Eric Pickles ready to send squad in to take over Tower Hamlets council

Embattled Mayor Rahman [left] and Communities Secretary Eric Pickles

Embattled Mayor Rahman [left] and Communities Secretary Eric Pickles - Credit: Archant

Last-ditch attempts by embattled Mayor Lutfur Rahman to stop government commissioners taking control of his £1.2 billion budget have been thwarted in the High Court.

Tower Hamlets council

Tower Hamlets council - Credit: Archant

A judge has thrown out his second legal challenge against Communities Secretary Eric Pickles who is now ready to send a squad in to take over key areas of Tower Hamlets council.

Mayor Rahman had already lost an attempt in July for a Judicial Review to stop auditors from Pricewaterhouse-Coopers getting their feet under the table at the Town Hall.

This follows the auditors report ordered by Mr Pickles in April into “financial mismanagement” and sales of public assets at knock-down prices.

Mayor Rahman’s original bid for Judicial Review in the summer was slammed by a judge as “hopeless.”

But the council went ahead and applied for an oral hearing in which its QC Jonathan Swift was hired to challenge Eric Pickles’ right in court to send in his squad—which the council lost on Friday.

Tower Hamlets Tory opposition leader Peter Golds is now demanding to know who decided the case should to go ahead when a judge had already deemed it “hopeless” in July.

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“Once again a judge has rejected an unsustainable case,” cllr Golds said. “This will cost taxpayers tens-of-thousands of pounds, while Mayor Rahman and his council are in denial about the implications of the auditors’ report.”

The auditors have not looked into allegations of fraud, it is understood. Such matters are said to be currently under police investigation.

The auditor’s report said: “Evidence of possible fraudulent payments has been identified and reported by the authority to the police in connection with nine organisations. We have not examined these matters in detail.”

What the auditors have looked at in detail are whether the council mismanaged public assets like selling off the Grade II-listed Poplar Town Hall on a prime site near Canary Wharf, unloaded for £875,000 to a late-bidder and political supporter of the Mayor, while a higher offer was rejected.

Grants were also handed out to organisations deemed “ineligible” with £407,000 given to groups failing to meet the council’s own minimum criteria, the auditors found, while allegations that the Mayor intervened to increase grants to Bangladeshi organisations went unanswered.

Friday’s High Court defeat now paves the way for Eric Pickles to send commissioners into the Town Hall. He has given the Mayor’s Office until midnight tomorrow to comply.

But the Mayor has hit back, accusing the Secretary of State of costing taxpayers £1 million by ordering the audit in the first place.

Mr Rahman said: “Our case challenged the cost and raises fundamental questions about the legal relationship between local and central government.”

Mr Pickles had branded Tower Hamlets a “rotten borough” in the Commons and said there was evidence of “cronyism and corruption”.