Main contractor told trams boss '˜deal can hold you to ransom'

Former TiE Chief Executive Richard Jeffrey was speaking at the Tram Inquiry

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 he started 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 to Edinburgh 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 September 23, 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.”

Mr Jeffrey said when TIE lost the first two adjudications over claims by the contractors for extra payments due to changes in design, those findings - in relation to bridges at Carrick Knowe and Gogarburn - had been a blow.

But he defended TIE’s strategy of continuing to contest the contractors’ claims.

“There is no question our position had been weakened by the decisions, therefore if we could obtain further decisions that went in our favour that would strengthen our position.”

He said if there was going to be a wider negotiation to resolve the conflict between TIE and the contractors, the relative strength of the two parties going into those talks would be crucial.

“So for us to have this setback in round one, if we just gave up at that point we would actually have been worse off.”