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Scandal of LDA's missing millions
Katharine Barney, Evening Standard16.07.08
Tens of millions of pounds of public money were squandered by Ken Livingstone's development agency, a report says today.
The investigation into the London Development Agency, ordered by Boris Johnson, outlines a string of failings including "ineptitude" and "massive misspending". The Forensic Audit Panel, headed by former financial journalist Patience Wheatcroft, was set up after revelations in the Standard about apparent financial irregularities at the LDA.
Today's report also raises the prospect of a similar investigation into Transport for London.
It calls for the LDA to be stripped of its role in the 2012 Olympics and for £8 million-of cuts across the Greater London Authority. Ms Wheatcroft said: "Our investigations have left us in no doubt that money has been misspent on a massive scale, say tens of millions.
"We're of the view that it was ineptitude rather than corruption that was the biggest blight on the LDA.
"The board failed to ensure the LDA worked effectively. Instead it seemed to have adopted the notion that in many ways the LDA was there to serve as the Mayor's chequebook and that chequebook has been used to write some rather interesting pay-offs to people who have left the LDA.
"It poured money into projects that failed to work out and failed to deliver.
"The LDA's efforts to tackle the problem [unemployment] have been hopelessly flawed and ultimate responsibility for this must lie with the board." She said the panel had been "very nervous" in looking at allegations of misspending by Mr Livingstone's former race and policy adviser Lee Jasper as they were being investigated by police.
Ms Wheatcroft also cited "unusual" spending when giving board member Yvonne Thompson her £17,000 salary for 15 months despite standing down.
Ms Thompson, who once accompanied Mr Jasper to New York on an LDA business trip, quit last year after allegations were made that the African Caribbean Business Network - of which she was president - received funding for projects which it did not deliver.
Another executive, Tony Winterbottom, got a year's sabbatical followed by a £75,000 pay-off and £160,000 into a pension fund and was then given another £20,000 job. The report also highlights:
• A £30,000 project to research London's weather trends in a bid to rival the Met Office.
• A £456,633 contract for street improvements which was not let competitively.
• A lack of checks on groups being awarded cash, with £36,900 given to the European Federation of Black Women Business Owners despite the company being dormant most of the time.
The panel also recommends that the delivery of the Olympics should be taken away from the LDA and the organisation completely reshaped.
Ms Wheatcroft said: "Part of the problem of the LDA was that it tried to do too much." Instead, Ms Wheatcroft suggests the LDA would act as a "strategic commissioner" working with the boroughs and the charity sector.
The LDA last year got a £740 million budget, mainly from City Hall, to promote London's economy.
Mr Livingstone, Manny Lewis, the former chief executive of the LDA and Mary Reilly, the former chairwoman of the board, all refused to appear before the audit panel. Led by Ms Wheatcroft, former editor of the Sunday Telegraph, the panel's members included two Conservative council leaders as well as the Mayor's business adviser. They were Stephen Greenhalgh, leader of Hammersmith & Fulham council, Edward Lister, leader of Wandsworth, Patrick Frederick, chief executive of Aimex International, and Andrew Gordon, head of investigations within the forensic services group of PricewaterhouseCoopers.
The report was rubbished by vicechair of the LDA and Labour member of the London Assembly John Biggs. He said: "This is just a bunch of Tory politicians who have seized the opportunity raised by the Lee Jasper affair to rubbish the good works of the LDA. As a board member I'm proud of the board's achievement and believe we've achieved a massive amount of good. The very nature of our work means we work among areas of likely market failure where you won't see a return."
Speaking at the Mayor's question time at City Hall, Mr Johnson also revealed that his predecessor had spent £17.4 million on mayoral consultants in his two terms and that TfL had spent £155 million on technical consultants in just one year. He gave the figures as "an example of excessive spending" under the last regime. Mr Johnson said: "There has been growing public concern about the LDA and that large sums of taxpayers' money are being wasted and therefore I thought it would be a good idea to commission a report. This is to make sure we run things better and make sure it never happens again."
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Reader views (20)
Here's a sample of the latest views published. You can click view all to read all views that readers have sent in.
We're continually told that the ethnic minorities are under-represented in society. Not in fraud and crime they're not!
- Les, middlesbrough, UK
Actually Kiwi Expat in comparison to the grubby backhander-based systems of government in corrupt countries like Italy, Spain and France the British system is squeaky clean. There will always be levels of ineptitude and waste in any job in any part of the world, it is the level of that waste that is important.
You can bark on about Livingstone but the last Tory government were, by the end of their tenure full of jobs for MP's cronies and dodgy dealings for big label privatisation contracts. Look at the MP expenses issue at the moment it's right across the political spectrum. Certain Tory MP's (and their wives) taking public cash to pay their mortgages or paying for one of their kids to be their "political researcher".
Boris is only in the first few weeks of his tenure, it is only time before he ends up being responsible for exactly the same ineptitude and wastage as Livinstone, not because he or Livingstone are themselves inherently corrupt, but because they can't monitor what everyone under them is doing all of the time.
- Chris, London
I do not think "Red Ken" expected to beaten, not did all the hanger's on and lo and behold a breath of fresh Boris air, now as a long time watcher of London politics will there be a fraud squad inquiry, financial squad inquiry, a question from any one, seems the same old story, millions of taxpayers money and the usual suspects sort of vanish and re-appear in another council or committee and all is forgiven- we are losing it and we are all losing it big time.
- Roy Barnard, New York USA
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