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A fraud inquiry has been launched into a £100million black hole found in the London Development Agency's 2012 Olympic accounts.
Independent auditors have been drafted in to examine the huge irregularities, unearthed during a routine audit. Two senior members of staff at the LDA, which is the Mayor of London's economic and business unit, have been suspended.
Gareth Blacker, who oversaw the purchase of the Olympic site in the Lea Valley near Stratford is on indefinite leave, as is his accountant. There is no suggestion of wrongdoing by either of them.
The Times said forensic accountants from KPMG, the consultancy advising on cost-cutting measures on other parts of the London 2012 set-up, have been called in to trace the money.
They are focusing on Mr Blacker's department, the Olympic Legacy Directorate, the last of the LDA departments to be reviewed following Boris Johnson's announcement of a comprehensive audit in March.
It is claimed analysis of its accounts revealed that between £60million and £100million allocated as compensation for businesses forced to relocate from the site is unaccounted for.
The agency has £750million to renovate the Olympic site. It agreed a price of about £1million an acre for 193 small and medium-sized businesses to move to alternative premises but, four years on, has yet to settle 72 claims.
The accounting anomaly relates to an apparent failure to put aside the money. KPMG will determine whether this was a genuine oversight, incompetence or a cover-up.
Auditors will also determine whether or not the money is retrievable.
A source told The Times: "This has gone beyond a routine audit, into the realms of a fraud investigation."
The anomaly leaves the agency with a cashflow problem that could cause other projects to be delayed or shelved.
Questions have also been raised as to why Andrew Travers, the LDA's risk and resources director, is overseeing the investigation into accounts he must have signed off.
The discovery is the latest in a string of embarrassments for Mr Johnson.
A spokesman for the LDA admitted that a review had identified some "additional spending commitments" but claimed the shortfall could be made up from savings elsewhere.
Reader views (9)
Does anyone else agree that the time taken to release the facts of the enquiry proves that this not just some simple administration error. The rumours are that the sums of money were lost to over inflated construction costs which were known and agreed by members of the London Development Agency. We will never know the truth as the London Development Agency always manages to evade investigation and cover it up by numerous restructures.
- Value For Money For London, Brighton, 03/08/2009 22:30
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I e.mailed Tessa Jowell ten days ago demanding that the findings of the KPMG forensic accountants' investigation into this scandal be published but she has not yet replied to that e.mail. Time, I think, to ask the newspaper editors to launch a campaign on behalf of tax payers demanding publication of the findings. Tax payers are being made pay for the 2012 debacle - they have a right to know if their money has been misappropriated. It is interesting to note that Tessa Jowell has chosen to step down at the next election.
- R.F., Yorks, UK, 03/08/2009 21:30
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Why has this come as no surprise? Tessa Jowell was unable to give an accurate account of the cost of refurbishing her own office! Appointing people of this calibre is only asking for trouble. They had better not dare ask the tax payer to make up the shortfall. I would urge KPMG to examine the expenses claims which is probably where the money has been spent.
- R.F., Yorks, UK, 03/08/2009 21:30
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Accountancy is definitely not the strong point of anyone in authority in either the House of Conmen or in the London Development Agency.
The unaccounted £100,000,000 probably vanished in expenses.
- Reuben Camara, Republic of Morecambe, UK, 03/08/2009 21:30
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I worked in the LDA and the financial and project management processes there were non existant or completely ignored by inexperienced staff. So I suspect the £100m black hole is more cock up than conspiracy.
It is encouraging to see this sort of auditing - Government and especially local Government needs transparency as they waste billions of our money. They make the MPs expenses scandals seem like pocket money misuse in comparison.
It is easy to review costs, I hope they review carefully what Olympic legacy benefits the ODA and LDA are delivering for us all. The fact the LDA has lost its second Olympic legacy Group Director, Tom Russell (who came with a great reputation from Manchester), recently and now has suspended an Olympic Legacy Land Director does not give us any confidence that taxpayers billions is going to deliver the legacy benefits from Olympics that we were promised by Seb Coe and Co at bid time.
If any good is to come from the banking crisis and MP expenses scandal,hopefully it is that leaders in the public and private sector will not be tolerated for stringing along voters and tax payers any more.
- Jim, Wheres the Olympic Legacy in London, 03/08/2009 21:30
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Surely a black hole of £100m is the responsibility of the Chief Executive, Peter Rogers and the Chief Finance Officer, Andrew Travers. It appears to me that the two staff suspended are merely the scapegoats. I understand that Peter Rogers who has been at LDA for a year now is to be honored for cleaning up LDA. This to me looks like the Head teacher at Cope land School in Brent who was praised for improving the school but later found to have done the opposite. The buck must stop with the Chief Executive.
- Sarah, London, 03/08/2009 21:30
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Is anyone really surprised about this matter? The London Development Agency has not exactly covered itself with glory over the past few years....
- Jonathan Montmorency, cooden, uk, 03/08/2009 21:30
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I hope when it comes to the Olympics our well funded ahtletes don't much such a mess of their jobs!
- Mark, Watford, 03/08/2009 21:30
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Oh Dear, and the good times just keep rolling in! Way to go Boys!!!!!
- A.Taxpayer, london, 03/08/2009 21:30
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