New probe raises doubts over £18.5m LDA grants

Auditors Deloitte carried out a second probe into the beleaguered LDA - known as the Mayor's "piggy bank" - after being passed more than 500 pages of new documents withheld from its initial inquiries last year.

The firm was commissioned by the London Assembly, which scrutinises the Mayor's use of public money, after long-standing concerns about the effectiveness and value for money provided by the LDA. The Agency is at the centre of the "dodgy grants" scandal exposed by the Evening Standard, involving more than £3 million paid to organisations linked to mayoral aide Lee Jasper.

Today's report, which cost £46,000, centres on six cultural initiatives chosen randomly to assess the LDA's choice of projects and financial controls. None of the six are linked to the Jasper allegations, which sparked police investigations into six other organisations.

The projects reviewed by Deloitte were:

The Rich Mix centre in Bethnal Green, which received £8million.

The Bernie Grant Centre in Tottenham, which received about £4 million.

The Laban Dance Centre in Deptford, which received about £4 million.

The Centre for Fashion Enterprise, which received about £2 million.

The London Fashion Forum, which received £500,000 to develop a website.

The West End theatre development project, which received about £200,000.

Today's report reiterated initial findings that the LDA's processes were "seriously flawed", with little or no evidence of the projects being monitoredto check money had been properly spent or achieved the LDA's objectives.

Projects were not measured against historic experience or expectations and none was subjected to an audit. Instead, the LDA relied on the organisations' own assurances that money had been well spent. There was also a lack of information on whether spending on some of the projects was kept to budget.

On three projects - West End theatre development, Laban and London Fashion Forum - there was "insufficient evidence" to justify LDA involvement.

Lib-Dem Dee Doocey, chairman of the Assembly's economic development committee, said: "Deloitte's second - and completely independent - report vindicates the committee's serious concerns about the processes used by the LDA to manage and monitor cultural projects it funds ... It is very clear that the LDA has mismanaged public funds."

The LDA said: "The majority of the concerns that were originally raised by the committee have now been answered. The projects have been successful and have had a positive impact."