Ministers responsible for the Millennium Dome were advised against naming Legacy as the preferred bidder because of doubts about the developer's ability to deliver the project as described.
However, ministers decided to override their advisers because Legacy had satisfied outstanding questions about finances and its strategy, meeting its requirements for competitive tenders.
Lord Falconer, the cabinet office minister responsible for the Dome, said yesterday he could not comment on the report provided by the external advisers. "We were advised that within the rules of the competition we could make Legacy the preferred bidder," he added.
Meanwhile it emerged that P.Y. Gerbeau, who is responsible for the day-to-day running of the Dome, wrote to the Government on Monday saying he had teamed up with Mr James Palumbo (36), the chief executive of the Ministry of Sound nightclub, in a bid to turn the Dome into a concert venue. Some advisers have been concerned that Mr Robert Bourne, the chairman of Legacy, had no experience in developing a project on this scale.
Advisers were said to be concerned that once the Dome had been sold to Legacy, the government would lose control. "There is a risk of it becoming something that was not intended," according to one. Ministers have set a deadline of February for conclusion of negotiations between itself and Legacy. If no deal can be concluded, it will consider re-opening the bid to other contenders.
However, aides to minister John Prescott are understood to be seeking guarantees from Legacy that its project will be delivered as promised. The two parties exchange contracts in February.
Mr Gerbeau's letter to the government said: "The bid has the confirmed financial backing of James Palumbo and a number of other significant investors. "It envisages the Dome as a new world-class visitor attraction and concert/special event venue." A business plan would be finalised by the middle of next month, but it is unclear whether Mr Gerbeau is pursuing the offer now Legacy has been selected as the preferred bidder.
