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Police have launched an inquiry into a sixth City Hall-funded project closely linked to the Mayor's race adviser, Lee Jasper.
Fraud officers are to investigate Brixton Base, an arts training hub, which received more than £500,000 from MrLivingstone's London Development Agency but ran only three short training courses in two years.
Scotland Yard was called in on Brixton Base after LDA auditors found at least £70,000 of the money they paid the project could not be accounted for.
Mr Jasper is patron of Brixton Base and the organisation's director, Errol Walters, is a close friend. Emails obtained by the Evening Standard show that Mr Jasper repeatedly intervened to protect Brixton Base from LDA officials who had severe doubts about the project and wanted to evict it.
The LDA said: "The LDA funded Brixton Base £535,262 between 2005 and 2007 to build its capacity as a grassroots delivery organisation and deliver employment support and skills training to vulnerable groups.
"The auditor confirms that expenditure of £464,144 is supported in their analysis. The LDA has to determine whether the gap in the accounts relates to inadequate book- or record-keeping or other possible issues.
"As the LDA does not possess the necessary legal powers to investigate such issues (eg right to seize bank accounts, documents, etc) it has decided to refer the whole case to the police."
The Scotland Yard inquiry is a further serious embarrassment for Mr Livingstone. When questions were first raised about Brixton Base - by the Standard last December - the Mayor claimed there was a "full audit trail" for the project with "complete chapter and verse on how the money's been spent".
He has repeatedly denounced the Standard's reports about financial irregularities as a "tissue of lies" and "smears" for which there is "no evidence." But it has since emerged that as well as the £70,000, Brixton Base also owes more than £190,000 in unpaid rent - even though it received a £287,000 grant from the LDA for "premises".
The other five Jasper-linked projects already under police investigation are the Deshbangla Foundation, the European Federation of Black Women Business Owners, the South London Green Badge Taxi School, Diversity International and Ethnic Mutual. These, with Brixton Base, have received at least £1.6 million City Hall funding and are run by close friends or associates of Mr Jasper.
All appear to have produced little or nothing in return for their grants and internal LDA inquiries are continuing into a further nine projects run by Mr Jasper's friends which have received at least a further £2.1 million.
Mr Jasper's deputy, Rosemary Emodi, was forced to resign from City Hall last week after lying about a free holiday she took to a five-star beach resort with MrWalters on Brixton Base business.
The Labour MP Kate Hoey, whose constituency includes Brixton Base and several of the other projects, said: "Another day, another Lee Jasper project referred to the police. A lot of good community groups have been let down very badly by the people running Brixton Base and I hope the police will be given full co-operation." Separately, it has emerged that the LDA's chief executive, Manny Lewis, is trying to block the London Assembly from discussing the six projects under police investigation, claiming the matter is now "sub judice".
The assembly is to hold a special plenary meeting next Thursday at which the Mayor will be publicly quizzed in detail about the scandal for the first time. But both the LDA and Mr Livingstone have been accused of trying to "sabotage" the session.
The meeting is due to start at 10am. After initially claiming he was too busy to attend, Mr Livingstone has now said he is prepared to come - but not until 5.30pm.
Mr Livingstone claims he is otherwise engaged during the day, opening the new Stephen Lawrence Centre. However, this engagement is only scheduled to take 90 minutes and is in Deptford, a 10-minute train ride from City Hall.
Mr Lewis, who also faces questioning at the assembly session, wrote yesterday to the assembly's chairman, Sally Hamwee, saying: "The assembly has a responsibility to consider whether in the light of the ongoing criminal investigation it is appropriate for the plenary meeting to deal with these matters." He also said he could not provide requested documentation on projects the police have not yet investigated and challenged the validity of the assembly's request.
Ms Hamwee wrote back saying: "The assembly expects you to comply with all aspects of [our request]. The penalties for non-compliance are clear."
Reader views (3)
Here's a sample of the latest views published.
The smell coming from Livingstone's adminitration has become overpowering. This is simply a vote-buying exercise, and proves the adage of power corrupts, absolute power corrupts absolutely.
Funny how it is always the "socialists" who seem most adept at twisting democracy into a means of lining their pockets.
- Michael Llewellyn, Bridgetown, Barbados
First of all it was millions unaccounted for.
Then it was £500,000
Then the auditors find £70,000 that has to be explained - not, it seems embezzled.
If you looked at any local authority with a much smaller budget - whoever's in political control, you'd find much more to be accounted for, though very rarely mispent.
- Eric Ray, london,UK
So Manny Lewis thinks these matters are 'sub judice'. Does this Chief Executive have the remotest idea of what that phrase actually means? Maybe he could tell us which Court is overseeing the matters?
What has Mr Lewis got to hide? Surely as the Chief Executive he should be moving heaven and earth to have the issues properly, independently and rigorously scrutinised. Why, as the Chief Executive, is he unable to provide the documentation as requested? Has Livingstone got the paperwork, then?
Let's see where Sally, Baroness Hamwee gets to on this. Her actions (or otherwise) will be remarkably revealing. I just wonder whether her predecessor Trevor Phillips might be having a discreet word...
- Chuck Unsworth, London
