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Senior British National Party members took part in a "long-term criminal enterprise" to defraud the Greater London Authority and HM Revenue and Customs, according to court papers.
Richard Barnbrook, the £53,000-a-year member of the London Assembly, was involved in a complex fraud where bankrupt firms were allowed to continue trading, defrauding the taxman and other creditors for £1million, it is claimed.
Mr Barnbrook, former deputy to far-Right leader Nick Griffin, allegedly received cash "kickbacks" on taxpayer-funded contracts for his office costs and personal assistants at City Hall.
His employees, who were temporary workers provided by a recruitment agency, were former BNP parliamentary candidate Anthony Avery and ex-BNP councillor Emma Colgate. All three have since left the extremist party.
The allegations emerged in a High Court claim by businessman Rene Greville, 65, from Norfolk. He bought Beau Trading LLP, a bankrupt company with alleged links to the BNP, in 2009.
In the court documents, Mr Greville claims to have discovered the firm was a sham and used as a vehicle to defraud the taxman, relying on "kickbacks" to members of the BNP.
Beau Trading supplied Mr Avery and Ms Colgate as temps to Mr Barnbrook, who was kicked out of the party in 2010 but remains an Assembly member.
In the court documents, Mr Greville claims to have uncovered "evidence which proves...Beau Trading LLP acted as a source of funding for at least three top members of the British National Party at the expense of the Greater London Authority". According to his witness statement, Mr Greville has invoices and bank statements that show Mr Barnbrook and Ms Colgate received commissions on Mr Avery's payments by the GLA, which was being double-billed by so-called "phoenix" companies that did not exist.
Mr Greville's statement said: "It is quite evident that it was also agreed between all parties that 'kickbacks' on the Greater London Authority contracts...would be paid to Mr Barnbrook and Ms Colgate."
Mr Greville is suing a finance company that brokered his purchase of Beau Trading, for £197,000. Summing up, he said he had uncovered a "long-term criminal enterprise by four companies which were all under the control of the same people, and all operated from the same addresses using the same telephone and fax numbers.
"With full knowledge and participation of...high-ranking members of the BNP, these 'phoenix' companies ...stole nearly £1million from the Revenue and hundreds of small creditors over an 18-month period while defrauding the GLA and making corrupt payments to their staff."
Mr Barnbrook said: "I find all the allegations ludicrous in the extreme. None of the accusations can be substantiated. This is an issue that has arisen between two parties in a claim and counter-claim within a legal dispute. None of this has anything to do with myself or Anthony Avery." Ms Colgate said the allegations were "ludicrous and can all be proven to be so. This is obviously a failed 'businessman's' attempt to recoup his investment."
