25th September, 2000: It has now emerged that yet another consultant's report, this time before the last general eleciton in May 1997, warned the Millennium Commission that it's projections for visitor numbers were too high. Accountant Deloitte and Touche and a consultancy firm called Vantage Point, run by the Chief Executive of Wembley Stadium Bob Stubbs, were appointed by the Millennium Commission to investigate the business plans. At a commission meeting to discuss their findings on 11th June 1997, Vantage Point reported that the NMEC management team lacked the necessary creative, technical and operative expertise for a project of such a scale. Mr Stubbs described the Dome "as the riskiest project he had ever seen either in the public or private sector". Deloitte and Touche gave a best case scenario of six - eight million visitors, which a commission spokesman says was a "low case" scenario. Michael Heseltine, a millennium commissioner and present at the meetings to discuss these reports, said on the Today Programme on Radio 4, that he does not remember them, and said consultants "always gave a gloomy view". Stressing the timing of the reports, he says "You've got the Dome built. A New Labour government is on the verge of deciding to go ahead and some consultants say the figures may be on the high side. What do you decide to do? Stop?" Mr Heseltine said the visitor numbers had been "disappointing" and conceded "If we had known it was going to cost this much, we wouldn't have done it".

Even in January, when the Dome had just opened, and NMEC was boasting that it would hit its break-even target of 12 million paying visitors, Deloitte and Touche were warning that the actual number could be as low as 8 million, a figure which even then meant that the Dome would have incurred enormous losses. More than a month of dismal ticket sales passed before the NMEC admitted that it would fall short of its target, but even then it only revised its own predictions down to 10 million visitors. When Jennie Page was fired, and PY took over, the Dome was given an extra 60 million to tide it over. By the time that money ran out in May, Deloitte and Touche were warning that the Dome would sell just 4.9 million tickets. The Dome's management insisted that it was confident of attracting between 6 and 8 million paying visitors. This disparity was the subject of heated discussions in May between the Millennium Commission's director and accounting officer, Mike O'Connor and the authors of the Dome's highly optimistic new business plan, PY Gerbeau and Neil Spence, the NMEC's finance director. The pair were adamant that their own figures would be vindicated once the visitors flooded back during the summer school holidays and successfully won another 29 million from the Millennium Commission. They pointed out that the alternative was bankruptcy. By early September, only 3.8 million paying visitors have passed through the Dome. The number paying the full 20 for a ticket is substantially lower, but NMEC will not disclose the figure.

Lord Falconer ignored the advice about visitor numbers from Deloitte and Touche for nine months and it was August before a proper external audit was carried out. An official inside the Millennium Commission said "We repeatedly asked NMEC to take these figures seriously and to provide us with an exit strategy in case they were correct. All along, they stuck to their own hopelessly optimistic assumptions which were continually being proved wrong". Lord Falconer's spokesman said that he knew about the independent reports, but said they were "models based on assumptions of a worst-case scenario". An NMEC spokesman said "We have worked closely with the Millennium Commisison for three years and always took close note of what their consultants were saying, as well as our own".

These reports have now been passed to the National Audit Office, which is conducting a review of the management and funding of the Dome and the results are due in November. The next 47 milliomn grant brought the total Lottery money to 628 million, when it was supposed to be 'only' 399 million, the extra 229 million having been given to prevent bankruptcy. In August the Millennium Commission finally lost confidence in NMEC and hired Price Waterhouse Coopers to calculate how much it would cost to close the Dome early, in October. At the same time, NMEC offered David James 530,000 to keep the Dome solvent and wind up its affairs, but in an extraordinary gesture he chose to work for nothing. Along with the 28 million black hole in the accounts, they discovered that many of the Dome's staff were on one-year contracts and that they would be paid even if their jobs disappeared. So inept is NMEC management that it did not realise that, under employment law, it is illegal to make more than 20% of staff redundant at once without 90 days of consultation. This makes large scale cutbacks impossible until too late to have any effect. At one meeting with officials of the Millennium Commission, a senior NMEC director complained "You should have explained that to us!" to be told that company directors should be aware of such basic legal enployment obligations.

On 22nd August, PWC declared that the NMEC was insolvent. For most companies this would be the cue to call in the official receiver or else be liable to be found guilty of trading illegally. However, this does not apply if there is a reasonable expection of further funding ... and the Dome naturally expected the National Lottery to bale them out. Lord Falconer informed the Prime Minister that he expected another hefty application for funds from the Millennium Commission. A crisis meeting, attended by Tony Blair himself, Lord Falconer and Alistair Campbell was called to decide how to protect the government from the inevitable public outcry. Two more senior press officers, Godric Smith and Peter Wilkinson, were drafted in to manage the announcement of the extra grant. The line they chose to take was to admit that mistakes had been made but to insist that the Dome was neverthless a success because it had brought jobs and regeneration to a once-derelict area.

Against this background, the Millennium Commission met with the decision on further funding for the Dome already made for them. However there was undisguised disgust from two hereditory peers, Lords Dalkieth and Glentoran, who had been demanding stricter financial controls for months. Relations between NMEC and the Millennium Commission are now said to be strained to the point of loathing. At the Commission, even junior staff are resentful about the sums of money squandered on the project. Morale is rock bottom, when many worthy causes are being refused grants so that money can be directed into the black hole of Greenwich.

Lord Falconer said "I do not think it would be appropriate for me to resign. I think it is appropriate for me to stay with the project and see it through". He refused to guarantee that the Dome would not be given further grants, and, conceding that he was responsible for ensuring that the project was managed properly, insisted that he had done so. [..... calling earth to planet zog ...]. It had been planned that the Dome would close on December 31st with a glitzy ceremony attended by Tony Blair and cabinet ministers, though naturally, this has been quietly shelved. Now nobody wants to be associated with this national embarassment.

24th September, 2000: PY issues a press statement desperately listing ten key successes achieved by the Dome, apparantely supporting comments made by Tony Blair, who said that people should consider "the other side of the balance sheet" when appraising the Dome.

PY Gerbeau said: "Despite the carping of certain critics - most of whom, you will notice, haven't actually visited the Dome themselves - we are easily the most popular paying attraction in Britain and second in Europe. This is an incredible achievement for an attraction in its first and only year of operation. More than four and a half million visitors have had a fantastic day out, and 85% of our visitors have given the Dome the thumbs up."I firmly believe that people should recognise the Dome's successes, not only by providing a unique and innovative visitor experience that people will remember for the rest of their lives, but also in terms of the regeneration of the Greenwich Peninsula and the jobs it has created. This will be the Dome's legacy for years to come and one of which Britain should be proud."

Here, PY's ten key successes are reproduced for posterity!

1. The Dome has already smashed the 1999 UK record for a pay-to-visit attraction. The 1999 record is 2.65 million visitors - held by Alton Towers - and the Dome has already attracted more than 4.5 million visitors so far. It is easily the UK's most popular attraction and the second most popular in Europe.

2. The Dome is an enormous hit with those who visit. MORI surveys show satisfaction levels of 84% with many elements receiving positive ratings of over 90%. These are satisfaction ratings rarely seen in the leisure industry. Some of the pundits may not like it, but the punters clearly do. Media surveys of visitors have also found high levels of satisfaction with 87% of visitors having a great day out in a BBC August poll.

3. The Dome has acted as a catalyst for the regeneration of the Greenwich Peninsula. The Peninsula - a 300 acre site - was previously derelict and heavily contaminated for over 20 years. It has now been completely transformed with efficient transport links to the centre of London, and new businesses and homes are being created.

4. The Dome has created thousands of jobs in some of the poorest parts of London. The construction phase of the Dome and other developments (hotel, cinema, supermarket, housing) has created employment for 8,700 people, while the developments have created 5,500 operational jobs. People in South East London have benefitted in particular, with many long-term unemployed people now working at the Dome. Greenwich Council predict that 30,000 permanent jobs will be created in the borough of Greenwich within seven years as a result of the investment in the Peninsula.

5. The Dome was built on time when the critics said it was impossible. This achievement should never be underestimated. Everyone said it was impossible, but a phenomenal team effort made it happen on time - unlike many other millennial attractions.

6. The Dome is a model case study for the use of public transport. Millions of people are visiting the Dome by public transport, whether it be tube, boat, bus or coach. This approach has shown the benefits of an integrated approach to transport.

7. The Dome has set new environmental standards. As well as contributing to the clear up of a once-contaminated site, the Dome uses renewable energy and recycles all the water that falls on its roof. It has also worked with the Environment Agency to set new standards for riverbank development.

8. Children's Promise has raised more than 19m for charity. Thousands of companies and millions of people donated the value of an hour of their earnings, with every penny going to seven charities that work with children.

9. The National Programme has involved the whole nation. NMEC's National Programme is the UK's biggest social action programme, involving hundreds of thousands of people taking part in educational, cultural, sporting, environmental and charity projects associated with the Dome. These projects will leave a lasting social legacy.

10. The Dome is playing a major role in making London the world city to visit in 2000. Alongside other major new attractions like the London Eye and the Tate Modern, the Dome is helping establish London as the place to visit during the year 2000 for overseas visitors.

21st September, 2000: NEIL SPENCE RESIGNS

Neil Spence has resigned from his post as Finance Director, and has also said that he would step down as a board member. An NMEC statement said: "Neil Spence has resigned from his position as finance director and as a member of the board of NMEC. He will continue to work through his notice period with the company to ensure an orderly cessation of trading in December 2000." He will continue to draw his 127,700 salary and 19,155 pension allowance.

19th September, 2000: FRAUD INVESTIGATIONS The Financial Times reports that Scotland Yard's Fraud Squad are investigating allegations of fraud relating to the award of contracts at the Dome and several of the site's 2,800 contracts could be subject to further investigation. A Scotland Yard spokeswoman said they were investigating allegations relating to "irregularities in connection with the procurement of contracts" at a "company in south east London". She added: "A decision will be taken in due course as to whether any further action is necessary".

14th September, 2000: The Millennium Commission announced that it would pay out the 30 million bridging loan promised earlier this year when it was sold to Nomura. The Government persuaded the Millennium Commission that a refusal to pay would make the Dome bankrupt. David James said "This means that we can maintain our commitment to keep the Dome operating to the 31st December and complete an orderly wind up of the Company thereafter. All of us look forward to seeing many more visitors enjoy the Dome in the remaining 109 days between now and the end of the year. This period will also provide an opportunity for discussions with any other parties who may be interested in acquiring the Dome or its business."

14th September, 2000: A letter from Lord Andrew Lloyd-Webber was published in the Daily Telegraph on 14th Septemebr. The contents of the letter has caused much amusement, so it is reproduced below:

Sir - Since the 105 million sale of the Millennium Dome to Nomura has collapsed (report, Sept 13), there is a very profitable exit route for all concerned. Any Victorian impresario would have told you that there is nothing that the public likes more than a good blaze. Torching the Dome would attract a vast crowd, probably in the millions, who could be charged handsomely to view the conflagration. There would be hugely profitable worldwide television, satellite and pay-per-view sales for the event. Further, the Millennium Experience would also own the copyright in an unrivalled library of widescreen incendiary disaster footage. If this were filmed properly by a decent director, it could cover all forseeable fire shots for disaster inferno movies for years to come, at immense long-term profit to the Millennium Experience. All those involved in the Millennium saga could act in this sequence. Whether they should be in Hollywood stuntmen's fireproof asbestos suits is a matter for those who are expert in health and safety legislation.

12th September 2000: NOMURA WITHDRAWS Disaster strikes. All this wheeling and dealing (see below) set alarm bells ringing for Nomura, who claimed they were being misled by the NMEC. They were refused a copy of the Price Waterhouse Coopers report, and indeed, say that they were unaware that PWC were even doing a report. One advisor to Nomura said "we cannot believe it ..... the immediate assumption is that there is something very nasty in it". Nomura said that it had been given almost no information about assets, sponsorship deals, ownership of the zones and the contracts with over 2,500 firms. Resisitng Nomura efforts to see the report, NMEC claimed, incorrectly, that the report was covered by parliamentary privilege. It then claimed that the report contained confidential information about NMEC's residual liabilities after the Dome was handed on to its new owners, which would not have fallen on Nomura. In an attempt to save the deal NMEC, the government and the accountants themselves agreed to talk Nomura through what PWC had found. It also made daily visitor figures available to the bank since a deal had been agreed in principle. However, these discussions fuelled further alarm for Nomura with a source saying "We felt like someone buying a house and then being told we might not own the carpet, curtains and dishwasher and that somebody could come along later on and rip them out". The bank found that the 105 million may have bought the Dome itself and the tangible items which made up the zones. It was less clear whether it would own the intellectual property which made the attractions work. Not surprisingly, Nomura pulled out of the deal, leaving panic-stricken politicians and media babes trying to figure out what to do next.

The fate of the Dome now rests with four Government ministers who will soon decide whether to reopen the competition. A series of options will be presented to a Whitehall sub-committe of Lord Falconer, John Prescott, Chris Smith and Andrew Smith (Treasury Chief Secretary). Talks have apparantely already begun with LEGACY plc, a consortium headed by Robert Bourne, the runner-up in the original competition. Legacy which is understood to have offered 50 million more than Nomura for the site, wanted to turn the land into a high-technology park. The collapse of the Nomura deal could also open the way for the BBC which wanted to turn the Dome into a theme park based on television characters.

Four other consortia which made the original shortlist could resurrect their interest:

  • Greenwich Media World: a media city with film studios and a sports park;
  • Sports Dome 2001: a huge sports park covering 50 different activities with an indoor 22,000-seat arena;
  • International Merchandise and Cultural Centre: a global one-stop shop for exchanging goods, services and tourism promotions;
  • City of the Future: a technology theme park.

    We are now being told that, after all, the Dome was really just a big regeneration project for "one of the poorest parts" of Britain, and that it would create 30,000 jobs over seven years. Presumably that includes the construction workers who put the damn thing up, and the very same who will shortly pull it down. But it didn't take long for the media to uncover the truth - Greenwich isn't even in the worst 10% of deprived areas of Britain, and all these jobs will come from completely unrelated developments which have not even been confirmed. Falconer also claimed that the Dome would bring "a billion pounds of private sector investment" to the area, but his officials later admitted that he was probably "confused" and had included public money in his figures.

    10th September, 2000: The sorry DOME TALE is well documented in the Sunday Times: Trouble set in early in the Dome, when originally under the control of Peter Mandelson, with Jennie Page as chief executive. Mandelson's ambition knew no bounds. One former NMEC director recalls a meeting in 1997 with Jennie Page and Ken Robinson, then operations director, at which they estimated that the Dome would attract 12 million visitors in its one year. "But that's 1 million a month" protested this unnamed executive "Not even Disney gets that". He was apparantely asked to leave the meeting because he was too negative and he was not 'on message'. Six months later, the official was at another meeting with Mandelson and other NMEC executives to discuss the costs. "It was clear that Mandelson did not understand the balance sheet" he says. This former executive portrays an organisation beset by waste and infighting. Some 100 million was spent on consultants, lawyers and sponsorship experts. Sir Cameron Mackintosh was paid 1 million for advice on entertainment. The design firm Imagination was paid 18 million in compensation for work on the zones that never materialised. A German company, originally contracted to provide the roof, has received 2 million in compensation because its design was never used.

    Neither Mandelson, nor Bob Ayling seemed to worry about the finances or realistic visitor numbers. When Charlie Falconer, Blair's old flatmate, took over the Dome at the beginning of 1999, nothing changed. As soon as the doors opened it became clear that that target of 1 million visitors a month, or 30,000 a day, was not going to be met. In February, as the politicians desperately sought a scapegoat, Jennie Page was sacked. Bob Ayling managed to hang in there until May, when for the third time in four months, The Dome had to beg for more money from NMEC. When Ayling resigned, Falconer failed to install a full time chairman, instead David Qaurmby took over as chairman in a non-exectuive role. By this time the Dome was already teetering on the edge of bankruptcy. In May the Millennium Commission had received a report from its own consultants, and so it knew then that fewer than 5 million paying visitors would go to the Dome. Mike O'Connor, the Millennium Commission's chief executive informed his bosses (who include Chris Smith and Mo Mowlam) and then told senior NMEC management. So concerned was O'Conner at the drain on the commission's funds that he suggested that the Dome close early. Naturally his warnings were ignored.

    Instead of installing a sound financial manager to sort out the mess, they employed PY Gerbeau. David James made clear at the beginning of September that PY has little grasp of financial management. In July, as questions continued about the Dome's finances, Falconer told a Commons Select Committee "It would be extremely difficult for any suggestion of any additional payments. The Dome has to get by on its own resources". Two weeks later the Millennium Commission had to give the Dome a further 43 million. Even if Falconer was under the illusion that this would be enough, the Commission knew better. Apparantely, by the end of July, the Commission knew that, at best, the money would only last until October.

    David James was made aware of the crisis in a phonecall he received on Monday, 31st July from a contact, asking him if he would speak to Quarmby. They met along with other non-executive directors. At this stage it was envisaged that James would only act as executive vice-chairman to Quarmby. On 9th August, James went on holiday to Salzburg and he says "In the course of the next nine days in Salzburg there were 35 hours of logged phone calls and 350 pages were faxed to the hotel". Given the sensitivity of the operation, it was conducted in code. Project Mozart was launched and the Dome became Bruckner, because of its resemblance to a bald head. "By day three we found a big mistake, the real problem was that there was an imbalance between the scheduled cash flow and the company's liabilities". In plain English, this means that if the Dome carried on as it was, NMEC would show a shortfall of about 11 million when the company was wound up. As they trawled through the 2,800 contracts signed in the rush to get the doors open, it gradually emerged that the scale of the problem was even worse. Not only did the Dome's existing management appear unaware of how much they had committed themselves to but it had not even compiled a list of what it owned and what it was hoping to sell to Nomura. James also discovered that PY Gerbeau had not only overestimated the number of paying visitors by 1.5 million, he had also miscalculated how much the Dome needed when he went cap in hand to the Millennium Commission in August for another 43 million.

    As it became clear that an independent assessment of the Dome's finances was needed, accountants Price Waterhouse Coopers were appointed (at a cost of 293,000). Among the millennium commissioners, Lords Dalkeith and Glentoran, and Judith Donovan were given specific responsibility to look at the finances. The trio has apparantely been unhappy for months. Says Lord Glentoran "I believe there has been mismanagement all round. I'm particularly sad that Tony Blair chose to politicise it when he came to power, because all the work the commission had done before was apolitical. Since Labour came to power, the government and the shareholder [Falconer], in particular, have been particularly neglectful in their duties". Dalkeith says that the Dome's problems are not just of the past month or so. "The lack of financial control stretches back throughout this year, if not before". Judith Donovan admits to being "both angry and disappointed" and says "The NMEC appears to be a company not on top of its own management of the business". Quite a damning statement considering the eminent beings who make up the Board of the NMEC (see Who's Who).

    According to James, PY should have asked for 90 million. Of this 12 million was needed to clear existing debts accrued when the Dome was built, and a further 7 million to cover the cost of running it with fewer visitors than originally anticipated. The remainder, a gaping hole of 28 million, was an underestimate of how much it would cost to prepare the Dome ahead of handing over the site to Nomura. In the original business plan, the NMEC had estimated that it would need to spend just 4.5 million. James said it would need to be much higher, and that NMEC should have allowed a further 2.5 million to cover accounting and legal costs, and 7.2 million for rates and maintaining the site for up to another six months before Nomura took the land over. In addition, NMEC should have included 2 million for further environmental work in cleaning up the disused gas site, 11.3 million for further debts and 5 million for "unforseen liabilities". Although James says that he thought the original decision to build the dome was "unwise" and that he "could not relate" to its contents he said that the cost of closing early would be prohibitive, with contractual liabilities and redundancy payments adding another 30 million to the overall cost.

    James has identified two main problems with the NMEC. First, there were too many non-executive directors compared with executive ones. "It was like a government quango, rather than a plc" he says. Second, the balance sheet and cashflow did not correlate "The Board never got the right feed of information". He now says "I am quite certain, on the numbers I have got, that I have the resources to see this company through. I cannot imagine whar else will arise. I cannot - at the moment - see there will be any other surprises". We'll see!

    Falconer has managed to dodge respnsibility for the day to day running, saying that it was the responsibility of the management, and claiming that he did not know of these low visitor forecasts. He said "I'm very surprised to hear that". He then went on to admit that "12m turned out to be "wrong and a mistake". Just how many other 'mistakes' will be revealed over the next few months ? But they won't be his fault of course - he says that all his job entails, as sole shareholder in the Dome, is to oversee and establish that the right management is in place.

    As a consequence of all this, Nomura is claiming that they have been "misled" , and says that it has been given "next to no information" about the assets, sponsorship deals, ownership of the zones, and the contracts with, an incredible, 2,500 firms.

    10th September, 2000: Tony Blair strongly defends his Dome again, saying it will outlast many of its critics. He said "a lot of people come from abroad and see what an amazing structre it is and say it's fantastic. Whe people are successful in this country, whether they are entrepeneurs or actiros, we like to pull them down when we should be proud of them. In countries like America they treat successful people differently".

    Peter Mandelson also defended the Dome, saying that Britain could still take pride in it. People should concentrate on making it a success rather than playing the blame game. He said "The Dome was delivered on time, on target, on budget at the beginning of this year when it opened. It is the most popular visitor attraction in the country and in terms of its architecture, the engineering, the construction achievement, it is something in which Britain can still take pride". He admitted that there had been mistakes and agreed that there should be an inquiry. He urged people, however, not to spend too much time looking for others to blame. (i.e. him !!).

    10th September 2000: THE SCANDAL OF THE HIDDEN CASH CRISIS On the 10th September the Sunday Times reported the big cover-up. The Millennium Commision apparantely warned the NMEC that its own estimates for visitors were "between 4.5m and 5m". The NMEC ignored these projections and insisted that the Dome would get "at least 7m visitors" by the end of the year (this already downgraded from 12m visitors). Charlie Falconer claimed that he did not know of these low visitor forecasts. He said "I'm very surprised to hear that". [Private- sector Rule no 1: is there a market for your product? Yes/No. Rule No 2: Sales minus Costs = profit/loss. (Loss = no bonuses!!)]. He then went on to admit that "12m turned out to be "wrong and a mistake". Just how many other 'mistakes' will be revealed over the next few months ?

    Commission members said that they did not sanction more money in August, even though they knew they would have to, because "we weren't sure how much was needed and we were worried that it might be used up". Well, this may be a bit too controversial to put into print - but here goes - THEY HAVE USED IT UP !!!!!.. and more besides.

    As a consequence, Nomura is claiming that they have been "misled" , and says that it has been given "next to no information" about the assets, sponsorship deals, ownership of the zones, and the contracts with, an incredible, 2,500 firms.

    HOW MUCH? - The latest calculations reveal that the Dome is costing 742,000 a day to run, yet the NMEC cannot explain where all the money has gone

    On 7th September, 2000, The Daily Mail published an expose of the continuing mistruths surrounding the Dome, read it here.

    BONUSES ALL ROUND! - The Millennium Commission has indicated that it would oppose performance bonuses to the NMEC board. The Daily Telegraph on 7th September quotes one of the millennium commissioners "Even though it is not our decision, we do believe bonus payments in these circumstances would be far from appropriate". We'll see !! So just who are these "good" performers, and where is all this money going?

  • Jennie Page, former Chief Executive, expecting to receive 150,000 if the project if deemed to have been a success. Jennie Page received a severance package totalling 173,983.
  • Pierre-Yves Gerbeau, her successor, apparantely is not expecting a bonus on top of his 100,000 salary and 15,000 pension allowance.
  • Liam Kane who succeeded in reaching his sponsorship target of 150 million is expected to receive a bonus.

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