Taking the Politics Out of the Games – Privatisation and the London Olympics

For private companies, projects like the London Olympics represent an enormous business opportunity. There are lucrative government-backed contracts to be won, reputations to be enhanced, iconic images to be manufactured and goods and services to be sold. Much has been made of the Games’ uniqueness in this respect, but it is dangerous to write it off as an ‘exceptional’ event that is somehow separate from the everyday politics of capitalist cities. On the contrary, it tells us much about the intricate relationships that are now being forged between states, private corporations, and international finance.

Intuitively we might imagine that corporations advocate smaller government, along the lines proposed by neo-liberals. But firms have increasingly realised that that some of the world’s biggest and safest investment opportunities are now to be found in state-backed projects. Bigger government, in terms of investments, could paradoxically generate greater profits. The new business lexicon amongst global elites has, therefore, shifted away from the mantra of free-trade to that of privatisation and aggressive ‘contract-capture’. Why invest in risky market-based ventures in the midst of a recession when government projects like the Olympics offer up billions of pounds worth of guaranteed expenditure, ripe for private sector expropriation? Why create complex những nhà cái uy tín financial packages to help smaller businesses and young entrepreneurs in poorer neighbourhoods when in every city there are state projects and assets that can be commodified and turned into profit-making opportunities underwritten by contracts?

The Olympics is a visible symbol of these processes in action. From the outset, global firms such as PricewaterhouseCoopers were funded to carry out feasibility studies and compile materials for London’s bid. Other multinationals gave their services for free, hoping and expecting that future contracts would come their way. A plethora of other consultants, including PCU3ED and AECOM – the latter of which is playing a key role in master-planning the 2016 Rio Olympics Games – rapidly became involved in various parts of the construction and planning processes. Corporations began to extend their influence into the heart of decision-making structures. The London Organising Committee for the Olympic Games (LOCOG) is obliged to raise $376m from corporate sponsorship ‘of which approximately two-thirds is in the form of goods and services values in kind’. This has opened the door for big corporations to flood key management and executive positions in LOCOG with their own personnel. It has happened to such an extent that the boundaries between what is public and what is private have become increasingly difficult to disentangle. According to the International Accounting Bulletin, the global business services firm Deloitte has seconded over 130 staff to LOCOG since 2005. This includes key personnel such as Neil Wood, LOCOG’s Chief Financial Officer, and Laurie Neville, its Procurement Programme Manager. Others such as the Anglo-German multinational legal firm Freshfields have used secondees to cement their status as the ‘official legal services provider’ to the Olympics. Thirty or more of its employees have worked for LOCOG’s legal team. The company has played a leading role in negotiating the lucrative contracts for the Games’ procurement arrangements covering a broad range of activities from catering to seating to sponsorship. This is all part of an expensive corporate-Olympic merry-go-round. LOCOG’s Chief Executive, for instance, Paul Deighton was taken on from Goldman Sachs in 2005, along with Terry Miller who took over as head of the legal team in 2006. These corporate individuals demand corporate salaries. LOCOG’s accounts reveal that the former was paid a basic salary of £479,873 in 2011 alone and could receive bonus payments well in excess of this if all goes to plan.

But this is just the tip of the iceberg. Recently released government figures show that the Olympic Delivery Authority (ODA) sub-contracted out £5.6bn worth of business for the Games, through 1,433 major contracts. These contracts were then sub-contracted by contract-holders with over 43,000 separate awards being made. The scale of the resources and rewards on offer through such arrangements explains why global corporations have focused so much effort on capturing state resources. It also indicates the degree of privatisation that has taken place. For instance, within a year of being set up, the ODA hired a conglomerate of three global corporations – C2MHill, Laing O’Rourke, and Mace – to act as a Delivery Manager for Olympic infrastructure projects. It was paid fees of £718million, including a series of bonus payments for meeting specific targets. Other major contractors have done consistently well. Government data shows that in the first six months of 2010, four global firms working on key infrastructure – Carillion, Lend Lease, Balfour Beatty, and ISG – were given bonus payments totalling £10,170,000 and such figures give a sense of just how resource-intensive this state-led privatisation project has become.

Advocates of this model of development argue that it delivers infrastructure on-time and on budget. The contracted companies have done what they were paid to do. The UK government now showcases the Games as an example of ‘UK PLC’ operating at its best. However, all of this comes with democratic and financial costs. Contracting-out becomes a ‘commercial matter’ to be systematically insulated from democratic politics and wider social demands in order to enhance commercial viability. Companies have to bid for contracts under open competition rules. Public money cannot be handed to companies just because they happen to be located in a particular place or are fulfilling a wider social function. Governments have effectively waived away their basic right to determine where their money is spent and to whom it should go. Attempts to access detailed information about these processes then become subject to the constraints of commercial confidentiality and the contractual right of private firms to keep their business decisions out of the public gaze. The bigger the project, the more complex the financial and contractual arrangements, and the more difficult it becomes to follow the money. We simply don’t know where much of the £10bn or more that is being spent on the Games ends up. It may be supporting east London residents and small businesses, or, it might be finding its way into international tax havens through complex and obscure financial arrangements.

The implications of these trends for societies are enormous. In the 1960s Robert Dahl famously argued that within a functioning democratic system all affected interests should have some say in shaping the laws and policies under which they are governed. If in an era of austerity, governments continue to acquiesce to the demands of private investors and use contracts to ‘take the politics out of development’, then the formal political grounds for contesting and shaping projects becomes more and more limited. As Jacques Ranciére recently argued in Hatred of Democracy, the new political priority of many Western states has paradoxically become the elimination of politics.

By Professor Mike Raco, Bartlett School of Planning, University College London (m.raco@ucl.ac.uk)

Additional information: https://www.outlookindia.com/outlook-spotlight/10-most-trusted-non-gamstop-casinos-in-the-uk-news-315335