Ken and lost £500,000: The inquiry begins

An inquiry is being carried out into £500,000 of public funds given to a community group with close links to one of Ken Livingstone's top advisers.

The Mayor revealed that the London Development Agency, which awarded the money to the Brixton Base project, is conducting an "audit" to check the sums were spent properly.

This follows a series of articles in the Standard that have questioned mayoral aide Lee Jasper's role in at least £2.5 million of LDA grants.

Tomorrow pressure on the Mayor will increase when the London Assembly Liberal Democrats will call for him to invite the district auditor to investigate the LDA's grant awards.

Today Mr Livingstone used his City Hall press conference to attack the Standard's coverage, which he claimed was without substance and merely spread "hatred" against London's black and ethnic minority communities.

He criticised the journalist responsible for the reports, Andrew Gilligan, saying he was the most discredited reporter in Britain who was seeking to boost the mayoral campaign of Tory Boris Johnson.

Mr Livingstone said: "What is obnoxious about the scale of the campaign is the amount of space that was devoted to it and the complete lack of any substance.

"If any of these people had any substantial evidence, they would have not gone to [Greater London Authority chief executive] Anthony Mayer, they would have gone to the police. These allegations are basically 'fishing' expeditions."

Mr Livingstone was supported in his attack by Lord Ouseley, the former chairman of the Commission For Racial Equality; Richard Taylor, the father of murdered schoolboy Damilola, and black community leader the Rev Nims Obunge.

Mr Livingstone said he had received assurances from LDA chief executive Manny Lewis that there was an "audit trail" of funding for a number of organisations highlighted by the Standard.

Today Lord Ouseley, who said he was sure the Standard's reports were without foundation after having a phone conversation with Mr Jasper, said it was wrong for black organisations to be subject to disproportionate amounts of public scrutiny.

But he added: "Every item of public expenditure has to be accounted for. It has to be appropriately applied and represent value for money. In the context of the allegations made, the Mayor and GLA have a responsibility to do that."

Mr Obunge, who said Mr Jasper was a personal friend, said: "I have looked at the attacks on Mr Jasper and several black organisations, not as an attack on himself but as an attack on leadership in the black community and an attack on organisations within the black community. When such a campaign seeks to vilify our leaders it gives very little hope to our young people. We won't stand for it."

The inquiry is set to include the operation of Brixton Base. Shango B'Song, a film-maker who used the studios and production suite, told the Standard he had only seen £8,000 out of a £230,000 grant it was given by the LDA and had in fact financed the Base largely out of his own pocket.