Ex-trams chief: ‘Main contractor said they could hold us to ransom’
● Comment made after executives flew in for meeting, inquiry is told
A former Edinburgh trams boss has described how the main contractor on the project told him: “This is a great contract for us. It allows us to hold you to ransom.”
Richard Jeffrey, who was chief executive of the council’s arms-length tram firm TIE, met Dr Jochen Keysberg, of Bilfinger Berger, and Dr Jorg Schneppendahl, of Siemens, in July 2009, just weeks after starting the job.
Mr Jeffrey told the tram inquiry: “It was during that meeting that Dr Keysberg first used the phrase, ‘This contract allows us to hold you to ransom’. That for me explained a great deal about their strategy.”
The two men had flown from Germany for the meeting. The project was already mired in disputes and delays.
Mr Jeffrey said: “I’m two months into the role. This is my first meeting with the principals and they are basically setting out their position in no uncertain terms – we are right, you are wrong; you don’t have a leg to stand on; agree with us or litigate I think was their final phrase.”
Mr Jeffrey also told the inquiry about a meeting soon after he joined the project with senior quantity surveyor Denis Murray. “I said what form of contract is this project based on? He looked at me and laughed or smiled. I said, ‘Why the smile?’
“He said, ‘Because in 30 years in this industry I have never seen a contract like this’.”
Asked about the state of the project when he arrived, Mr Jeffrey said: “I thought the work sites across the city were very untidy and poorly managed.
“There was a distinct lack of progress across all the sites. There was no clear way forward on the legal issues.
“There was no completed design. None of the sub-contractors had contracts, they were all working on letters of intent. It wasn’t a great picture.”
The inquiry was shown a report to the tram project board from 23 September, 2009, which included tables showing 8.3 per cent of works completed against a target of 60 per cent. Mr Jeffrey said: “The lack of progress was easy to see. You didn’t need a table to tell you that adequate progress was not being made.”
He said in December 2009 that the tram project board had backed a “more commercially aggressive” strategy with the contractors and seeking to enforce the contract.
But he admitted: “The reality is we could be as aggressive as we liked, but the contract would only allow us to go so far.”
Inquiry counsel Jonathan Lake asked Mr Jeffrey: “Is it reasonable to say this strategy of being commercially aggressive did not yield positive results?”
Mr Jeffrey said the strategy had been adopted to bring about a change in the contractor’s behaviour or strengthen TIE’S negotiating position.
But he said: “In these two regards it did not succeed.”
Mr Jeffrey will continue giving evidence today.