham facility are pathetic. This is a world-class facility, which will provide conference, education and hotel facilities for our entire union and help regenerate a neglected part of the UK’s second city.
“In a sector beset with blacklisting and insecure working, we are also extremely proud that this facility was built using unionised labour, as determined by our executive council. The costs and management of the project will be considered by our executive on Friday. It would be completely inappropriate for Unite to enter into discussion of these with the media beforehand.”