Exclusive:Edinburgh's Christmas 'at risk' as Council could face legal action over contracts

Edinburgh’s Christmas ‘at risk’ as council faces backlash over contract failures.

Edinburgh council could face legal action over the Christmas festival, amid allegations the award of last year's contract flouted rules.

It comes after a spate of controversies around the festival, with doubt now having been cast over the future of Edinburgh’s Christmas, which includes the Christmas market, George Street ice rink and a programme of events.

The Evening News can reveal that a report has been raised through Safecall, the council’s whistleblowing service, over the handling of last year’s contracts. It follows the collapse of the contract in 2022, when organisers backed out resulting in £3m losses for the council.

After Angels Events Experience walked away from the contract, Unique Assembly Ltd were given an emergency contract and subsequently, a one year extension. Now the consortium is also in the running for this year’s event, along with two other bidding companies. But it has sparked fresh anger over an alleged lack of transparency and fair process.

Now several companies are seeking legal advice over alleged breach of public contract tender rules – as the festivals are plunged into controversy once again.

The City of Edinburgh Council denies that any breach of contract took place and said that financial due diligence on all bidders for the festival has been carried out. 

A source close to the event said: “The council took the festivals off a company with no cash flow and gave it to another with no cash in 2022 then extended their contract unchallenged for 2023. Since 2022, all contract decisions have been closed room briefings. The finances don’t stack up. Unique Assembly shouldn’t have been awarded an extension of the contract. Accounts at the time showed that they had no money and were heavily in debt.

“The council knew the tender rules and let it slip through anyway then extended it without due process. They could face a judicial review if other companies knocked out decide to pursue legal action. They shouldn't be allowed to get away with it."

An investigation was launched into claims senior council officers misled councillors over the botched 2022 contract, following a complaint from the main contractor’s business partners. 

After Unique Assembly Ltd were given the contract council bosses said they ‘rescued’ the festival, delivering it at short notice. Following a successful Christmas again in 2023, the contract was extended based on performance.

Concerns about planning delays and implementation had been raised 'for months' with the council when the 2022 contract collapsed.

But it’s claimed the emergency contract was a "done deal" within hours after Angel Events backed out in September. Councillors didn’t ratify it until two weeks later at a finance committee meeting in October.

Council faces claims of flouting contract tender rules over award of Edinburgh's Christmas 2023

Despite backing out, bosses of the company were then involved in the running of the festival in 2022 and it’s claimed traders sub-contracted for the market huts also profited again in 2023.

Sources said many were ‘uncomfortable’ that Angels managing director David Kohlert remained in charge of the festival’s Christmas market in 2022. In an email seen by the Evening News he told his business partner he was ‘confident’ they’d be back trading – after reneging on the contract.

The company, which runs Winter Wonderland in London’s Hyde Park, had a number of local traders already in place for stalls at Edinburgh’s Christmas 2022 and the council said it wanted to ‘support’ local businesses.

Concerns were raised by a finance officer about lack of scrutiny around the 2023 contract, following promises from the council to have an ‘open book’ approach after the 2022 debacle.

The authority has declined to share accounts for the 2023 event.

A source close to the event said:  “On the day Unique Assembly Ltd formed, they changed shareholders to two shell companies, avoiding liability. But it wasn’t until months later that the confirmation statement to companies house showed the transfer. It didn't just fall down the back of the couch.

“It means Unique events used a start up with different shareholders that weren’t part of their bid. The contract should have been put out to re-tender. As of March 2023 accounts showed a negative balance sheet of half a million pounds. Whether they could trade through it is beside the point. It’s obscene, where is the due diligence? Other traders are outraged and several are seeking legal advice.”

Ian McAteer, chairman of the Union Group, said: “If it is indeed the case that the companies bidding for the festival’s finances do not meet the requirements stipulated in the tendering process then questions should be asked as to why they are allowed to tender. Given our experience from the abortive Angel Event Experience Ltd tender, where we discovered they had in fact set up a shell company and thereby avoided liability, I think it is vital that the council is clear on who it is dealing with.

"The 2022 event resulted in several Edinburgh companies, including ours, left out of pocket, and the council washed their hands of us. Is it incompetence or something more? The bottom line is that the council is aware that Edinburgh businesses were effectively defrauded. They refused to help us, and a number of other companies. We were thrown to the wolves and together, local companies lost more than £120,000."

A spokesperson for Unique Assembly Ltd said: “Following the stepping back of the winning tenderer for Edinburgh’s Christmas contract, an emergency one-year and subsequent 1 year extension was awarded to Unique Assembly Ltd to deliver Edinburgh’s Christmas 2022 and 2023. This emergency award was not part of the original Edinburgh’s Christmas tender, and the historic finances outlined showing subsequent losses incurred from the project, but do not reflect the current financial position of the company or our ability to deliver future contracts.

“As Unique Assembly we are immensely proud of our part in delivering both Edinburgh’s Christmas and Edinburgh’s Hogmanay over the last two years, projects which we have invested significantly in delivering to huge success for the city. We can make no comment regarding the current bid during the tendering period.”

Council leader Cammy Day said: “Following the termination of the contract for Edinburgh’s Christmas in October 2022 we had to work quickly to find a suitable alternative under a very tight timescale. The process for the emergency award was followed properly.

“We’re committed to putting on the highest calibre events possible for our residents and visitors, and we’ll be working closely with the organisers and other partners as we prepare for the 2024 edition and beyond.”

Editor's note: This story was originally published on February 23, 2024. It has been updated on February 29, 2024, with changes which reflect the council's denial that any breach of contract took place and its claim that financial due diligence on all bidders was carried out.