Archive for March 13th, 2012

Anybody who has been following the fascinating question of why on earth Lord Coe and his 2012 Olympics organising team came to select a company as controversial as Dow Chemical to sponsor a fabric wrap around the main Olympic stadium this summer will be intrigued by a number of Government emails that have been disclosed to me under the Freedom of Information Act.

They show that:

– the idea to bring in a private sponsor was the personal suggestion of Culture Secretary Jeremy Hunt himself

– that Mr Hunt’s department was aware of Locog’s safety concerns about dropping the wrap during the Comprehensive Spending Review in 2010

– that the wrap was potentially vital to ensure the safety of artists performing high wire tricks during the opening and closing ceremonies

– that the wrap was and is important (in Locog’s words) to ensure that Olympic VIPs and media do not get wet in the main stadium’s more exposed West stand

– that the £7million cited cost for the wrap was never in the ODA budget in the first place; it was to be covered from reserves.

– that the Department for Culture Media and Sport appeared to be well aware that a deal was being done with Dow “a few weeks” before the previously reported date to Parliament of May 25

– and that contrary to what we have been told repeatedly before, the International Olympic Committee were involved in Locog’s wrap deal with Dow “to bring them on as a world wide sponsor”.

I have shown the emails to Labour MP Barry Gardiner who wants to put down an Urgent Question to Mr Hunt in the Commons tomorrow. He believes that Mr Hunt needs to explain two main points to the House: a) his own involvement and b) the date when his department knew about the deal.

For those unfamiliar with the background to this saga, here are the basic facts:

In July 2010, Dow paid an estimated $100 million to the IOC to become one of its worldwide TOP sponsors for the next 10 years. This was a straightforward business decision because it allows the company to push its products onto Olympic Games organisers. There is an element of first option in any supply contracts.

At about the same time in July/August 2010, the Coalition was preparing announcements for the October 2010 Comprehensive Spending Review. DCMS wanted the Olympic Delivery Authority to find £20million of savings.

In October 2010, DCMS announces that the wrap will be dropped from the ODA budget to save £7million. There is some talk at that stage that the wrap could be retained if private funding is found.

In December 2010, Locog reveal they have had a number of expressions of interest for the wrap and in February 2011 an “open and rigorous” tender process is advertised. It offers “sector exclusive marketing rights” in return for supplying the wrap.

On August 4, 2011, Dow Chemical is announced as the winner of that process. On Aug 7, the Sunday Express is the first newspaper to report concerns and outrage from the victims of the Bhopal gas disaster in 1984. That story is picked up by the international press, the Sunday Express continues the momentum, it uncovers apparent anomalies and concerns at Olympic Board level and protests and threats of boycotts grow.

In January 2012, Meredith Alexander one of the commissioners for the Commission for a Sustainable London 2012, which had been assigned to investigate the Dow deal, resigns in protest at the decision of her chair, Shaun McCarthy to give the deal a clean bill of health. Mr McCarthy then admitted that the processes had not been good enough and recommends to future Olympic Games organisers that corporate ethics should be considered when awarding sponsorship contracts.

What almost everyone who has closely followed this controversy finds difficult to fathom is why PR master Lord Coe thought there would be no fall-out from the Dow deal, given the company’s links to Bhopal.

Well, very senior Olympic insiders tell me that because there had been no howls of protest from the Bhopal campaigners when Dow became an IOC sponsor in July 2010, they assumed there would be nothing risky later on. They also insist that Dow’s position on Bhopal is legally sound. The pesticide plant in Bhopal was owned by an Indian subsidiary of Union Carbide. Union Carbide made a $470million “full and final” settlement to the gas victims in 1989. It then sold its Indian subsidiary and in 2001, Dow Chemical completed a deal to buy the rest of Union Carbide.

So Dow never owned nor operated the Bhopal plant and they continue to highlight that. However, the Indian government and victims continue to pursue Dow through the courts. Among their arguments are that the contaminated groundwater in Bhopal, which still maims children to this day, predates the 1984 disaster; as such, the international principle of “polluter pays” applies and Union Carbide, now owned by Dow, is that polluter. Secondly, the Indian government argues that the number of victims accounted for in the 1989 settlement was vastly underestimated, that the full horror of the 1984 disaster has only become apparent with the passage of time.

In many ways it is complex, but there is one simple fact: the pesticide plant in Bhopal has never been remediated and that the slums surrounding it continue to draw water from nearby wells.

So that’s the background. Now on to the emails. I asked the ODA for all correspondence it held on the issue of the wrap from July 2010, both internally and with the DCMS and Locog. Some of that correspondence has been withheld on the ground that it would affect “policy advising”.

The material that has been released, though, is fascinating enough.

On July 27, 2010, David Goldstone, a director at the Government Olympic Executive (GOE) at the DCMS, wrote to Dennis Hone, who was then the Finance Director at the ODA (he was soon promoted to CEO when David Higgins left). He told Hone that “ministers are clear they want all options to be considered” in the CSR, “and that includes opportunities to raise further revenues from non-public sector sources”.

On August 4, 2010, Mr Hone writes to his team to say that the GOE have suggested dropping the wrap.

On September 13, 2010, David Goldstone writes to Locog CEO Paul Deighton and David Higgins, the then CEO of the ODA:

“Sorry if this is a stupid idea, wasting your time,” he writes…”I was thinking about why we can’t get the wrap paid for by sponsors – it will be (if we don’t scrap it) one of the most viewed images in the world in 2012; it must be worth a fortune to sponsors to have their logos etc on there.

“I assumed it fell foul of ‘clean venue’ requirements – but understand they focus on the field of play, not external. As I assume an external wrap wouldn’t be visible from field of play, that should be ok. So what’s to stop Paul sending the commercial team to auction off rights to a bunch of sponsors each to have images etc on there‐ which would i assume raise far more than the £7m we are talking about saving.

“I keep thinking i must be missing something, and this must have been looked at – so if there is an obvious reason why it doesn’t work, please do let me know. Otherwise, is it worth pursuing?? Thanks, and sorry if this is an obviously stupid idea for a reason i am missing.”

[For the origin of this idea, see a further email below from May 2011…]

Paul Deighton replied the same day:

“We’ll do some further investigation. This would be covered by IOC clean venue rules which would allow for something as it is not the field of play. The reality is that the limited nature of what would be permitted would prevent us from extracting particularly significant sums.”

On September 20, 2010, Neil Wood, the chief financial officer at Locog, emails David Goldstone to outline Locog’s concerns about removing the wrap. He says the wrap is important for practical reasons, that it would incorporate signs for spectators and that these signs would match the colours on people’s tickets. He says this signage system is “paramount” for gaining a safety certificate for the stadium.

Then under a heading of “Impact of Athlete and Ceremony Perfomances”, he says that the ODA had commissioned study which found there would be “minimal impact” on athletes’ speed if the wrap were removed. However…

“The ODA study does not assess the potential impacts of the changing wind conditions on the Opening and Closing Ceremonies…Locog has focussed on developing an aerial ceremony production, with aerial suspension of performers and scenery. This naturally involves an element of risk to the performers, however Locog will need to assess if the impact of removing the wrap adds further to the health and safety of the performers”.

And then under a heading “Spectator, Media and Olympic Family Safety and Comfort”, Mr Wood adds:

“The study commissioned by the ODA concludes that the removal of the wrap further increases the spectators’ exposure to the prevailing wind causing conditions to be less favourable than with the wrap in place. The west stand was the area of the stadium highlighted as having the greatest impact on spectator safety and comfort in the vent of having no wrap. As the west stand is where the media and Olympic Family are seated, this causes Locog concern, especially with the roof of the stadium already not providing full coverage to the seated areas.”

He goes on:

“Removing the wrap significantly increases the area exposed to inclement weather which creates uncomfortable conditions and a potential for slippery surfaces.”

David Goldstone replied briefly on behalf of DCMS/GOE the next day, noting on September 21, 2010:

“Weather protection – we discussed this with ministers yesterday and they understand but still want to continue to pursue the option….”

Also on that day, Mr Goldstone emailed Neil Wood asked about the progress on the idea of commercial sponsorship, to which Mr Wood replied:

“It is being investigated although there are certain constraints in what the IOC will allow. We are preparing a proposal that will then need to be evaluated by our commercial team – but it is being followed up.”

And so in October 2010, DCMS announced that the wrap had been dropped as part of the CSR and that £7million would be saved. In reality, the wrap was never going to be dropped.

Culture Secretary Jeremy Hunt made a fortune in publishing before becoming an MP and he was a particular expert with marketing and advertising brainwaves.

So fast forward to May 2011 when David Goldstone lets the cat out of the bag. It is May 23 and DCMS are aware that a deal with Dow is imminent and now it’s all about who should take the credit.

Mr Goldstone writes an email to an unnamed official:

“I understand from LOCOG that they are close to a deal on the wrap, along the lines we discussed a few weeks ago. We will need to be sighted – and be able to agree/amend – any announcement on this, as the idea of seeking private funding for this came from the SofS so there should be some recognition of that when the new solution is announced.”

Note this is May 23, the reference to “a few weeks ago” and to the “SofS”.

Two days later on May 25, an unnamed official replies to Mr Goldstone and reveals what everyone has been suspecting, that the IOC had been involved in the Locog process:

“The deal with Dow has been agreed but the contract is not yet signed (all contract and commercial terms are agreed). XXXX in LOCOG comms is dealing with any announcement and I have left him a message to call me. was under the impression that LOCOG comms were already talking to GOE/ DCMS press or comms?

The details on the deal are:

· Dow Chemical is a US company

· IOC has been involved as they are bringing Dow on as a new world wide sponsor


· Covers all necessary fabrication and install costs to connect to the fixing plates built in by the ODA

· There are circa 330 wrap panels

· Will include printing on both sides

· It is not PVC – I am trying to find out what the material is

· The cost includes taking the panels down post Games – one legacy use being explored is for the panels to be converted into humanitarian aid shelters for organisations such as UNICEF or Red Cross

Dave also said that Neil Wood is in the loop on this and at the Directors meeting where this was discussed an announcement in conjunction with Government was already being considered.

I will continue to try and contact but if anyone is aware of any GOE/ DCMS contact already then let me know.”

Now, on February 7 this year, Barry Gardiner asked the following Parliamentary Question:

To ask the Secretary of State for Culture, Olympics, Media and Sport on what date his Department was first made aware of Dow Chemicals’ interest in sponsoring the stadium wrap for the London 2012 Olympics.

Sports Minister Hugh Robertson replied:

Contracting for services and supply of goods to the London 2012 Organising Committee (LOCOG) is a matter for LOCOG, a private company operating independent of Government. On 7 February 2011, LOCOG publicly sought expressions of interest from the private sector to supply the wrap, published on the Compete For London 2012 business opportunities website, with a deadline of 18 February 2011.

Following this procurement process, LOCOG informed us they were in the final stages of contract negotiation with Dow Chemicals, on 25 May 2011. The conclusion of these discussions between LOCOG and their suppliers was announced on 4 August 2011, publically (sic) naming Dow as the Olympic Wrap supplier.

The stadium wrap had been removed from the Public Sector Funding Package for the London 2012 Olympic and Paralympic Games as part of the 2010 spending review.

Mr Gardiner says this is the basis for an urgent ministerial question as we now know that DCMS was aware of the deal “a few weeks before” May 25.

When I put this apparent discrepancy to DCMS, a spokesman said:

We were clear when we decided to drop the wrap to save £7 million from the Olympic budget that private sponsorship was an option to LOCOG if they wanted the wrap on the stadium. While we were aware in the run up to a deal being signed that LOCOG were close to finding a sponsor we did not know it was Dow until May 25.

Is that really believable?

And when I queried the IOC about whether they had been involved in the wrap process, they said “No, we were not involved. Then “We were absolutely not involved in the negotiations on the wrap.”

I then showed them the May 25 2011 email and they said it was my “interpretation” that it meant the IOC had been involved. They said that email was “general background” referring to the July 2010 TOP sponsor deal.

I then pressed: “Did the IOC discuss in any way the possibility of Dow sponsoring the wrap with Locog or DCMS between August 2010 and May 25 2011, and particularly prior to the launch of the tender in Feb 2011?”

The IOC spokesman replied yesterday: “So far I haven’t come across any instance.”

As I said, murky and complex.

Here are the links to the 15 FoI email chains: here, here, here, here, here. here, here, here, here, here, here, here, here, here and here.

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