£100m hole in London 2012 accounts 24/06/2009 |
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Forensic accountants are investigating irregularities at the London Development Agency after discovering a £100 million hole in its 2012 Olympics accounts, The Times has reported.
A team from KPMG has been called in to find the source of the discrepancy, which was unearthed during a routine audit.
Two senior members of staff at the agency, which is the Mayor of London’s economic and business unit, have been suspended, although there is no evidence of wrongdoing. Gareth Blacker, who was in charge of buying the land on the Olympic park under the biggest and most controversial forced relocation conducted in Britain, is on indefinite leave along with his accountant.
His department, the Olympic Legacy Directorate, is the focus of the KPMG investigation, which found that the agency failed to make provision for between £60 million and £100 million to compensate the businesses that were forced out of the Olympic site in Stratford, East London.
The agency has paid £750 million so far to piece together the highly contaminated land, which had been an industrial dumping ground for nearly a century.
It agreed a price of about £1 million an acre with 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 a failure to put aside the money. KPMG will determine whether this was a genuine oversight or a cover-up that could amount to reckless use of taxpayers’ money.
The deployment of a forensic team represents an increase in the investigation, according to a source. “This has gone beyond a routine audit into the realms of a fraud investigation,” he said.
Suspicions were raised in March after Boris Johnson, the Mayor of London, ordered an agency-wide financial audit. The Olympic Legacy Directorate was the final department to be reviewed.
It will cease to exist in October when it hands over its £1.1 billion budget — mostly land assets — to a special 2012 legacy company, which will operate at an arm’s length from the agency.
The anomaly of up to £100 million leaves the agency with a cashflow problem that could cause other infrastructure projects to be delayed or shelved.
The discovery is embarrassing for both the agency and the mayor, whose office has been blighted by financial scandals. The most recent involved Ian Clement, a deputy mayor, who resigned this week after discrepancies were found in the use of his corporate credit card.
The irregularity at the London Development Agency was probably a case of incompetence rather than deception, according to one informed observer. But questions remain as to why Andrew Travers, the agency’s risk and resources director, is overseeing an investigation into accounts he must have signed off.
An agency spokesman admitted that a review had identified some “additional spending commitments” but that the shortfall could be made up from savings elsewhere and would not require additional borrowing.
“We have identified ways of absorbing this without affecting core programmes,” he said.
The findings of the review are not expected to be made public despite the allegation of financial impropriety. The two suspended LDA employees were unavailable for comment and the agency refused to discuss personnel issues. KPMG declined to comment.
(Source: Timesonline.co.uk)
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