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Volume 1: Security for the Arena
Volume 1: Security for the Arena (large format)

SMG

Key findings

  • For the purposes of the Attack, the two most important companies in the SMG group were SMG Europe Holdings Ltd and SMG (UK) Ltd. There was an unclear division of responsibility between these two companies.
  • SMG Europe Holdings Ltd had undertaken to provide security in the City Room by reason of a facilities management agreement with its landlord. Security included patrolling and monitoring of CCTV.
  • There is likely to have been a breach of the Security Industry Authority’s (SIA) licensing regime in relation to CCTV operators by either or both SMG Europe Holdings Ltd and SMG (UK) Ltd.
  • SMG had responsibility for the security of people in the City Room by reason of the facilities management agreement. It had a separate statutory duty to take such steps as were reasonably practicable to keep event-goers in the City Room safe from a terrorist attack.

The SMG corporate structure

In Part 1, I referred to SMG. While a convenient shorthand to cover more than one company which included SMG in its name, it is important that the legal position is set out. This is because there was an unclear division of responsibilities between two SMG named companies. The arrangement was sufficiently unclear to result in confusion in the minds of some SMG employees as to which company they worked for. It also created confusion which resulted in an incorrect belief that an SIA CCTV licence was not required for those monitoring the CCTV.

SMG’s corporate structure at the time is set out in a document entitled “SMG Organizational Chart European Entities” as set out in Figure 9.

Figure 9: SMG Organisational Chart of European Entities – relevant companies highlighted. The organisation chart for SMG’s corporate structure highlights the relationship between SMG (on the first level of five) and SMG UK Ltd on the fourth level. Between, on levels 2 and 3 are SMG Europe Holdings Ltd and SMG Europe.

Figure 9: SMG Organisational Chart of European Entities – relevant companies highlighted64

The relevant parts of this structure, as they were arranged in 2017, were as follows. SMG was a Pennsylvania General Partnership. It was the parent organisation and was registered in the United States. I shall refer to it as SMG US.

Beneath SMG US was SMG Europe Holdings Limited (SMG Europe Holdings). SMG Europe Holdings was wholly owned by SMG US and registered in the United Kingdom. SMG Europe Holdings owned a number of other UK-based companies. One of these was SMG Europe Limited (SMG Europe). SMG Europe was an intermediate holding company and is not named as a party to any of the agreements.65

SMG Europe owned SMG (UK) Limited (SMG (UK)).

For the purposes of what occurred on 22nd May 2017, the two most important companies in the SMG group were SMG Europe Holdings and SMG (UK). Between them, SMG Europe Holdings and SMG (UK) carried out the two parts of the SMG group’s activity within the Victoria Exchange Complex. Those two parts were facilities management and the running of events.66 I accept that, at a senior level, the intention was that SMG Europe Holdings would be responsible for facilities management and SMG (UK) would be responsible for events. This was not always borne out by what occurred.

In this Report, when I refer to SMG, I am referring to the activities of these two companies. The evidence revealed there was an insufficiently clear distinction between the two of them for it to be appropriate, or on occasions possible, for me to identify one rather than the other. This was because of the contractual and employment arrangements which had been put in place by SMG.

The approach I am taking by referring to two legal entities by the single name SMG reflects the reality on the ground in May 2017 in the minds of many who interacted with SMG. At a senior level in Showsec, for example, there was no clear understanding of the corporate structure set out above.67

My approach is also consistent with the approach that SMG itself took during the Inquiry. Core Participant status in the Inquiry was held by SMG Europe Holdings.68 However, those representing SMG Europe Holdings, which of course owned SMG (UK), dealt with both the events and facilities managements side of the business. This was both an appropriate and pragmatic approach.

SMG Europe Holdings

The Arena lease and the facilities management agreement

Mansford sub-let the Arena to SMG Europe Holdings. SMG Europe Holding’s lease was subject to a facilities management agreement.69 In 2014 the rights and responsibilities under both agreements were transferred from SMG Europe Holdings so that they were jointly held by SMG Europe Holdings and SMG US. This was at the request of Mansford. This was not a change which the evidence suggested made any difference to the issues I am considering.

The facilities management agreement is an important document. It states: “SMG will provide and operate a 24 hour a day, 7 day a week, security service”.70 Included within the security service was “Monitoring, operating and testing the security alarm, intruder detection, and security surveillance systems.”71 The security service also required “foot patrols of the building”72 which would be recorded by “an electronic clocking system”.73 These electronically monitored foot patrols were referred to by SMG as “Deister Patrols.” This term was a reference to the equipment which was used.74

The route of the Deister Patrols took in the mezzanine area in the City Room.75 These patrols included a counter-terrorism element. They did not, however, take place during events. The facilities management agreement did not specify how many patrols would occur each day or at what time, but stated that “all duties”, which included the foot patrol duty, “will be required on a 24 hour, 7 day a week basis.”76

Key employees of SMG Europe Holdings

SMG Europe Holdings employed a number of key people so far as the events of 22nd May 2017 are concerned. The Inquiry heard from each of them.

In 2017, John Sharkey was the Executive Vice President of SMG Europe Holdings. He was responsible for 10 arenas operated by SMG Europe Holdings, including the Arena.77

James Allen was the Arena General Manager. He joined SMG in 1998, having spent the three previous years working in the events industry.78 He started working at the Arena in 2003.79 He became the Arena General Manager in 2013.80 James Allen stated that he worked for SMG (UK).81 In fact he was employed by SMG Europe Holdings,82 but was paid by SMG (UK).83

Miriam Stone was the Events Manager and on duty on 22nd May 2017. She was also employed by SMG Europe Holdings84 and paid by SMG (UK).85 She worked for the events side of the business. She said of the relationship between SMG (UK) and SMG Europe Holdings, “If I’m honest from where we were sitting there was… it didn’t feel like a massively straightforward relationship.”86 She went on to say that there was “some fuzzy crossover in that our offices were next door, so there’d be to-ing and fro-ing.”87

SMG Europe Holdings also employed Michael Edwards,88 who worked in Whisky Control as a Control Room Operator. Michael Edwards was one of three people in or around Whisky Control during the Ariana Grande concert.

I will address the training of the relevant SMG Europe Holdings personnel in Part 6.

SMG (UK)

Licence to occupy

SMG Europe Holdings granted a contractual licence to SMG (UK) to occupy the Arena. Despite his seniority, John Sharkey was not sure whether this grant had ever been reduced to writing. Consequently, the details of this contractual licence were not clear from the evidence. John Sharkey stated that there was a process of re-charging between SMG (UK) and SMG Europe Holdings, although SMG (UK) did not pay any rent to SMG Europe Holdings in order to occupy the Arena.89

This appears to me to have been an arrangement of convenience based on an informal understanding between two legal entities. This agreement was able to subsist because the legal distinction was not regarded as being sufficiently important, by those who put it into effect on the ground, for any lack of clarity to be regarded as problematic.

John Sharkey denied the suggestion that the arrangement created confusion in practice.90 However, it did give rise to difficulties with the SIA licencing regime as I set out below.

Premises licence

The premises licence granted by Manchester City Council, which permitted events to be held at the Arena, was held by SMG (UK). James Allen, who was employed by SMG Europe Holdings, was named as designated premises supervisor.91

I will address the detail of the relevant parts of the licence and the licensing regime in Part 3.

Key employees of SMG (UK)

SMG (UK) employed Michael Cowley and Paul Johnson.92 Michael Cowley was the Facility Services Director.93 This meant he was in charge of the facilities management agreement. He was named as part of it.94 The facilities management agreement was signed on behalf of SMG Europe Holdings, not SMG (UK).95 In his statement John Sharkey incorrectly asserted that Michael Cowley and Paul Johnson were employed by SMG Europe Holdings.96 However, he corrected this when he came to give evidence.97

Michael Cowley gave evidence about the operation of the facilities management agreement. He stated that, during events, the SMG Deister Patrols would not take place98 and patrolling was carried out by Showsec.99 His evidence was contradictory and confusing about whether or not Showsec were discharging the facilities management agreement responsibility to patrol.100 He appeared to settle on a position in which he thought Showsec had been retained by SMG to discharge the patrolling obligation.101

Miriam Stone provided clarity on the point. She was clear, and I accept, that Showsec’s operation was confined to the event which was taking place and had nothing to do with SMG Europe Holdings’ obligation to Mansford.102 It is of concern to me that the person in charge of facilities management, Michael Cowley, did not understand the correct position.

Paul Johnson was the Security and Cleaning Supervisor.103 He had held that position since 2005. These roles fell into the facilities management side of SMG’s business.104 He also acted as Fire Safety Officer on event days, including on 22nd May 2017. He stated that he was employed by SMG Europe Holding105 and had learned of SMG (UK) through listening to the Inquiry.106 In fact and despite the belief he held, Paul Johnson was employed by SMG (UK), as John Sharkey was to confirm.107 He stated that he had not realised that there was a split between facilities and events and that he worked as part of “a very close team.”108 I will address the issue of Paul Johnson’s training in Part 6.

Consequences of SMG’s corporate structure

The SIA regime only requires a person in a junior role to be licensed for CCTV monitoring into a public space if they are supplied under a contract for services. During the Ariana Grande concert, Paul Johnson and Michael Edwards both monitored the CCTV in Whisky Control. Neither had an SIA CCTV licence. One was employed by SMG Europe Holdings; one was employed by SMG (UK). At least one of them required an SIA CCTV licence, depending on whether at the time they were monitoring CCTV, they were doing so on behalf of SMG Europe Holdings or SMG (UK). James Allen’s view was that the facilities management side of the business provided him with control room officers for events.109 If this was what SMG was in fact doing, as was the case for at least Michael Edwards, he required an SIA licence for it to be permissible to monitor the CCTV during events.

Part 3 will deal in greater detail with the SIA regime. In Part 6, I will deal with CCTV monitoring as a terrorism threat mitigation measure.

Responsibility for people in the City Room

There was a clear understanding at all levels of senior management within the SMG group110 of its responsibility for the security of people attending events at the Arena, including in the City Room.111 In submissions to me, it was accepted on SMG’s behalf that SMG was responsible for the security of people in the City Room.112 SMG acted as though it was responsible113 and SMG was responsible.

SMG had that responsibility for people in the City Room for two reasons arising from the two sides of its business. SMG was responsible under the facilities management agreement for the provision of security on the site, 24 hours a day, 7 days a week. The City Room was included within this contractual responsibility.114

SMG also had a responsibility for those attending events as the event operator. The City Room provided a key ingress and egress route into and out of the Arena and was used as an area in which people queued to buy tickets and queued to enter. That responsibility arose under section 3 of the Health and Safety at Work etc. Act 1974. This required SMG to conduct itself so as to ensure, so far as reasonably practicable, that persons who are not its employees who may be affected by its activities are not exposed to risks to their health and safety. Event-goers were undoubtedly persons who were affected by SMG’s activities. I shall address the health and safety regime in a little more detail in Part 3.

An issue arose during the Inquiry as to whether John Sharkey had told Figen Murray, the mother of Martyn Hett, that SMG was not responsible for the City Room. Figen Murray stated that John Sharkey had told her that “the area outside the Arena had nothing to do with SMG” during a meeting she had with him on 8th December 2017.115 John Sharkey stated on a number of occasions during his evidence that he had no reason to dispute Figen Murray’s account116 although he also stated he could not remember the exact words he used.117 He asserted he was “definitely responding on the basis of not describing the responsibilities.”118 At one point in his evidence, John Sharkey said “I don’t think I said SMG are not responsible for security in the City Room” but then confirmed he was not disagreeing with Figen Murray’s account.119 He categorically denied trying to avoid responsibility in the meeting.120

He accepted that “it should have been fairly easy to describe the responsibilities.”121 He offered Figen Murray an apology for not having given a clear answer and for the hurt he had caused.122 He stated that it had not been his intention for her to leave the meeting with the impression she did.123 Figen Murray’s account was not challenged by SMG.124

Having heard from both Figen Murrary and John Sharkey, I have no doubt that John Sharkey said to Figen Murray words which carried the clear meaning that SMG was not responsible for security in the City Room. That was despite the fact that he knew in May 2017 that SMG was responsible for security in the City Room by reason of both the facilities management agreement and the duty towards event-goers.125 I conclude that John Sharkey tried to mislead Figen Murray in a misguided attempt at ‘damage limitation’ for SMG. I am prepared to accept that it was a challenging meeting for John Sharkey.126 However, it would have been a much more difficult meeting for Figen Murray, and John Sharkey should have given a straightforward and accurate response.