TV company’s £300,000 contract ‘broke EU rules’

Trevor Phillips’s position as chair of Britain’s equality watchdog is under intense pressure in the wake of revelations that it unlawfully awarded a £300,000 contract to a company run by one of his close professional friends.

The six-figure sum swallowed up the entire publicity budget for the launch of the Equality and Human Rights Commission (EHRC).

The commission was also shaken last week by the resignation of Ben Summerskill, of Stonewall, a gay rights group. On Friday, he urged that Phillips should quit his post. Summerskill’s departure and remarks will intensify scrutiny of the watchdog’s finances. The Observer has learnt that a confidential investigation into the award of the contract was ordered by Nicola Brewer, the commission’s former chief executive, but has not been made public.

The investigation examined the award of a contract to Juniper TV, a company headed by Dr Samir Shah, who has known Phillips since they worked at LWT in the 1980s. In 2007, as the commission was being set up, Juniper was awarded a contract to produce My Story, a 30-minute video in which the public and celebrities talked about “difference”.

According to the tendering document, the project was the “first EHRC product reflecting and publicising the new organisational branding”, but it ran into financial trouble. Concerned about spiralling costs, the commission attempted to terminate the contract. “There was an issue about halfway through the production,” Shah said. “They sought to bring the project to a close and we said we would expect them to pay us the cost of completing it.”

Emails obtained under the Freedom of Information act reveal the commission then demanded Juniper “shave” the costs of the production. But despite this, the EHRC still ended up paying Juniper £307,802, exceeding the £300,000 publicity budget for the commission’s launch.

“An internal audit report did subsequently raise concerns over budget and procurement processes in the transition team around this project,” a commission spokesman said. “The report concluded that EU procurement rules had not been followed, concerning whether or not the tender for the project should have been advertised across Europe.”

The revelation comes at the end of a turbulent week for the watchdog after Summerskill stood down, taking the total number of commissioners who have left to six. It also emerged that Alun Davies, the head of its disability committee, is leaving, as is its director of stakeholder relations, Bradley Brady. There is speculation that Sally Greengross, another commissioner, will leave soon.

The exodus is seen as a result of growing disquiet over Phillips’s role. As chairman, he works a three-and-a-half-day week and is paid £110,000 a year. There was speculation the government would not renew his contract this summer. The decision by the equality minister, Harriet Harman, to reappoint him triggered the recent departures.

In his resignation letter, Summerskill expressed concerns over the watchdog’s finances, stating: “As chair of the commission’s audit and risk committee, I would feel entirely unable to offer future reassurance … that the commission was being led and the commission’s affairs conducted with appropriate probity.”