£100m black hole discovered in 2012 Olympics accounts
A £100m black hole in the 2012 Olympics accounts of the London Development Agency (LDA) is to be investigated by independent auditors, it was revealed last night.
A routine check on the accounts of the LDA, which is the business and development arm of Mayor Boris Johnson, hasrevealed huge irregularities with the accounting of taxpayer's money. A team of external accountants from KPMG, the consultancy that has been advising other parts of the London 2012 set-up on cost-cutting measures, has now been called in to investigate the whereabouts of the missing money.
Two senior members of staff at the LDA have been suspended. Gareth Blacker, who oversaw the purchase of the huge Olympic site on the Lea Valley, adjacent to Stratford in east London, is on indefinite leave, as is his accountant. No evidence of wrongdoing is attached to either Mr Blacker or his accountant.
Concerns began to mount after the Mayor announced a comprehensive audit of LDA accounts in March. The Olympic Legacy Directorate (OLD) was the last of the LDA departments to be reviewed. Analysis of its accounts revealed that between £60m and £100m, which was due to be put aside as compensation for businesses forced to relocate from the site, is unaccounted for.
Previously a highly contaminated industrial waste land, the Olympic site in Stratford is being redeveloped in the biggest construction project in Western Europe. The LDA has so far paid around £750m for its work on the land, which included deals of close to £1m per acre with each of the 193 small and medium-sized businesses forced to relocate. Many have moved to nearby industrial complexes in east London but more than four years after London's bid proved successful 72 claims are yet to be settled.
The LDA is due to stop existing in October when its £1.1bn budget, which is mostly tied up in the price of land, is handed over to an Olympic legacy company set up to ensure lasting benefits from the games. The LDA budget has no bearing on the overall £9.3bn budget for the construction of the Olympic site by the Olympic Delivery Authority (ODA), which continues to be ahead of schedule.
The auditors will be tasked with discovering whether or not taxpayer's money was wasted or misplaced through incompetence – and whether or not it is now retrievable. A source told The Times: "This has gone beyond a routine audit, into the realms of a fraud investigation".
The revelations will come as a fresh blow to Johnson. In December, David Ross, the founder of Carphone Warehouse who oversaw the Olympic budget and advised on legacy issues for the Mayor, quit from his position following a shares scandal. Just this week, Ian Clement, a deputy Mayor, resigned after irregularities were found in the use of his taxpayer-funded credit card.
A spokesman for the LDA said "additional spending commitments" have been identified.
KPMG declined to comment.The two suspended LDA employees were unavailable for comment, and the agency refused to discuss personnel issues.
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