Embattled Tower Hamlets mayor Lutfur Rahman has today hit back after secretary of state Eric Pickles stripped the council of its property sale powers.
On 4 November Pickles installed a three-man team of commissioners to oversee property sales in the borough after a PwC report alleged the council had accepted late bids that did not represent best value for council property.
Rahman issued the following statement: “In general, and having received legal advice, I find the directions to be excessive and disproportionate to the evidence and issues identified in the PwC report.
“That said, we have responded with proportionate and workable proposals. Our services are excellent and it is a shame this fact has not been highlighted.
“Where process and governance issues have been identified we will improve them. The secretary of state should restrict his directions to ensuring that we adopt excellent practice.
“It is also highly irregular for the secretary of state to seek to influence and prejudge the work of the Electoral Commission and the ongoing election petition via the election court, which is of course subjudice – the proceedings and outcomes of which are unknown to the secretary of state.”
The response added that, although no property was found to be undervalued, there were “valid recommendations about process”.
Rahman is now proposing a series of measures that will not jeopardise the council’s regeneration or social housing work.
PwC was appointed to investigate the council after the Evening Standard made a number of claims regarding potential fraud in April 2014.
Among major alleged administrative and governance flaws, PwC said the council had “failed to comply with its best-value duty” on a number of property transactions.
These related to the Sutton Street Depot, Mellish Street and Poplar Town Hall – where Tower Hamlets was said to have selected a bid that was received late, after other bids had been opened, and that did not represent the highest bid.
The Grade II-listed Poplar Town Hall was sold in 2011 to a local developer for £875,000. One of the company’s major stakeholders is the registered host of Rahman’s election campaign website.
The property company was also allowed to change the contract it had signed – though the report added that it was “unclear” whether the connection to the mayor was known within the authority at the time.
Pickles said at the time that the PwC report painted “a deeply concerning picture of obfuscation, denial, secrecy, the breakdown of democratic scrutiny and accountability, and a culture of cronyism risking the corrupt spending of public funds”.
