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Council gave youth companies thousands of pounds to ‘influence voters’

PUBLISHED: 07:00 23 March 2020

One of the

One of the "fictitious" companies in receipt of council cash used a flat in Commercial Road as its address. Picture: Hannah Somerville

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A series of fake and council-sponsored businesses were given taxpayers’ cash to “influence local community voters”, freshly revealed documents claim.

A diagram from an internal presentation on enquiries into a suspected bogus company.A diagram from an internal presentation on enquiries into a suspected bogus company.

Internal council reports, produced between 2014 to 2016, claim dozens of companies were set up under the auspices of Tower Hamlet’s Council’s youth service.

Based in flats, derelict buildings, community hubs and empty shops from Limehouse to Bethnal Green, these companies either “did not exist” or were spearheaded by councillors and officers while receiving public funds, according to the reports.

Most have since been dissolved but none of the people running them have faced criminal charges.

The documents, dubbed the Poplar Papers, focus on fraud and corruption in the Youth and Connexions Service (YCS) dating back to the 2000s.

The 4,401 pages of evidence were released in January as part of an ongoing employment tribunal claim by Mark Edmunds, an ex-fraud investigator then working for Tower Hamlets Council.

One of the suspected bogus companies was based in a compound behind Burslem Street, Shadwell. Picture: Hannah SomervilleOne of the suspected bogus companies was based in a compound behind Burslem Street, Shadwell. Picture: Hannah Somerville

One internal council report from 2015 concludes: “It appears there has been a conspiracy to defraud the council via fraudulent [funding] applications and complicit behaviour of YCS officers.

“It appears the arrangements were to directly influence local community voters and maintain political position.”

In one example, the long-established Progressive Youth Organisation Ltd (PYO), based at the council-owned Montefiore Centre in Whitechapel, had been receiving council funding since at least 2003.

A council employee, who went on to become a director, said he had been instructed by council managers to help PYO secure council cash and provide paid-for council staff to PYO at no cost, in an “arrangement” in exchange for political support.

PYO ceased trading in 2019.

On being interviewed, a youth service officer claimed that companies did not spend taxpayer funds as intended and were used to generate political support.On being interviewed, a youth service officer claimed that companies did not spend taxpayer funds as intended and were used to generate political support.

“Based on other information received,” a disciplinary report stated, “It is highly likely that some of the (council) funds granted to these organisations subsequently made their way to the [redacted]... possibly via premises rental arrangements.”

On being interviewed, the officer was quoted as having reported that “funds were siphoned away from their intended use”, with cash put towards rent instead of the agreed activities, and “both senior and junior YCS officers were aware of the arrangements in place”.

He added that activities for young people were “key” to promoting the then-Mayor, Lutfur Rahman, and associated councillors.

Events, he said, were “designed to encourage parents to support the Councillors”.

He added: “numerous other organisations operated in the same way… and were promised money/funds for political reasons and to ensure support.”

"Ghost" companies were registered to residential streets all over Tower Hamlets, including one in Bekesbourne Street, E14. Picture: Hannah Somerville

In 2014 a whistleblower claimed that an organisation called the Brady Youth Forum, of which no trace could be found, had been receiving illicit funds, with little to no oversight.

Eight others were named in their disclosure, such as “Urban Youth Vibes”, “Outreach Dimension UK”, “Young Routes” and “Fusion Youth”.

Auditors Mazars visited these addresses on behalf of Tower Hamlets in 2015 and found no evidence of the companies operating there.

People living at one address, auditors said, had received post for the organisation.

“The occupant added that when people from the organisation came to collect the post, they would act aggressively,” the auditor said.

Between them, these eight companies received £284,300 in 61 grant payments in 2013/14. The whistleblower claimed the relatively small amounts of money awarded were “kept at levels to avoid oversight”.

Some of the council officers involved were on 14-hour or zero-hour contracts and should have been receiving £14-15,000 a year as standard.

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But instead the top earners were taking in up to £54,500, the papers claim.

According to auditors’ reports, money was paid to these companies with the at least partial knowledge and sign-off of the then-head of service, Dinar Hossain.

An ex-youth worker, who spoke to the Recorder on the condition of anonymity, said because of low pay staff took on extra work outside the council.

The youth service investigation was later widened to 19 suspect organisations with at least 21 council officers involved, which had received £1.3million in 383 payments since 2008.

A source close to the service said there could be 30-40 in total, adding: “The indirect agreement was that this money also purchases support for the administration.”

‘We have come a long way’

A spokesperson for Tower Hamlets Council said: “We have come a long way since 2014 when the government removed the previous mayor and issued directions.

“They included investigating historic wrongdoing as well as rebuilding the council’s processes including governance, whistleblowing and grant giving.

“Mr Edmunds was employed by the council as part of those investigations. Where there was sufficient evidence, the council took action including dismissing staff and referring matters to the police.

“In addition, we had an anonymous reporting process where allegations were assessed by an independent clear up team.

“In the past few years, the government’s directions have been lifted, we have delivered six well run elections, our children’s services have secured a good Ofsted rating and our services are winning national awards.

“However, we must always remain vigilant and rely on the new processes to ensure fairness, transparency and value for money are at the heart of a well-run, accountable council.”

‘Learning recommendations’ made to police after criminal cases closed

The Metropolitan Police referred its own investigations into spurious Tower Hamlets youth organisations for review after no criminal charges were brought.
Two allegations of fraud, related to nine companies, were referred by the council to the Met in June 2015.

At the time the allegations centred around payments totalling around £300,000 to these organisations during 2013/14.

They were allocated for investigation to the fraud squad within the Met’s Organised Crime Command.

A Met Police spokeswoman said: “A number of inquiries were carried out and the matter was concluded in September 2016.

The rationale for the decision reached was shared at the time with London Borough of Tower Hamlets.

“In June 2017 at the request of the Met, City of London Police carried out a review of the Met’s original investigation.

“In May 2018 that investigation concluded that all reasonable lines of enquiry had been adequately progressed by the Met.

“However, it did make four learning recommendations which were accepted by the Met and subsequently incorporated into the overall design and delivery of the new Economic Crime command model.”


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