UK probing Tower Hamlets ‘fraud’

The British government has appointed inspectors to look into allegations of governance failure, poor financial management and fraud at the London Borough of Tower Hamlets.

Serious concerns have been raised following the receipt of certain documents, the communities secretary said in a media statement.

The enquiry follows the BBC Panorama's investigation into the east London borough run by directly elected mayor Lutfur Rahman, who is of Bangladeshi origin.

The BBC says he allegedly increased £3.6m of public grants against council officer’s recommendations to Bangladeshi and Somali-run charities to shore up his vote.

Using new laws that came into effect on Friday, the Secretary of State for Communities and Local Government, Eric Pickles, appointed PricewaterhouseCoopers to carry out an inspection of the council “acting in the public interest”.

He said the Tower Hamlets had been informed and staff from the accountancy firm were already in already on site.

“A file is being passed onto the Metropolitan Police for consideration,” it was further said.

The govern statement added PricewaterhouseCoopers inspection will look into evidence of the authority’s payment of grants, the transfer of property, spending decisions in relation to publicity, and other contractual processes from “25 October 2010 to the present day”.

Secretary Pickles was quoted as saying in the statement: “It is a matter of public record that I have long been concerned about a worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration in Tower Hamlets.

“Following the receipt of a number of documents, I am now taking legal steps, in the public interest, to appoint inspectors to look into the allegations in respect of Tower Hamlets.

“I hope this sends a strong signal that robust processes are in place to investigate allegations of failures in financial management and governance in local government, under the new regime introduced by the Local Audit and Accountability Act which replaces the Audit Commission.”

Pickles further said that “this central action is not undertaken lightly” and that “localism requires local transparency, scrutiny and accountability, and these vital checks and balances must be upheld”.

“The inspectors have a legal right to access all premises and documents belonging to the authority which appear necessary for the purposes of inspection.”