Police investigate Lee Jasper deputy over carnival funding

A City Hall investigation of Mr Jasper's Caribbean Showcase, set up with at least £200,000 of public money, found that "a criminal act may have been committed" and that "GLA systems and processes were not followed by two individuals".

One of the individuals is Rosemary Emodi, who was forced to resign as Mr Jasper's deputy in January after admitting she lied about a free trip she took to a five-star resort in Africa. Mr Jasper himself resigned the following month after the Standard exposed a series of irregularities in projects linked to him. The other individual reported to the police is still serving in the GLA.

The Caribbean Showcase, held in 2005 and 2006, was a major mayoralsponsored festival intended to upstage the Notting Hill Carnival. Mr Jasper, Ken Livingstone's former race adviser, fell out with the Carnival in the Eighties after it refused to appoint him director. The Showcase was on the same day as the Carnival and was held in Hyde Park, next to the main Carnival area.

The GLA said today that the police investigation started on Wednesday after an "extensive investigation" by the authority's director of finance and performance Martin Clarke.

The inquiry was assisted by forensic auditors. "We believe there is evidence that GLA systems and processes were not followed by two individuals and that cash may have gone missing or been misappropriated and a criminal act may have been committed," a spokesman said.

Mr Livingstone promised that the 2006 Showcase would cost only £68,000, with the rest of the £310,000 total cost coming from sponsorships and concession rentals. It ended up costing taxpayers more than £200,000, funded by the London Development Agency, which is under a separate "forensic audit" after the Standard exposed a series of suspicious-payments to a number of other projects involving Mr Jasper.

The Standard is aware of allegations that friends of Ms Emodi and other GLA officials were given food, drink, security and other concessions at the Caribbean Showcase and that some of the money raised disappeared.

A Met spokesman said: "The Metropolitan Police Service has begun an investigation following a referral from the GLA over concerns over the alleged misuse of funds for the Caribbean Showcase in 2005 and 2006. The investigation is being conducted by officers from the Specialist and Economic Crime command."

Ms Emodi and Mr Jasper were unavailable for comment today.

The police inquiry is a move by the new Mayor against what insiders said was a "horrifying" financial situation in parts of the GLA. The separate forensic audit into the LDA, led by former newspaper editor Patience Wheatcroft, will publish an interim report next week. Ms Wheatcroft is understood to have been shocked by what she has found.