Kiley to stand down after 'blazing row' with Mayor

Bob Kiley, one of the highest paid public servants in the world, is to stand down as London's transport commissioner after a "blazing row" with Ken Livingstone.

Mr Kiley, a US citizen and former CIA agent, signed a four-year contract in January worth £2.4m and is expected to receive a substantial proportion of that as a pay-off when he leaves at the end of January.

The transport commissioner and the Mayor were keen to promote the idea last night that the decision was mutual, but it is known there has been tension between the two men.

The 70-year-old, who lives in a £2m house in Belgravia at the expense of Transport for London (TfL), has gained a reputation as a "difficult" man since he was recruited by London's Mayor. More recently there have been questions over what he did for his generous salary. Mr Kiley was paid £700,000 last year but he also presided over a coterie of highly paid executives, some of them from the US.

Transport sources said Mr Kiley and TfL officials had been negotiating over a severance package since a "blazing row" between the two men four weeks ago.

A senior official at TfL said, however, that the announcement that London had won the 2012 Olympic Games meant the existing five-year transport plan had to be scrapped because the "horizon" now extended much further ahead. "He did not decide to go immediately after the announcement because of the suicide bombs on London Underground. He now feels it's the right time to go."

Earlier yesterday, officials were insisting that he was still transport commissioner and that he had simply gone home to Martha's Vineyard for the Thanksgiving holiday and would return to his job on Monday.

Roger Evans, chairman of the London Assembly's transport committee, demanded to know the reason for Mr Kiley's departure. "We always had serious concerns about Bob Kiley's value for money," he said. "He was one of the highest paid public-sector bureaucrats in the world. We need to know specifically why he quit. Ken Livingstone personally brought Bob Kiley to London, showering him with praise. How did relations sour so much that Ken Livingstone's golden boy has failed?"

Mr Kiley spent six years during the Eighties in charge of New York's Metropolitan Transportation Authority. He was credited with turning its subway system into a well-managed operation.

The Mayor said the positive impact of his legacy would be felt for years to come. Mr Livingstone said the commissioner had overseen the largest investment programme in London's transport system since the Second World War. Mr Kiley will act as a consultant to Mr Livingstone until the end of the Mayor's current term in office.