Mayor 'misled public over cash scandal'

Ken Livingstone has been accused of "misleading the public" after claiming an internal probe into the City Hall grants scandal was independent.

The Mayor was attacked by MPs from all three big political parties over his claim about the London Development Agency review. It examined allegations that LDA cash was misappropriated by friends of his adviser Lee Jasper.

The probe came after the Evening Standard raised concerns over organisations that have been given at least £3.3 million.

Questioned on TV news show BBC London last night, Mr Livingstone said: "We've just had one independent inquiry - the [LDA's] external auditors looked into this. They've dismissed 15 allegations."

But today the London Assembly heard evidence from two senior LDA officials dramatically at odds with Mr Livingstone's claims.

Andrew Travers, who led the review, told Assembly members: "The review has been conducted by a team of LDA staff supported by a team of internal auditors - the conclusions of the review are mine alone."

LDA chief executive Manny Lewis said the review had spoken neither to Mr Jasper, nor to anyone from the suspect projects or not employed by City Hall.

Labour MP Kate Hoey, Lib-Dem Lynne Featherstone and Conservative Greg Hands accused the Mayor of misleading the public. Mr Hands, MP for Hammersmith and Fulham, said: "It is deeply misleading for Mr Livingstone to suggest that the LDA has either been cleared or that the enquiry is independent."

Ms Featherstone said: "Ken has no shame. It is almost as if if he shouts loud enough he makes what he is saying true, but the evidence shows that what the Mayor has said is not true."

Ms Hoey, MP for Vauxhall, said: "The Mayor has been consistently misleading the public over the status of this review. It was not independent and it did not clear Mr Jasper or the LDA. People need to wake up about what is happening."

The LDA, like other regional development agencies, is funded direct from Whitehall rather than by London council tax payers and its aim is to provide jobs and regenerate the capital.

The LDA investigation, supported by auditors Deloitte, recommended that police investigate four projects. A Scotland Yard inquiry has now been launched.

They are:

Diversity Works, from which programme manager Brenda Stern was forced out of her £75,000 job.

The European Federation of Black Women Business Owners, which received £25,000 from the LDA.

The Deshbangla Foundation, which received at least £30,000 in LDA grants: £20,000 in 2001/02 and £10,000 the following year. Its claimed purpose was to train Bangladeshi students in TV production. However, official records at the Charity Commission show it did not exist in 2001/ 02.

A Yard inquiry is already under way into the South London Green Badge Taxi School over the apparent disappearance of up to £281,000 in LDA grants. A stormy evidence session at the London Assembly cast new light on the scandal - and the nature of the LDA investigation.

Mr Travers, the LDA's chief financial officer, said: "The evidence I have used is that which is available to me from within the LDA and from talking to existing LDA staff."

Assembly members fiercely criticised a Mayoral and LDA press release issued last Friday claiming the review had given the projects the all-clear. Lib Dem leader Mike Tuffrey described it as "spin".

Bob Neill, a Tory member, asked Mr Travers: "Of the six [projects] you concentrated on, four require further work, Is that a fair conclusion?"

Mr Travers replied "Yes." Mr Neill then asked the LDA chief executive, Mr Lewis: "Why then did you issue a press release saying the allegations of corruption were unfounded? It [the review] said nothing of the sort, did it?"

Mr Lewis said that the review had found no evidence of corruption at the LDA.

Mr Travers also confirmed that the review had not spoken to Brenda Stern, the ex-LDA whistleblower at the centre of the allegations involving one of the projects.

And Mr Lewis said his organisation had not contacted the Standard because the Standard had failed to contact the LDA prior to publication of the first of a series of articles that began last month.

This is untrue as the reporter in question, Andrew Gilligan, submitted a list of around 80 questions - something even the Mayor himself has admitted in public.

Tory Assembly member Tony Arbour asked Mr Traver: "Isn't the obvious thing to have done to go to the source of the allegations?" Mr Travers replied: "It would be regarded as normal pratice when an allegation is received to go to the internal records."

Tory assembly member Bob Blackman said today: "I'm not convinced, and I don't think Londoners are convinced, that you have done a proper review."

Mr Lewis refused to discuss specific details of the allegations today, saying: "We don't think it's appropriate or timely to go into a case-by-case analysis." But the Assembly said it will return to the issue in a full session on February 7.

All 13 of the suspect projects identified by the Evening Standard have now been referred by the MPs District Auditor, Mike Haworth-Maden, for independent investigation.