Council signed ‘terrible’ deal for tram work

Firms tried to extort cash, inquiry told

THE contract to build a tram network in Edinburgh was ‘ridiculous’ and ‘should never have been made’, an inquiry has been told.

A QC representing several former employees of trams delivery company TIE said the ‘misguided’ agreement had allowed contractors to hold it to ransom.

The scheme, which was supposed to cost £375million, opened three years behind schedule at a cost of £1billion.

In his closing statement to an inquiry into the debacle, Douglas Fairley, QC, accused consortium Bilfinger Berger Siemens of trying to ‘extort’ money from the council.

It denies this, saying the project was held up by TIE, set up by the City of Edinburgh Council to oversee the project, and its failure to complete utility works on time.

Mr Fairley told judge Lord Hardie yesterday: ‘If I may paraphrase a recent pronouncement by President Trump, this was a contract which was ridiculous and which should never have been made. It was a terrible contract for TIE, and by extension for the council.’

He added that evidence given during the inquiry was proof of ‘the mindset of a contractor which was determined to disrupt and extort, without ... any clear idea of the legal basis on which it might do so’.

In March, Vic Emery, who was chairman of TIE and took part in mediation talks alongside council chief executive Sue Bruce, said a deal agreed with the contractor in March 2011 was designed to ensure the project continued.

It involved the council paying £362.5million for completion of off-street works from Edinburgh Airport to Haymarket and a another £39million to take the network to York Place.

Mr Emery told the inquiry: ‘You either said yes to this deal or you walked away. I have been here before on other projects. It’s called a pig deal.’

Yesterday, Mr Fairley described one part of the deal as ‘at best productive of extensive delays’.

He said: ‘An unintended effect of that was to allow a contractor, if it had a mind to do so, to hold its employer to ransom.’

Pricing details were described as ‘confusing and opaque’, and Mr Fairly said that overall it was an ‘extremely poor deal for the council’.

However, he accepted that some of those he represents ‘may on occasion have made errors of judgment’, adding that they were working against a backdrop of ‘extreme difficulty created by others who either preceded them or in some cases were senior to them within the organisation’.

Garry Borland, QC, for Bilfinger Construction, said utility works – which it had no control over – were ‘far from complete’ in the run-up to the contract between TIE and the contractors being concluded.

He argued the works should have been completed before the start of construction work, but were finished ‘years late’.

Mr Borland maintained that TIE lost every significant point of principle at adjudications.

The cost of the inquiry now stands at £9million, Transport Scotland has confirmed. Lord Hardie will hear further closing submissions today.