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A police investigation involving a Unite union official is looking into contracts relating to the construction of a £98million hotel and conference center in Birmingham, the Guardian has learned.

South Wales Police and HM Revenue and Customs raided the union’s offices in central London on Thursday as part of an investigation into allegations of corruption, fraud and money laundering.

Sources have confirmed that contracts related to the 170-room hotel and conference center are part of their investigations.

It is understood that the police also examine contracts related to the services of members who were linked to the union.

More than 20 officers arrived unannounced at the union’s offices in Holborn, central London, on Wednesday. The police searched a single office and took away dozens of files, documents and a computer.

Police also searched a number of other addresses in South Wales, Merseyside, Cheshire, North Wales, Greater London and Northamptonshire.

A document leaked to the Guardian in January last year showed that the costs of the Unite hotel and conference center appeared to have more than doubled from 2015, when initial estimates were £35million, to 2020. Construction was completed in December 2020 at a cost of £98m.

Then-general secretary Len McCluskey told a Unite executive board meeting in January 2021 that costs had risen due to the union’s promise to employ unionized workers, avoid the involvement of companies that had a history of blacklisting, directly employing workers and paying them at least national wage rates.

The union’s executive committee concluded that directly employed labour, high construction costs in Birmingham and a change in the scope of the project drove up the price.

The election of a new Unite general secretary last summer prompted calls from MPs and union officials for a cost inquiry. Newly elected general secretary Sharon Graham launched an investigation in December into how construction costs turned into a “potentially significant loss” for the union.

On Thursday, a Unite spokesperson said: “A Unite employee is the subject of a criminal investigation by police. On Wednesday April 6, the employee’s office at Unite’s headquarters in Holborn , London, was visited and searched by the police under warrant.

A police spokesperson said: ‘South Wales Police have executed warrants as part of an investigation into allegations of corruption, fraud and money laundering.

“Warrants were executed on Wednesday April 6 to addresses in South Wales, Metropolitan, Merseyside, Cheshire, North Wales, Dyfed Powys and Northamptonshire police areas.

“The joint investigation with HM Revenue and Customs is continuing and a number of suspects will be interviewed in due course.”

On Friday, neither the police nor the union added to their previous statements.

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