The EU-funded European Medicines Agency (EMA) faces a hefty €31 million bill following the collapse of the coworking giant WeWork last month.
A confidential EU report reveals that a badly negotiated subletting contract involving the agency’s former London base, which was abandoned after Brexit, commits the EMA to renting the premises through 2024 and beyond. This follows a High Court ruling that declared that the EMA could not exit the rental agreement early.
The EMA, the EU’s primary regulatory agency for pharmaceutical products, has attracted controversy for years over its costly withdrawal from its pre-Brexit London headquarters in Canary Wharf. It signed a 25-year rental agreement on ten floors of the property in 2014 without a proper exit clause.
Unable to escape its commitments, the EMA sublet the prestigious London property to WeWork—all while EMA staff rebelled against plans to place the agency’s new headquarters in the centre of Amsterdam’s red light district following the post-Brexit move.
Now, an internal European Parliament document obtained by the think tank MCC Brussels reveals that the EU will be left on the hook for an estimated €31 million in costs per annum since WeWork filed for Chapter 11 bankruptcy in the United States in November, with uncertainty surrounding the future of its British holdings.
The confidential briefing note from the EU Parliament’s budgetary committee explains how WeWork is unable to continue paying for the EMA’s former London offices, with the medical watchdog requiring an immediate cash injection to cover the monetary shortfall.
EU expenditure on the Canary Wharf property could likely rise before the lease expires in 2039, with a grand total of €400 million owed to the landlord over the next 15 years.
Already under pressure for its less-than-stellar performance during the COVID crisis, the EMA’s bungling of the London rental agreement has been cited by MCC Brussels director Frank Furedi as indicative of a wider malaise within EU institutions.
”Paying millions in rent for a vacated building is not only a waste of precious resources but an insult to the European taxpayer” declared Furedi, adding that there was a wider “lack of accountability” within many similar EU agencies.
Responding to a request for comment, a spokesperson for the EMA denied that the London office was empty, saying that WeWork had been in contact to re-negotiate the lease in light of the bankruptcy of their U.S. wing amid an announcement that the company was slimming its British operations.
