The Metropolitan Police has launched a fresh investigation into possible fraud involving hundreds of thousands of pounds handed to an organisation funded by the Mayor of London's offices, the IoS can reveal.
The inquiry follows a series of allegations made in recent weeks against the London Development Agency (LDA) and the Greater London Authority (GLA) of financial mismanagement.
Ethnic Mutual – a fund set up to offer business support and loans to the "financially excluded" – was given £350,000 by the GLA last year. It is the fifth organisation funded by the LDA or GLA to fall under suspicion, joining four others already being investigated by fraud squad detectives. The four are the European Federation of Black Women Business Owners; the Deshbangla Foundation; Diversity International; and the South London Green Badge Taxi School.
The Financial Services Authority is said to be preparing to remove Ethnic Mutual from its register. Maxine James, a former member of Ethnic Mutual's trustee board, said: "I did receive a letter from the FSA this week saying they were thinking of striking them off or something like that."
Ms James said that she had resigned her position last year.
This latest revelation has come as a shock to the London Assembly's audit committee. "This [Ethnic Mutual] is a completely new name on me. If true, they've kept this very secret and I am shocked," Richard Barnes, a Conservative member of the committee, said last night:
"What this is proving is that the LDA is not fit for purpose. There needs to be a clean sweep of senior management and the board of directors."
In a statement, an LDA spokesman said: "We referred Ethnic Mutual to the police last year and they are now investigating it." But this was contradicted by the Metropolitan Police yesterday, who said that Ethnic Mutual had only been referred to them this month.
Ethnic Mutual shares the same London address as the Ethnic Business Development Corporation (EBDC), a charity that offers computer training. Emerson Braithwaite, EBDC's policy director, worked alongside Lee Jasper, the Mayor's policy adviser, at the African Caribbean Positive Image Foundation, where they served as trustees.
The EBDC has not filed accounts with the Charity Commission since 2005. That year its gross income was recorded as £4,136. Company records show that EBDC has been given £713,018 from DTI (Ethnic Mutual) since 2005.
Question marks remain over the involvement of Mr Jasper with more than a dozen organisations that have received more than £3m in funding. The District Auditor is examining 14 organisations funded by the GLA or LDA.
An LDA spokesman said: "The LDA is inspected and audited annually by the Audit Commission and they say we are performing well."Reuse content