'The Mayor is denying the truth'

Breaking her silence: Brenda Stern
12 April 2012

A former senior manager at Ken Livingstone's London Development Agency has dramatically broken her silence to reveal what she describes as demands for hush money, political interference and financial irregularity that dogged one of the Mayor's flagship programmes.

Brenda Stern, programme manager for the LDA's Diversity Works initiative, was forced out of her £75,000 job after resisting attempts to funnel £250,000 in LDA money to a personal friend of the Mayor's senior aide, Lee Jasper, despite a record of deceit and non-delivery.

Leaked emails show that the final decision on Ms Stern's fate was taken not by anyone in the LDA but by Mr Jasper himself. The supposed reason for Ms Stern's dismissal was later admitted by the LDA chief executive, Manny Lewis, to be "not founded". Today Ms Stern says key procedures to protect public money were not followed, "constant interference" by Mr Jasper derailed the programme and the LDA was pressured to pay "hush money" to prevent the details of the scandal being exposed.

She decided to speak out after the Mayor claimed that the Standard's story last week revealing the scandal of a company called Diversity International, part of Diversity Works, was "entirely false," "dirty," and "mendacious" and called for the reporter responsible to be sacked.

She said: "I ran the programme and the contract described in the Standard story last week. I can confirm that everything the Standard reported about that programme and that contract was correct.

"I cannot understand why the Mayor is denying the truth. Either he is lying to us or he is himself being lied to.

"This was a potentially excellent programme which could really have delivered for all Londoners. But it was totally undermined by, among other things, constant political interference from Lee Jasper."

Ms Stern, a high-flying City lawyer and former director for the Commission for Racial Equality, was brought into the LDA in March 2006 to rescue Diversity Works. She came from a background in anti-apartheid activism in pre-1994 South Africa.

She said: "I fought what proved a losing battle to ensure that the LDA was run on a professional, transparent and accountable basis. Instead, I found that the priority of the programme was not to promote the interests of London's diverse communities but to promote the profile of the Mayor and Mr Jasper."

Ms Stern said these problems were "nowhere more apparent" than in the programme's key contract, for an online "diagnostic tool", the Diversity Dividend.

The £295,000 contract for this was given to Diversity International, run by a long-standing friend of Mr Jasper, Joel O'Loughlin even though Diversity International was based in Liverpool and had no track record of delivering projects of this nature.

Ms Stern said: "I have seen evidence that Joel O'Loughlin, a personal friend of Lee Jasper's, was given this valuable contract without following the full legally-required LDA procurement procedure. In the months afterwards it became clear he was totally incapable of delivering on the contract."

Ms Stern described an atmosphere of "chaos and panic" within the LDA headquarters, constant "micromanagement" by Mr Jasper and serious underperformance by his friend, Mr O'Loughlin.

"Payment was tied to the achievement of key performance milestones by given dates. But Mr O'Loughlin was paid - indeed overpaid - even though those milestones consistently were not met. The website never operated according to specification or to the required scale.

"O'Loughlin charged extra VAT, and was paid it, even though the contract was already VAT-inclusive. He was paid some of his money months before it was due. He was paid a total of £346,000 - £51,000 more than he was entitled to. Even after that he continued to demand yet more money despite not delivering on his contractual obligations.

"On 21 April 2006, he sat in front of me and the chief executive of the LDA, Manny Lewis, and claimed to our faces that his company was in 'financial rude health'. Literally days later, we learned from our own independent credit checks that he had put the company into liquidation.

"I and other LDA officials believed that in order to protect the interests of Londoners the contract with Mr O'Loughlin should be terminated. But following pressure from Lee Jasper, and despite even more evidence of Mr O'Loughlin's financial impropriety, I was ordered to keep Mr O'Loughlin on board despite his inherent failures."

After Mr O'Loughlin appealed to Mr Jasper, the LDA performed a 180-degree turn. On 27 April, in a letter leaked to us, Mr Lewis, the chief executive, had threatened to sack him, claw back all or part of the £346,000 and possibly even sue him. But by 1 May, all such threats had been withdrawn and Mr Lewis offered Mr O'Loughlin a further £250,000 and a consultancy in addition to the money already paid.

Ms Stern said: "I felt this was absolutely unconscionable. Mercifully, the liquidator blocked the deal. But I was instructed to continue negotiating with O'Loughlin because Mr Jasper wanted to limit the public fallout that would be created by terminating the LDA's relationship with him.

"O'Loughlin and his co-worker Bryan Adams wanted to withdraw from the contract but they wanted to be generously paid for doing so. They kept threatening to go to the press and MPs if we did not pay them off. If they had done so, the fact that the LDA had employed Lee Jasper's friend would have come out.

"There was no other reason to offer him anything. He had nothing that we wanted. We were essentially under pressure to pay hush money.

"Joel and Bryan continually invoked their relationship with Lee and frequently communicated directly with him to bring pressure to bear on me and the agency. We were under constant pressure from Lee to do the deal.

"The figures that were being demanded from us were outrageous. I just could not reach agreement to spend these sums of public money on any basis we could justify in the public interest."

Emails leaked to the Standard - not by Ms Stern - support Ms Stern's claim that she launched strong protests about the deal at the time: one called it "extortionate" and another said it was "against the interests of the GLA."

Negotiations broke down and Ms Stern launched a "risk recovery strategy" to continue the programme without Mr O'Loughlin. But then Ms Stern was told that a member of staff in her team had complained about her. In a statement, seen by the Standard, the complainant alleged that Ms Stern had "excluded" him from meetings and had threatened a large meeting in which he was present that she would "not tolerate anyone taking the piss".

He also claimed that she had said to another large group meeting: "Anyone who hasn't done what they are supposed to do will be a very, very unhappy person - the highest point of [Tower Bridge] will not be high enough to throw that person off." Ms Stern said: "He was not involved in the meetings he complains of being excluded from because they had nothing to do with the areas of the programme for which he was responsible. As for the supposed offensive remarks, they are an inaccurate distortion of an obviously joking piece of banter directed at the whole team, which produced laughter, not offence.

"Most of his complaints related to meetings at which I was not even present. This person was simply used as part of an effort to oust me."

Ms Stern said she was called in by Mr Lewis and suspended without any formal hearing and without being given more than a brief opportunity to respond. In a letter to Ms Stern, seen by the Standard, Mr Lewis later ruled that the complaints were "not founded or established" but Ms Stern never returned to work at the LDA.

"It was a kangaroo court," she said. "Its purpose was to remove me and my objections and replace me with someone more accommodating to Lee's demands."

Emails obtained by the Standard - again not from Ms Stern - make clear that the final decision on her fate was taken by Mr Jasper. She was a secondee from her City law firm and Mr Lewis asked Mr Jasper what he should do with her: "Send her back," says Mr Jasper.

Ms Stern told the Standard of the extraordinary influence exerted by Mr Jasper over her programme. "He micromanaged it," she said. "It is totally disingenuous for him to claim, as he has, that he merely 'advised'.

"He and his officials were constantly on the phone to us and almost all the key decisions had to be approved by him. I would spend my life running across Tower Bridge between the [then] LDA headquarters and City Hall. When I joined, Manny [Lewis] specifically asked me how I was going to cope with Lee.

"Lee just kept saying: get me results. I said we had to fix the programme. But all they wanted was a platform for Ken. I don't think they cared whether it was delivered or not."

Emails seen by the Standard suggest that Ms Stern's colour was also a problem for some of her fellow staff. "It is beginning to look like Brenda, a white South African, is calling the shots in this programme," says one of Mr Jasper's allies.

Ms Stern was not the only LDA manager to lose her job for attempting to limit Mr Jasper's influence. Another senior manager, Maxine Jones, was also suspended and later dismissed after raising concerns.

"Maxine was hot on corporate governance," said Ms Stern. "She was scapegoated for the problems with the Diversity International project."

Ms Stern said she had decided to speak out because, she said, "public money should be used for the public".

She added: "There seems to be a complete lack of accountability and Londoners deserve answers. I urge the London Assembly and the District Auditor to conduct a full, thorough and independent investigation of this grant and I will be happy to provide them with all the evidence they may need."

Richard Barnes, Tory group leader on the London Assembly, said: "Ms Stern's evidence is staggering. It completely puts the skids under Lee and it demonstrates that the Mayor has misled the Assembly and London. It makes an emergency Assembly meeting absolutely imperative. We need the District Auditor in immediately."

The Mayor's office and the LDA refused to respond to repeated questions about Diversity International.

TO READ THE ORIGINAL EMAILS, CLICK ON THE LINKS BELOW

TO READ THE APRIL 27, 2006 LETTER CLICK ON THE LINK BELOW

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