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Top Multiplex directors axed Cleveland Br idge

NEWS - Decision to remove steelwork subcontractor from Wembley job came from the top, court hears

A SENIOR Multiplex manager working on its contract to rebuild Wembley stadium has admitted that the firm's highest-ranking directors were involved in the decision to replace the steel firm it is now suing in the High Court.

Cleveland Bridge (CBUK) was told at the end of June 2004 that it was being replaced by Dutch firm Hollandia, which would finish erecting thousands of tonnes of steel needed for the home of English football.

Multiplex asked CBUK to stay on and carry out design and steel fabrication work but the firm left the job five weeks later at the beginning of August.

Multiplex is suing CBUK for up to £30 million for damages and breach of contract. Cleveland Bridge is counterclaiming £18 million.

Multiplex had insisted the decision to remove Cleveland Bridge from its contract to put up the steel was made by project director Ashley Muldoon and his boss Matt Stagg, who was then head of the firm's UK operations.

But under cross-examination by CBUK's QC Hugh Tomlinson last week, Ran McGregor, Multiplex's project manager responsible for the steel structure, said others had been involved in the decision-making process.

Mr McGregor said he was told CBUK had been removed from erection responsibilities on the day CBUK was given notice and added: 'I do not make the decisions. Matthew Stagg and the directors above Matthew Stagg would make a decision of such gravity.'

Mr Tomlinson said Multiplex had lined up Hollandia to replace Cleveland Bridge as part of its 'Armageddon plan', which Cleveland Bridge claims was a strategy to bankrupt the firm and save Multiplex money on rising steel costs.

The court heard how Multiplex chairman John Roberts and his son, chief executive Andrew, jetted into London from Australia in June 2004 and attended a meeting on June 9 with Mr Stagg, Mr Muldoon and Noel Henderson, then an executive director who was the firm's head of worldwide construction.

Mr Tomlinson told presiding judge Mr Justice Jackson that it was at this point Multiplex decided to implement its Armageddon strategy.

Mr McGregor was also asked about notes he had made in January 2004 in which he envisaged a number of scenarios regarding CBUK, one of which was marked 'cut them now'. Asked by Mr Tomlinson what he meant, Mr McGregor said: 'Cut means 'remove'.'

Mr McGregor conceded that CBUK had been hampered by late and incomplete design information from the design engineer, Mott Stadium Consortium.

The court heard how Multiplex had introduced a design freeze in December 2003 to reduce the amount of changes.

Mr Tomlinson said his client faced an 'unprecedented level of change and difficulties on this project, which was nothing to do with CBUK'.

Mr Stagg told the court Multiplex had lost confidence in CBUK's capabilities over the summer of 2004. CBUK was given notice days after lifting the stadium's iconic arch into place.

Mr Stagg said: 'We weren't confident that if we went with CBUK the thing would get finished. We formed a view that Hollandia management would be more capable of putting it up rapidly.'

Mr Stagg was asked to detail the breakdown in the relationship between Multiplex and Cleveland Bridge, which Mr Tomlinson suggested had been caused by Multiplex's refusal to honour an agreement over money.

The court heard how the pair had come to a deal over the value of work CBUK had done up to February 2004.

Mr Tomlinson said this figure was £32.66 million, which was later included in a so-called supplemental agreement the pair signed in the middle of June.

This agreement included an option for Multiplex to remove CBUK from site, which Mr Tomlinson said was crucial to Multiplex's plan to drop CBUK from the project and recover around £15 million in steelwork costs.

Mr Tomlinson said CBUK had only signed up to the supplemental agreement because it included the £32.66 million figure. But Mr Stagg said the £32.66 million was never a final agreed figure, and repeated claims that CBUK was trying to force Multiplex to employ it on a permanent cost-plus contract, which, the court was told, CBUK had been on since the middle of February 2004 until the time of its departure.

Mr Stagg said a proposal Cleveland Bridge put forward in late June 2004 to finish the rest of the steel work after the arch had been lifted into place was 'meaningless'. He added: 'It was costplus and zero-risk to CBUK. It was a totally unacceptable submission.'

He was again asked about the Armageddon plan and Mr Stagg repeated his claim that it was planning for a worst-case scenario if CBUK walked off the job. 'That's a lie, ' said Mr Tomlinson, adding that by spring 2004, Multiplex had decided to remove CBUK from the job in the hope of meeting a targeted steel cost plan.

But Mr Stagg denied Multiplex hatched a plan to send the firm under.

He said: 'It was unthinkable that we couldn't reach an agreement going forward. The two worst things for a main contractor are the subcontractor goes bust and you have to replace them.'

The case continues.