Police called in over party funds claim

POLICE have been asked by leaders of a Liberal Democrat-controlled council to investigate allegations that the local Labour Party has used more than pounds 100,000 of public funds to run a constituency office over the last six years.

A race equality group, jointly funded by the Government and Tower Hamlets council, east London, has contributed more than pounds 80,000 to local party funds and paid the bills at its office in Bethnal Green, it has been claimed.

In 1986 the Bethnal Green and Stepney Labour party agreed a 10- year lease with the Tower Hamlets Association for Racial Equality to take over part of its constituency office in Cambridge Heath Road. The association paid pounds 82,000 in the deal, according to members of the ruling Liberal Democrat group. The association has continued to pay almost all of the gas, electricity and rates bills.

The allegations come after the association's new management committee decided to end the lease with the Labour party. Liberal Democrats said documents relating to the scandal had been handed to the fraud squad.

Liberal Democrats are calling for the resignations of two Labour councillors, Rajan Jalal, who signed the lease in 1986 when he was chair of the association, and John Riley, the former council leader. The Greater London Labour Party said: 'It is a perfectly legitimate commercial lease.'