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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."
Reader views (20)
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
It seems that not having found any evidence of fraud or corruption or no instances of law-breaking on the part of Ken or Lee this group couched this report in language as near as possible to attracting legal action but just managing not to cross the line.
What it amounts to is that money was spent on projects that this Tory group would not have chosen. Nothing more nothing less. So where is the headline which would correctly state that 'Tory group find Lee Jasper innocent'?
- David Dee, Canterbury
Ken Livingstone and his little gang should all have to answer to the courts.
- Vince London, West London
Lets just hope Boris and the LDA can learn from the mistakes made by others in the past and work to avoid them happening again.
- Edward, Winchester
Ignoring the "friends of Boris" who seem to be like a pack of rabid sheep at the moment, any independent thinkers will realise that this investigation will never be held as an example of fair and just scrutiny.
To win the trust of Londoner's Boris you should have had a politically balance panel with some actual knowledge of Forensic Audits. Then we could have truly believed the outcomes.
Apologies to ant Rabid Sheep out there...
- Independent Thinker, London, UK
Brilliant to see Ken's grubby little circus finally exposed.
- Phil Davy, London
The breathtaking scale of the largesse handed out by Ken Livingstone's cohort makes a mockery of the expected ethics and probity of those in any group of elected officials, let alone those charged with running one of the most prestigious cities in the Western world.
As someone with English and Scots parentage who was born at the furthest reaches of the old Empire, I and my peers were bought up to venerate British institutions such as parliamentary democracy, the system of justice and unimpeachable standards of civic management. We have taken the hits as the Empire shrunk, your government removed British citizenship from those of us born in former colonies in the '60s, but we remained what we have always been: To us, Greater London has always been an icon representing all that is 'the best of British'. I arrived here a few years ago with a sense of awe, but to live here and watch this incredible venality uncovered is sickening and makes me realise how naive and unworldly us 'colonials' were for all the years we worked to develop our societies in the image of what we saw as The Great Model. Many of the tourists from Canada, the USA, Australia, New Zealand, South Africa and many other far-flung countries come to London to see and touch a central part of their heritage. Ken Livingstone's cohort has not just raided the city's Revenue, they have betrayed the ideals of a global cultural identity that transcends ethnicity, geography and modern national boundaries.
- Kiwi Expat, London, UK
Ahhh, communism at work; screw the proletariat while those in charge suckle joyfully at the teats of the centralised piggy bank.
1) If Livingstone has nothing to hide, it seems very unlike him to not meet such a challenge as this head on - one would have expected him to gleefully confront a [supposedly] biased panel
2) Will Patience Wheatcroft sue Livingstone for what surely amounts to libellous comments about her inability to be impartial?
3) Why on earth are we paying Biggs to represent London when all he apparently wants to do is pick fights with the Conservatives. Biggsy, if you are listening, I'd like you to consider doing what is best for Londoners rather than what is best for your clueless Old Labour bosses.
- St, London
The independent Lynch Mob delivers as expected.
The report says they can't accurately estimate any wastage, but that they "may" run into tens of millions. How "forensic" is that?
Is this estimate as accurate as the hundreds of bottles of fine wines in Ken's "secret" cellar? You know, the 39 bottles in the cupboard next to his desk!
Quick, get the torches out- I feel a middle class rabble rousing!
This will backfire on Boris, and he'll be distancing himself again before long.
- Patience, london
Surely there is nobody out there who is actually surprised at this news?
- Deborah, London
So Livingstone and his cronies refuse to appear before the audit panel on the grounds that they are "Conservative"?
Doesn't this despicable little man realise that he isn't the Napoleon of London any more? He is just another out of work politician, and as such should be forced to appear. This is our money we are talking about here, not Livingstone's, and as a Londoner and part owner of that money, I want to know exactly what happened to it?
What would Livingstone do if he had to appear in court on a speeding charge and he found out that the magistrate was a Tory, would he then refuse to appear before him as well?
Force him to appear, and if necessary, jail him.
- Peter Thurgood, London, UK
I haven't got a "conflict of interest". Perhaps Livingstone would care to answer my question:
Where's all the money gone you thieving incompetent fool?
- Dave, London
There must be a paper-trail of the missing millions!
If not, then there must at the very least be paperwork confirming who "requisitioned the money" and who it was that was "responsible for releasing the money". Clearly, if there truly is a lack of legitimate paperwork available then it must be those persons responsible for the release of the monies who must now be held accountable for the missing millions along with the directors of the LDA and Ken Livingstone, as Mayor.
I suspect that "hard jail time" for those responsible would avoid any repetition of similar nonsense in the future. What do you think?
- Fraser, Telford Park
It is always nice to see how Labour waste everyone elses' money and they expect my vote at the next General Election and the Mayoral election beyond that. What an incompetent and useless lot they are. Lets get to work on TFL next and then we will know where more financial skeletons are buried.
- Alastair Adams, Worcester Park, Surrey
Like all arrogant, self-obsessed intellectually little men who have tasted power, they cream off money for themselves and their friends. So Livingstone: when are you going to give us our money back?
- Josh, london
Wow sounds just like everyone else at Westminster so who are they to point the finger when their snouts are in the trough!
- Charlie, London
Ken has made no secret of his admiration for corrupt leaders like Castro and Chavez so it should come as no surprise that his London government was run in the shoddy way it was.
The kindest interpretation of his lavish waste of £millions on his friends and comrades is gross negligence.
- Mikko Takala, Drumnadrochit, Scotland
"Mr Livingstone, Manny Lewis, the former chief executive of the LDA and Mary Reilly, the former chair of the board, all refused to appear before the audit panel"
So what power does this panel have? It's all just show for the people.
Just another example of people-in-power protecting each other.
- J. Cadbury, Glastonbury, UK
