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A former senior manager at Ken Livingstone's London Development Agency has dramatically broken her silence to reveal what she describes as demands for hush money, political interference and financial irregularity that dogged one of the Mayor's flagship programmes.
Brenda Stern, programme manager for the LDA's Diversity Works initiative, was forced out of her £75,000 job after resisting attempts to funnel £250,000 in LDA money to a personal friend of the Mayor's senior aide, Lee Jasper, despite a record of deceit and non-delivery.
Leaked emails show that the final decision on Ms Stern's fate was taken not by anyone in the LDA but by Mr Jasper himself. The supposed reason for Ms Stern's dismissal was later admitted by the LDA chief executive, Manny Lewis, to be "not founded". Today Ms Stern says key procedures to protect public money were not followed, "constant interference" by Mr Jasper derailed the programme and the LDA was pressured to pay "hush money" to prevent the details of the scandal being exposed.
She decided to speak out after the Mayor claimed that the Standard's story last week revealing the scandal of a company called Diversity International, part of Diversity Works, was "entirely false," "dirty," and "mendacious" and called for the reporter responsible to be sacked.
She said: "I ran the programme and the contract described in the Standard story last week. I can confirm that everything the Standard reported about that programme and that contract was correct.
"I cannot understand why the Mayor is denying the truth. Either he is lying to us or he is himself being lied to.
"This was a potentially excellent programme which could really have delivered for all Londoners. But it was totally undermined by, among other things, constant political interference from Lee Jasper."
Ms Stern, a high-flying City lawyer and former director for the Commission for Racial Equality, was brought into the LDA in March 2006 to rescue Diversity Works. She came from a background in anti-apartheid activism in pre-1994 South Africa.
She said: "I fought what proved a losing battle to ensure that the LDA was run on a professional, transparent and accountable basis. Instead, I found that the priority of the programme was not to promote the interests of London's diverse communities but to promote the profile of the Mayor and Mr Jasper."
Ms Stern said these problems were "nowhere more apparent" than in the programme's key contract, for an online "diagnostic tool", the Diversity Dividend.
The £295,000 contract for this was given to Diversity International, run by a long-standing friend of Mr Jasper, Joel O'Loughlin even though Diversity International was based in Liverpool and had no track record of delivering projects of this nature.
Ms Stern said: "I have seen evidence that Joel O'Loughlin, a personal friend of Lee Jasper's, was given this valuable contract without following the full legally-required LDA procurement procedure. In the months afterwards it became clear he was totally incapable of delivering on the contract."
Ms Stern described an atmosphere of "chaos and panic" within the LDA headquarters, constant "micromanagement" by Mr Jasper and serious underperformance by his friend, Mr O'Loughlin.
"Payment was tied to the achievement of key performance milestones by given dates. But Mr O'Loughlin was paid - indeed overpaid - even though those milestones consistently were not met. The website never operated according to specification or to the required scale.
"O'Loughlin charged extra VAT, and was paid it, even though the contract was already VAT-inclusive. He was paid some of his money months before it was due. He was paid a total of £346,000 - £51,000 more than he was entitled to. Even after that he continued to demand yet more money despite not delivering on his contractual obligations.
"On 21 April 2006, he sat in front of me and the chief executive of the LDA, Manny Lewis, and claimed to our faces that his company was in 'financial rude health'. Literally days later, we learned from our own independent credit checks that he had put the company into liquidation.
"I and other LDA officials believed that in order to protect the interests of Londoners the contract with Mr O'Loughlin should be terminated. But following pressure from Lee Jasper, and despite even more evidence of Mr O'Loughlin's financial impropriety, I was ordered to keep Mr O'Loughlin on board despite his inherent failures."
After Mr O'Loughlin appealed to Mr Jasper, the LDA performed a 180-degree turn. On 27 April, in a letter leaked to us, Mr Lewis, the chief executive, had threatened to sack him, claw back all or part of the £346,000 and possibly even sue him. But by 1 May, all such threats had been withdrawn and Mr Lewis offered Mr O'Loughlin a further £250,000 and a consultancy in addition to the money already paid.
Ms Stern said: "I felt this was absolutely unconscionable. Mercifully, the liquidator blocked the deal. But I was instructed to continue negotiating with O'Loughlin because Mr Jasper wanted to limit the public fallout that would be created by terminating the LDA's relationship with him.
"O'Loughlin and his co-worker Bryan Adams wanted to withdraw from the contract but they wanted to be generously paid for doing so. They kept threatening to go to the press and MPs if we did not pay them off. If they had done so, the fact that the LDA had employed Lee Jasper's friend would have come out.
"There was no other reason to offer him anything. He had nothing that we wanted. We were essentially under pressure to pay hush money.
"Joel and Bryan continually invoked their relationship with Lee and frequently communicated directly with him to bring pressure to bear on me and the agency. We were under constant pressure from Lee to do the deal.
"The figures that were being demanded from us were outrageous. I just could not reach agreement to spend these sums of public money on any basis we could justify in the public interest."
Emails leaked to the Standard - not by Ms Stern - support Ms Stern's claim that she launched strong protests about the deal at the time: one called it "extortionate" and another said it was "against the interests of the GLA."
Negotiations broke down and Ms Stern launched a "risk recovery strategy" to continue the programme without Mr O'Loughlin. But then Ms Stern was told that a member of staff in her team had complained about her. In a statement, seen by the Standard, the complainant alleged that Ms Stern had "excluded" him from meetings and had threatened a large meeting in which he was present that she would "not tolerate anyone taking the piss".
He also claimed that she had said to another large group meeting: "Anyone who hasn't done what they are supposed to do will be a very, very unhappy person - the highest point of [Tower Bridge] will not be high enough to throw that person off." Ms Stern said: "He was not involved in the meetings he complains of being excluded from because they had nothing to do with the areas of the programme for which he was responsible. As for the supposed offensive remarks, they are an inaccurate distortion of an obviously joking piece of banter directed at the whole team, which produced laughter, not offence.
"Most of his complaints related to meetings at which I was not even present. This person was simply used as part of an effort to oust me."
Ms Stern said she was called in by Mr Lewis and suspended without any formal hearing and without being given more than a brief opportunity to respond. In a letter to Ms Stern, seen by the Standard, Mr Lewis later ruled that the complaints were "not founded or established" but Ms Stern never returned to work at the LDA.
"It was a kangaroo court," she said. "Its purpose was to remove me and my objections and replace me with someone more accommodating to Lee's demands."
Emails obtained by the Standard - again not from Ms Stern - make clear that the final decision on her fate was taken by Mr Jasper. She was a secondee from her City law firm and Mr Lewis asked Mr Jasper what he should do with her: "Send her back," says Mr Jasper.
Ms Stern told the Standard of the extraordinary influence exerted by Mr Jasper over her programme. "He micromanaged it," she said. "It is totally disingenuous for him to claim, as he has, that he merely 'advised'.
"He and his officials were constantly on the phone to us and almost all the key decisions had to be approved by him. I would spend my life running across Tower Bridge between the [then] LDA headquarters and City Hall. When I joined, Manny [Lewis] specifically asked me how I was going to cope with Lee.
"Lee just kept saying: get me results. I said we had to fix the programme. But all they wanted was a platform for Ken. I don't think they cared whether it was delivered or not."
Emails seen by the Standard suggest that Ms Stern's colour was also a problem for some of her fellow staff. "It is beginning to look like Brenda, a white South African, is calling the shots in this programme," says one of Mr Jasper's allies.
Ms Stern was not the only LDA manager to lose her job for attempting to limit Mr Jasper's influence. Another senior manager, Maxine Jones, was also suspended and later dismissed after raising concerns.
"Maxine was hot on corporate governance," said Ms Stern. "She was scapegoated for the problems with the Diversity International project."
Ms Stern said she had decided to speak out because, she said, "public money should be used for the public".
She added: "There seems to be a complete lack of accountability and Londoners deserve answers. I urge the London Assembly and the District Auditor to conduct a full, thorough and independent investigation of this grant and I will be happy to provide them with all the evidence they may need."
Richard Barnes, Tory group leader on the London Assembly, said: "Ms Stern's evidence is staggering. It completely puts the skids under Lee and it demonstrates that the Mayor has misled the Assembly and London. It makes an emergency Assembly meeting absolutely imperative. We need the District Auditor in immediately."
The Mayor's office and the LDA refused to respond to repeated questions about Diversity International.
TO READ THE ORIGINAL EMAILS, CLICK ON THE LINKS BELOW
April 22, 2006 (pdf)
April 23, 2006 (pdf)
April 25, 2006 (pdf)
May 1, 2006 (pdf)
May 5, 2006 (pdf)
May 5, 2006 (pdf)
May 5, 2006 (pdf)
May 6, 2006 (pdf)
June 21, 2006 (pdf)
June 21, 2006 (pdf)
June 25, 2006 (pdf)
July 11, 2006 (pdf)
TO READ THE APRIL 27, 2006 LETTER CLICK ON THE LINK BELOW
Reader views (25)
Crazy that people can get away with such crimes against the nation.
- Jerome N. Keshwar, Johannesburg - South Africa
How come it has not been announced that police are after the whistle-blower? This seems to be the norm for incidents where New Labour politicians and their ilk are involved.
- Derek Emery, UK
First Congratulations! To The Standard, Gilligan and Stern for taking this on.
A full enquiry and in depth audit of what exactly Livingstone and his cronies have been up to is required, not just on this issue, but throughout the LDA.
I hope The Standard will pursue this fully and then maybe those who have who think they can use taxpayers' money as some sort of personal account, to dispense to their 'friends', will feel that it is not worth the risk ... we might then see a completely different sort of person aspiring for political office. This is not just a party specific issue, but 'New' Labour came in promising to clean up - foolishly most people misunderstood the double entendre here.
- Patrick, London, UK
Well done Andrew Gilligan and the whistleblowers for exposing this utterly contemptible situation. If only we had more of these brave souls who put their own careers on the line to expose the depths that New Labour will got to in order to retain power. Why should taxpayers be forced to pay for these snout in the trough politicians and hangers-on who put their own ambitions before the interests of the people they are there to serve. I can only pray that they are forced out of office so that the money can properly go to the London communities it was originally designated for.
- Madge, UK
Ken and Lee..... The Chinese have a proverb: "The fish rots from the head".
- Jerome N. Keshwar, Johannesburg, South Africa
If this all true how is it possible that Ken Livingstone is still in his office? Is he going to publish a line by line and evidence backed denial or just carry on as before?
He hasn't got much time to clear his name!
- Tom K, Teddington, Middx
Ms Stern and Andrew Gilligan are to be commended for their parts in unearthing and bringing to light yet another scandal in the mismanagement of London's affairs. Cronyism, questionable practices and overall mismanagement. Is it reasonable to expect change? Every time I read something like this, I give thanks that my house is some 250 yards outside of the GLA area. It means I don't get a bus pass but at least I know where my money is going.
- David Patrick, Epsom UK
Oh dear! I am a great supporter of Ken and I was willing to give Jasper the benefit of the doubt over the recent claims made against him and thought of it as a smear campaign by the media in an attempt to get rid of Ken, who has never been much liked by them. But this really does not look good.
Brenda Stern, a lawyer, is making such bold statements, she must know the consequences of them and she says she has evidence to back up her claims. If I was Lee Jasper, I'd be scared, very scared! And Ken Livingstone needs to distance himself from him.
- Kim, London
Andrew Gilligan is doing a fantastic job in exposing what is going on in the Mayor's office. It's about time we got rid of the sleaze mob led by the Mayor. The people of London should take note of these revelations and vote KL out of office.
Believe me this is just the tip of the iceberg.
- Jake, London
Yes, kudos to Brenda Stern. But why does it always seem to be the honest characters who lose out in these situations?
- Adam, London, UK
Yet another good reason to vote Ken Livingstone out of office...
- Clare, London
What worries me is that what we have seen with Ken Livingstone, Blair, Brown and the rest of this incapable government is a total lack of responsibility when it comes to the management of our(the taxpayers) money. Their arrogance and the belief that they never do wrong will be their downfall.
- Nigel Wheatcroft, Wimbledon
Another Nu-Labour scandal which should be national news but has not been reported nationally.
- John Williams, BRIGHTON .UK
This is just another example of Ken Livingstone's 'farce-factory'. What else are the City Hall cronies up to? There needs to be a full and independent enquiry immediately.
- Mr Neville, London, UK
I think Gilligan is to be commended for a thorough investigation into the financial shenanigans going on at City Hall. Real investigative journalism instead of tittle tattle. I was disgusted by Livingstone's subsequent attempt to divert attention from this blatant scandal by trying to smear the reporter with blame-by-association for David Kelly's death. Also, hats off to Brenda Stern; it takes guts to be a whistleblower.
- Oliver Deckard, London
Londoners -are you aware that this story is not appearing in the news in any other part of the country - what conspiracy of silence is going on in the media -surely this is a massive story of national interest?
- David, Northumberland
Isn`t it about time Livingstone resigned?
- Malcolm, Chingford
What chance the Metropolitan Police investigating this?
No, I thought not.
- Andy C, UK
Surely this is the FINAL proof that the District Auditor must investigate.
- Richard, London, England
I am very angry that the money I'm taxed should be thrown around so casually ... and can't belive that the paperwork at City Hall can be in such mess that receipts and annual reports can't be produced immediately. What on earth is going on in there?
And sincere thanks to Brenda Stern for blowing the whistle - that takes courage.
- Steve, Clapham
Sadly it doesn't surprise me, far too many council programmes up and down the country are run on the "it's not what you know but who you know principle". This leads to the waste of huge amounts of our money each year. I hope the Audit brings out the full story.
- Mrs Smallprint, Somerset, England
Congratulations for this thorough expose. What's the betting that it will be quietly allowed to fade away and die, with no action taken? If this happened in the private sector heads would automatically roll. In the USA there would be serious jail sentences.
- Robin, London, UK
Ms Stern should be congratulated for her courage in speaking out about these scandalous issues. It's appalling that she has been fired for simply doing her job. If this is the way the LDA is operating it should be wound up immediately.
- Chuck Unsworth, London
Unfortunately none of this is surprising, and there is probably far worse to come.
- Julienne, London
Well done Ms.Stern and the Evening Standard for exposing the corruption at City Hall. Why should we pay our hard-earned money so that people like Lee Jasper can misuse it, and then play the tired old race card when he's found out?
- Sarah N., London
