Communities Secretary Eric Pickles has asked independent auditors to look into allegations of fraud and financial mismanagement at Tower Hamlets council.
The auditors, PricewaterhouseCoopers, arrived at the Mayor’s Mulberry Place headquarters in the early hours of Friday morning to recover boxes of official files.
Sir Bob Kerskale, permanent secretary at the Communities Department, said the inspection would examine allegations of “possible fraud” and issues raised by the BBC Panorama documentary which was broadcast earlier this week.
The auditors will be looking into grant payments, transfer of property by the authority to third parties and spending.
The Department for Communities and Local Government has also passed a dossier of documents, which raised “serious concerns”, to Scotland Yard.
Pickles who ordered the full probe into the administration of Mayor Lutfur Rahman said: “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.
“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. This central action is not undertaken lightly, but localism requires local transparency, scrutiny and accountability, and these vital checks and balances must be upheld.”
The auditors will be reporting back to Pickles on June 30.
Rahman who was elected as independent mayor of Tower Hamlets in 2010, has denied the allegations and accused the BBC of racism and Islamophobia.
“I welcome the Secretary of State’s decision to send independent auditors to review our grants processes. This will refute the scurrilous and ill founded allegations recycled by Panorama and demonstrated that the Council acts in the best interests of all Tower Hamlets residents.”
Rahman’s statements were supported by a spokesperson for Tower Hamlets Council who said: “We welcome the opportunity to demonstrate that council processes have been run appropriately and to date we have seen no evidence to suggest otherwise. This inspection affords the borough the best opportunity to demonstrate that the borough has acted in the best interests of all residents. We will release further information in due course.”
The investigation follows years of allegations in the borough, including the controversial sale of Poplar Town Hall and suggestions of electoral fraud that have been dismissed by the electoral commission which noted that the procedures to ensure that the electoral register is accurate: “exceeded current practices in the majority of other London boroughs and local authorities throughout the UK.”