London Assembly (Plenary) – 5 March 2008
Transcript of Question and Answer Session with Manny Lewis (Chief Executive, London
Development Agency), Mary Reilly (Chair, London Development Agency) and Andrew
Travers (Group Director, London Development Agency)
Sally Hamwee (Chair): Thank you to Mary Reilly, Manny Lewis and Andrew Travers who I
know have, through the wonders of modern-ish technology, watched the proceedings so far. I
suggest that we spend about 45 minutes to an hour asking questions of our visitors. I remind
Members of the advice which was given this morning and which applies to the whole of the
meeting. We have, of course, bundles of documents. For health and safety reasons, mine are on
the floor in a corner! These are documents which were provided by the London Development
Agency (LDA) a couple of weeks ago following the summons of documents before the previous
We were aware through the discussion at the previous meeting that some organisations have been
referred to the police. Can I start by asking you, has the LDA referred any matters relating to
further organisations or individuals to the police beyond the six organisations identified at out last
Manny Lewis (Chief Executive, LDA): No, we have not, Chair, and the simple reason for that -
and Andrew [Travers] will happily expand on this - is that we have taken a great deal of action to
follow through and have appointed agencies and accountants to support our work in the sampling
[of projects]. We have taken a number of steps to support the police and the District Auditor in
their inquiries and, of course, we have taken a number of steps to support the Assembly in its
scrutiny. All of that leaves us now with an opportunity to commission the work on the sampling
and a further review of projects which will then lead over the next few weeks to the analysis of
that work and conclusions, and, if necessary, as a result of those conclusions, to make further
referrals for investigation.
Sally Hamwee (Chair): OK. I am not going to pursue that from the Chair but others might want
Elizabeth Howlett AM: Do you think it would useful to establish a Greater London Authority
(GLA) Group-wide register of interests because, quite clearly, the Mayor’s Office pays scant
regard to that for their senior officers?
Manny Lewis (Chief Executive, LDA): I think even more positively, Elizabeth, you will have
seen from Andrew Travers’ report that he identified this as an issue within the investigations he
undertook. Indeed he recommends to the GLA that it would be worthy of consideration that there
is a broader arrangement for declaration of interests, Group-wide. Anthony Mayor [Chief
Executive, GLA], in his report to you today, has confirmed that that is one of the arenas within
the terms of reference that the governance panel will be considering. We would welcome further
guidance and clarity on these issues.
Dee Doocey AM: I want to talk to you about Diversity International. When the LDA retained
Diana Skeete to manage Diversity International, were you concerned about any possible conflicts
of interest given that she had previously worked with Joel O’Loughlin?
Manny Lewis (Chief Executive, LDA): At the point of her employment, I think it is fair to say
that I would not have been aware of her particular [previous] employment because I do not,
obviously, get involved in all the appointments within the organisation. It may not have been
apparent in her application form or in the interview process that they had a particular relationship;
she may not have declared it. What I can say now is, looking at the history and the record, clearly
you would want separation between an officer of the agency that is managing the contract and
managing the delivery of that contract with any history of previous relationships with that
contractor and that is a matter that, if the facts were known now, we would look at and weigh up
in those judgments.
Dee Doocey (AM): Am I correct to say you were in post in 2002?
Manny Lewis (Chief Executive, LDA): No
Dee Doocey (AM): In 2002, Diana Skeete had been working on a project with Joel O’Loughlin,
which was actually funded by the LDA. I am aware that there are sensitivities, so I am choosing
my works with care; I am not going to say things that I shouldn’t. The LDA had funded a project
that she was working on with Mr O’Loughlin. The LDA had concluded that none of the outputs
had been achieved but the money had been spent and the company eventually went into
liquidation. Then, two years later, the LDA awarded another contract to Joel O’Loughlin except
Mr O’Loughlin was now trading as Diversity International and this time you got Diana Skeete to
work at the LDA offices and to actually manage the project. It just seems very odd that your
systems did not pick up any of this, particularly in light of the fact that you had previously funded
a project that they were both working on, so somebody should have been aware of the
involvement. What procedures have you got in place now that would pick this up?
Manny Lewis (Chief Executive, LDA): Just help me, Dee; what was that project that you
referred to that delivered no outputs?
Dee Doocey (AM): Am I allowed to mention things set out in the pink bundle of paper
[supplementary agenda for the meeting]1? I thought you had refused to allow us to talk about
them in public. I am somewhat at a loss; I am very happy to tell you but I do not want to break
any legal rules.
Sally Hamwee (Chair): I am being told that you can name it but we have to be careful about
what discussions take place.
1 The supplementary agenda for this meeting set out extracts from documents which had been provided to
the London Assembly by the LDA further to the statutory summons notices agreed by the Assembly on 16
January 2008 and issued to the Chief Executive of that organisation. These documents related to the LDA’s
funding of the organisations listed in the terms of reference of the LDA’s review of January 2008. The LDA
did not consent to the Assembly discussing in public matters that would disclose information set out in the
documents listed in the schedule at Appendix 1. These documents were therefore considered to be
Dee Doocey (AM): North West One [Charitable Trust]. Just before you answer, I was actually
quoting from your own internal document when I said that the LDA had concluded that none of
outputs had been achieved and the company then went into liquidation but the money was spent.
Manny Lewis (Chief Executive, LDA): North West One is not, as you already know, a project
that we have yet investigated and reviewed. It is one that will feature in the second set of analyses
of the four projects named in the Evening Standard allegations that have not yet been interrogated.
There is a limit to how much absolute corroborated data I can give you today. On your general
point, you would want the antennae and the intelligence of the organisation to be such that it
would cross-relate previous experiences of project delivery and project suppliers with new awards
of contracts and new delivery programmes. That is part and parcel of what you would want your
delivery teams to be aware of, both from your data record and from the actual experience of
What we now have is a very comprehensive portfolio director system that contains all of our
project information that enables interrogation as to who the suppliers were, what types of projects
they were, what outputs were delivered. We also have an appraisal process, our Corporate
Investment Panel, where one chair and one group of directors reviews a whole range of projects
which means also that you bring that intelligence together. To answer your question, it is much
less likely that that sort of occurrence could happen now.
Dee Doocey (AM): Do you not find it extraordinary that somebody can get a grant for what I
am sure was a perfectly legitimate project and, for whatever reason, the money was spent, because
all the money was paid in advance, no outputs were realised and then, just 18 months later, the
same person could come trading as a different company because the company had gone into
liquidation and be given a very substantial grant, nearly £300,000, without anyone picking it up.
The project manager who had been working on the previous grant was actually then retained by
the LDA to work in-house in the LDA on the project. Do you not find that quite extraordinary?
Manny Lewis (Chief Executive, LDA): As you said, this was 2002. The individual concerned,
Joel O’Loughlin, was operating within a particular consultancy, as I understand it.
Dee Doocey (AM): No, he was not a consultant. He was running a company to which the LDA
gave a grant; the company then went into liquidation; he then came back to you two years later,
running a different company, called Diversity International, asking for another grant, which you
then gave him. Not only did you give it to him, but also you took the project manager who had
been working with him, when you had given him the previous grant to actually work for the LDA,
as his principal contact.
Manny Lewis (Chief Executive, LDA): We will review this case as part of the second phase. At
this point in time, I cannot draw any conclusions with any of the material you have set out. What
I have explained is that that is a set of circumstances which I could not possibly condone. It
would not be appropriate for decisions about new grant fund applications to be taken to new
delivery agencies without a proper historical check of their credentials, the due diligence and the
delivery experience of those suppliers. If that were to be the case now, we would do that due
Dee Doocey (AM): I am glad you do not condone it and I am surprised that you do not draw
conclusions because the very clear conclusion that I draw is that the LDA certainly was not
looking after taxpayers’ money and appears to have done virtually no checks at all, but let us leave
that there for the moment. You had said, last time, that Diversity International was a project that
you were not proud of and I accept that, and you said a lot of mistakes were made. If we could look
at the end of that project, there is a letter on file, the previous documents you supplied to us, the
ones that are published, from you, dated 14 June to Joel O’Loughlin, saying that the LDA was
sending in its auditors to Diversity International to examine its records, in relation to the LDA’s
funding and how it was spent. It is not clear from that letter whether it was actually sent and
whether you sent in the auditors. Can you clarify?
Manny Lewis (Chief Executive, LDA): The letter was certainly sent and arrangements were
made for the auditors to go in. I believe that that process was then overtaken by the insolvency of
Dee Doocey (AM): Right, so if the LDA had such concerns on 14 June 2006, that you were
going to - and your letter is quite strict with them - send in your auditors to examine in the
records in relation to how they had spent the funding and you said what they had to have
available, you set out the terms very clearly, why did it then take you 18 months to refer these
concerns to the police? Was it something to do with the fact that the Evening Standard broke the
story, because, it seems to be just after the Evening Standard broke the story that you referred
them, yet it seems that had very deep concerns, 18 months previous, but had done nothing about
Manny Lewis (Chief Executive, LDA): It is not correct to say that we had done nothing about
Dee Doocey (AM): Sorry, you sent a letter.
Manny Lewis (Chief Executive, LDA): Firstly, we made it very clear to Diversity International,
at that point, between April and June 2006, that they were in breach of their delivery obligations.
We made it very clear that we were going to send auditors in to review their accounting of our
spend. We also did not make any further payments beyond the amounts that had been made at
Dee Doocey (AM): Sorry, if I could just correct you there. You did not make any further
payments because you had already, if my memory serves me correctly, overpaid them by £50,000,
in respect of VAT that was not due, and you had already given them nearly £100,000 over and
above what the contract had stipulated. I am very pleased to hear that you were not giving them
yet more payments.
Manny Lewis (Chief Executive, LDA): Your second point is incorrect. We had not given them
Dee Doocey (AM): I will check my facts.
Manny Lewis (Chief Executive, LDA): My recollection is that it was a contract for circa
Dee Doocey (AM): That was the original contract.
Manny Lewis (Chief Executive, LDA): There was a claim on the table for Diversity
International for more funds and it is my point that we did not contemplate any more funding.
We also began a process to seek to recover the intellectual property rights.
Dee Doocey (AM): Yes, I know all of that. We covered that the last time. I am interested in
why you sent a letter to say, ‘There are no outputs. You’ve provided virtually nothing; you are in
breach of almost every element of the contract including subcontracting when you shouldn’t have
done. I want to send in the auditors to find out what you’ve done with our money;’ and you have
made it very clear that it was taxpayers’ money and you were responsible for it and then did
nothing for 18 months.
Manny Lewis (Chief Executive, LDA): This is the point I am contesting. It is fallacious to say
that we did nothing because we then completed the process by appointing Hammonds, our
external lawyers, to advise us on how we could manage the breaches and we also appointed Grant
Thornton as accountants to seek to undertake the reviews we wanted of how the money had been
spent. What then happened was, Diversity International went into liquidation and we acquired
what the LDA needed to deliver the project at the end of the day through the liquidator.
I then commissioned an investigation, in July 2006, into the issues and the problems arising from
management of Diversity Works. That investigation report set out the lessons learned and at
that point in time, having secured the project, reviewed the problems and having experienced the
liquidation of Diversity International, that is where the LDA closed the matter. What has now
happened, as you know, is as a result of these allegations, Andrew Travers has undertaken his
review and he has, for the avoidance of doubt to ensure there is complete transparency, and to use
police forensic powers which we do not possess, referred any case where there is a significant
concern for further investigation to the police. That is completely legitimate in the light of the
knowledge and experience that now operates.
Dee Doocey (AM): I find your explanation totally unacceptable but let us leave that there for the
moment. I just think, every time you answer a question you raise more concerns, in my mind,
about how this agency is run.
Manny Lewis (Chief Executive, LDA): They are predetermined concerns.
Dee Doocey (AM): Can I take you back; Bob Blackman, this morning, established that there had
been a long-standing relationship between Lee Jasper and Joel O’Loughlin dating back to, I think,
2002. I do not think that is written down.
Sally Hamwee (Chair): 1992.
Dee Doocey (AM): 1992, sorry. That would appear that Mr Jasper knew Mr O’Loughlin quite
well and yet, despite this, according to the files that you have given us, Lee Jasper and the GLA
officers, repeatedly expressed, ‘Very real doubts about your decision to award the contract to
Diversity International.’ If Mr Jasper knew Mr O’Loughlin very well through business and
whatever else, why did you ignore this advice and just go out to one tender and give this contract
to Diversity International?
Manny Lewis (Chief Executive, LDA): I have seen no evidence that suggests that Lee Jasper, or
anyone else at the time, advised against a process of appointment that led to Diversity
Dee Doocey (AM): So Lee Jasper has written a letter to you saying that he advised, very
strongly, against it. I do not know who the GLA officers are, I am just quoting from it, but you
have no recollection of that?
Manny Lewis (Chief Executive, LDA): No, I am not saying that. I think, if you want, we can
turn to that particular e-mail. What I am aware of is in the e-mail from Lee Jasper, circa May
2006, which is way after Diversity International had been appointed and was operating - it is
actually at the point of its insolvency - where he says, ‘Looking back, I would always have advised
against the appointment of that particular company’.
Dee Doocey (AM): Shall I just read it to you?
Manny Lewis (Chief Executive, LDA): What is the date of it, please?
Dee Doocey (AM): The date was 23 April 2006: ‘I am reminded that I expressed very real
doubts about the LDA procuring Diversity International at the point of the contract being agreed,
expressed by myself and GLA officers repeatedly, once we were aware of the LDA’s decision to
give this contract to Diversity International.’ So here you have Lee Jasper, who knows Joel
O’Loughlin, who runs Diversity International, who has, in a previous guise, running a different
company, had a grant from you, and the company then went into liquidation without any outputs
but with the money being spent. Here is Lee Jasper advising you, very strongly, along with other
officers, not to award this contract and you have still awarded it. I just wondered why?
Manny Lewis (Chief Executive, LDA): Firstly, the e-mail you have read out refers to the fact
that once he had heard or became aware that the contract had been awarded, and, secondly, having
reviewed the files in the same way that you have reviewed the files, there is no evidence at the
point of the contract being awarded that those reservations were expressed. There is no record of
Darren Johnson: This is looking ahead now. Obviously the LDA is crucial in delivering a
number of key projects including some recent projects like the new climate change programme
and so on. What assurances now can you deliver to Londoners that these projects can be
delivered, be properly monitored and be utterly transparent?
Manny Lewis (Chief Executive, LDA): May I say just two things to that. Firstly, this agency is
completely different to the one that has been reflected on going back to 2002, 2003. It has
radically changed; we have changed the senior management team, we have put in assurance
procedures, we have a corporate investment panel process to evaluate all of our projects, and we
have invested in a whole programme of systems and reporting. That means that it is a much
higher level of assurance that I can give you about our delivery now. Our auditors review us on a
regular basis; this is an external audit, and they make clear that we are performing well and our
use of resources is good.
Having said that, we also have a track record, Darren, I hope you will agree, now of delivering.
We have delivered on the Olympic land, we are delivering on the Mayor’s skills and employment
board, we have delivered on Visit London, we have delivered with investment, we have delivered
on housing delivery for the Mayor. There is a whole different set, I think, of evidence that
demonstrates that this agency is performing well. In the case of the Climate Change Action Plan,
I think, in a very short period of time, within a year, we have set up the Green Homes Service, we
have set up the Better Buildings Partnership, we have established the Green 500 with all the top
employers in the city to get them to deliver low carbon schemes and renewable solutions and we
have a very high quality director that runs that programme, who is Helen Keenan. I am
absolutely confident that the combination of our systems, our quality senior management team
and our process and that director in charge of it means that we will deliver for you and deliver for
Darren Johnson (AM): Jenny [Jones] and I have pushed very hard for this project and we,
obviously, absolutely want it to succeed and all the programmes to succeed, but this is a
comparatively new area for the LDA. These are new contracts. Things may go wrong. What
sort of auditing and monitoring is in place to ensure effective value for money?
Andrew Travers (Group Director, LDA): The first thing to say is that I do think that our
processes are sound now. We have, of course, got an ongoing programme of internal audit review
to look at those systems to check that they are indeed sound and, of course, internal audit, to some
extent, does bring an external view of what we have.
Darren Johnson (AM): Is there a need for more external input?
Andrew Travers (Group Director, LDA): I will come to that in a moment. We do have
external auditors who do look at our systems routinely and give us a score and feedback on those
matters. We have had a look at our systems again, in the light of recent events, and we did take a
report recently to our Risk, Resources and Audit Committee saying that although our systems are
sound, there are one or two areas we do need to look at to see whether they should be tightened
up and that work is in progress. We have also decided that we are going to commission some
additional assurance work in respect not only of our systems, but in respect of actual project
experience, so looking at how we handle specific projects and going into those projects to check
that all is in order. That would be an additional level of assurance that we are now in the process
Darren Johnson (AM): So if anything were to go wrong in any part of that programme, for
example, can we be reassured that, as Assembly Members, we would get to find out about that at
the earliest stages and not read about it some years later as some huge great scandal on the front
page of the Evening Standard?
Andrew Travers (Group Director, LDA): Broadly, assurance work is available. It is not secret.
It could be obtained under the Freedom of Information Act and our policy is to be open about
those matters. The only exception to that would be if there was a case where there was some
other action necessary and then we would have to review carefully, but our position broadly is
that we want to be completely open on that assurance work.
Bob Blackman: Mary, can you clear some confusion up in my mind. Reading the transcript from
the last time you appeared before us, when you answered Sally [Hamwee], from the Chair, about
briefing given to the Mayor or Mayoral Advisers, you stated categorically that there had been no
meetings or discussions. Subsequently, in the meeting I clarified that issue and you said that you
had briefed the Mayor on those particular issues the night before the LDA Board meeting. Can
you just confirm what the position was overall?
Mary Reilly (Chair, LDA): Yes, I did. I corrected myself because I had genuinely forgotten
actually. I think the question I was asked specifically was had I discussed it with Mayoral
Advisers and I had not, but, I had forgotten that I had met with the Mayor the night I got back
Bob Blackman (AM): I am sure colleagues will want to return to that later in the discussion.
Manny, can I pick up on the issues of Diversity International as Dee has picked up on them. Did
Lee Jasper at any time relay the fact that he had business relationships with Joel O’Loughlin?
Manny Lewis (Chief Executive, LDA): Not to my knowledge or recollection.
Bob Blackman (AM): What involvement did he have in influencing the decisions around
Diversity International as far as you are concerned?
Manny Lewis (Chief Executive, LDA): From all the reviews, and this is contained in Andrew’s
report, it does not appear that he had any direct involvement in the appointment of Diversity
Bob Blackman (AM): Not the appointment, but what about monitoring and decision making
around whether the contract was terminated, for example?
Manny Lewis (Chief Executive, LDA): Firstly, as you have already debated this morning, there
is a whole reporting and performance-monitoring role that the advisers have in their particular
field, and in that sense that applies here to Lee Jasper and our delivery. Secondly, he was the
Chair of the GLA Group-wide steering group on Diversity Works and your documentation gives
myriad examples of the reports to the steering group in a pretty open way, well codified. Thirdly,
as a project that was in difficulty then it was escalated both to me, at various points, from the
project director, to help steer as well as to Lee in trying to help resolve the issues in terms of his
policy view on the case. There was, as the evidence shows, a reasonable amount of interaction.
Bob Blackman (AM): At no time did he say, ‘I don’t think I should be involved in this’?
Manny Lewis (Chief Executive, LDA): Not to my recollection, no.
Bob Blackman (AM): What sort of scenarios would there be for the LDA to give a single tender
Manny Lewis (Chief Executive, LDA): Again, Andrew may want to come in to this, but we
have always had express guidance in our governance procedures about our procurement code and
the circumstances under which a single tender may be appropriate. It tends to surround situations
where there is evidence that there is only one particular provider with that level of expertise or
that particular knowledge or experience. It may also apply to circumstances where there is
continuity required because an existing contractor is already providing that service and to then go
out to the market to bring someone else in would mean that that service would be interrupted, and
that existing one already has the knowledge. There may also be circumstances of urgency where
there is an immediate need and therefore you have to react very quickly. They are three broad
What we have in the Agency now, broadly, is a select list where we tender on a regular basis for a
suite of contractors or suppliers, a range of criteria, that has been properly procured, and we can
access them fast when needed. Certainly our guidance now, very expressly, is that single tender
actions should be, at the absolute minimum, scrutinised heavily; they are not signed off without a
great deal of review and they are all reported to our Risk and Resources Committee.
Bob Blackman (AM): Taking what you said, how does the single tender contract to Diversity
International stack up against your criteria?
Manny Lewis (Chief Executive, LDA): There is advice on file, which again we can look at,
whereby at the point in time of seeking to commission a provider for the Diversity Works
programme advice was sought from the lawyers in respect of the options. There is absolutely no
doubt that Diversity International had brought the idea and the concept, in terms of the diversity
exchange and also the diversity diagnostic. They had brought that idea and put it forward as an
initiative to the agency. One of the considerations was whether to take that idea as an agency and
then go out to procure it ourselves, or to consider whether the circumstances of their knowledge
and experience was such that single tender was appropriate. Legal advice was taken at the time
and the grounds presented that there was sufficient cause for us to consider a single tender action
in those circumstances.
Bob Blackman (AM): What action was taken to establish that this organisation had credibility
and capability to deliver before placing a contract with them on a single tender basis?
Manny Lewis (Chief Executive, LDA): I admitted absolutely candidly to the Assembly at the
last meeting on 7 February that I did not think our due diligence processes at that time were
thorough and effective enough in respect of an appointment of that contract. I do not think that
we had done enough research into the background of Diversity International and indeed it was
one of the issues that came up in the report about the lessons learned that I had commissioned.
Bob Blackman (AM): Can I just be clear from what you said; did Diversity International
approach the Agency or was it the other way around?
Manny Lewis (Chief Executive, LDA): I do not know, Andrew, if you recall that specifically
from your review?
Andrew Travers (Group Director, LDA): I do not recall specifically where the very first point
of contact was, but there was certainly a dialogue. It is quite hard to see where it was initiated.
Bob Blackman (AM): Who was responsible for the introduction of Diversity International to the
Manny Lewis (Chief Executive, LDA): The records do not show that expressly. My belief is
that in all probability -
Bob Blackman (AM): Sorry, Manny. Can I interrupt. Obviously this is one of those projects
where there are serious concerns of the governance of the arrangements and one of the issues here
is how that relationship came into being in the first place. What I am seeking to say is: was it
Diversity International coming along marketing their great capability to do this wondrous job for
London, and therefore selling themselves to the Agency, or was there an introduction from
someone saying, ‘We need someone to do this. Let’s go out and get someone to do it’, and
therefore you found Diversity International? I mean, it is not clear to me how that whole process
Manny Lewis (Chief Executive, LDA): It appears as if that the work that they had done in
terms of diversity exchange and the thinking in respect of diversity diagnostic had been seen by a
member of the LDA team, the LDA staff. That is what then triggered a presentation by Diversity
International, to the LDA at some point in time, in about 2005.
Bob Blackman (AM): What I am getting here is picture of someone seeing something. They get
them in to give a presentation and then on the back of that eventually they arrive with a single
tender contract worth a substantial amount of public money and there are still concerns about
whether they should ever have been awarded this contract. It does not seem a very good way of
operating. Is that a fair reflection of the position?
Manny Lewis (Chief Executive, LDA): I think if you look at how much review there was of the
capability of Diversity International to deliver, if you look at the advice and the negotiations about
the contract, if you look how thorough the contract, even at that time, was in demanding a whole
range of deliverables and outputs, then I think there was adequate attempt to seek to ensure that
was the right route to take, the single tender action. There is no doubt in my mind – I have said
this already – that the due diligence was not thorough enough and that we would not operate like
that now in these circumstances. I do not think I can add to that.
Bob Blackman (AM): Just to be clear, what was the role, if at all, of the Mayor’s Office in how
that whole process was handled? You are saying none at all. Is that right?
Manny Lewis (Chief Executive, LDA): In the appointment of Diversity International? First,
Andrew’s review confirms that there was nothing inappropriate in the role of the Mayoral Adviser
in that appointment, and second, from the record we have all reviewed and done thoroughly, I can
see no evidence of Lee Jasper intervening in that contractual appointment.
Bob Blackman (AM): Or making an introduction?
Manny Lewis (Chief Executive, LDA): Not to my knowledge.
Bob Blackman (AM): Not to your knowledge? Can we move onto the position with the Offley
Works and obviously what happened there? There were discussions between the LDA and the
Mayoral Office about setting up an artistic hub, going back to what, 2004, I think, ahead of
Brixton Base. How did that decision making come about?
Manny Lewis (Chief Executive, LDA): The data I have reviewed highlights that Brixton Base
had successfully delivered a particular short-term project, in terms of employment skills around
creative industries, and that on the back of that successful delivery, there were discussions --
Bob Blackman (AM): Sorry, Manny, can we be clear? There was a decision being made to set up
an artistic base. Did the LDA approach Brixton Base about doing this project or was it the other
Manny Lewis (Chief Executive, LDA): Offley Works was originally acquired by the LDA in
about 2003 as a creative hub and the idea was that we would seek to grow creative sector
businesses through the Creative London strategy. That strategy was reviewed and we did not
actually implement that model of delivering creative hubs and Offley Works was therefore a
vacant building without any occupants, in the middle of Kennington, which we felt should be used
for community use and not just wasted.
Bob Blackman (AM): Did any other organisation other than Brixton Base, get involved in
discussions around setting up this artistic hub?
Manny Lewis (Chief Executive, LDA): Certainly other organisations occupied the building.
Bob Blackman (AM): No, that is not the issue. It is around setting up the artistic hub. Were
any other organisations included in that discussion?
Manny Lewis (Chief Executive, LDA): I think the initiation was with Brixton Base.
Richard Barnes (AM): I have a question to you, Mr Travers. In January you produced your
statutory officer’s report which basically said that Lee Jasper did not need to register his interests
in the 1990 Trust, and yet, very recently, the BBC produced a series of e-mails from Lee Jasper
regarding the sacking of the Chief Executive of the Trust, how to make funding applications,
consulting outside bodies, and indeed stopping some e-mails from being sent. Did you see these e-
mails when you did your investigation?
Andrew Travers (Group Director, LDA): When I did my review in January I covered six
organisations, from a list of twelve and the 1990 Trust was not one of those organisations and in
fact, to the best of my knowledge, the 1990 Trust has not received any funding from the LDA, so
would therefore not be subject to an investigation or review by me. In terms of the general
position I obviously came to a conclusion that, where organisations were funded by the LDA, I
thought there should be a review of how GLA officer interests are recorded and I made a
recommendation that they should be changed to a Group-wide basis.
Damian Hockney (AM): In response to questions from both Dee and Bob you have mentioned
that this would not happen again or we would not do that now. Can you just give actual proof
what specific things have you actually done and where can I seem them?
Manny Lewis (Chief Executive, LDA): You can see them in the reality of who is in front of you
now, which is that we have Andrew Travers -
Damian Hockney (AM): You have often appeared before us. In 2005 you actually said, it was
told to us by the LDA, ‘We’ve had problems in the past but they have now been resolved’. It is in
that context. What physical proof, what written evidence can I get? What minutes, what
protocols can you let me have?
Manny Lewis (Chief Executive, LDA): I can give you a whole suite. First, a Corporate
Investment Panel and the role they have in appraisals. Those appraisals are minuted at every
single meeting. Second, there is a suite of new systems, the Athena suite, which describes all of
our project management cycle on a very thorough, consistent basis for all projects. Third, we
have a performance review every month of the whole of the Agency’s projects and that it is
delivering its outputs. Those reports are documented and clearly that is something that, under
the right confidential terms, we can let you have. Fourth, we have a much more extensive
assurance process through our auditors and our risk management procedures, which have been
Damian Hockney (AM): This would include, Manny, would it, things like, for example, what
Dee mentioned earlier about the fact that a director can set a company up, get funding and then
close the company and go back in? That could not happen again because somewhere it says that
we check those things now which we did not before?
Manny Lewis (Chief Executive, LDA): What you cannot do is operate outside the vacuum of
Damian Hockney (AM): Agreed, totally agreed but at least the check is made now and it is
agreed and it is written down somewhere that that happens every time?
Manny Lewis (Chief Executive, LDA): The commercial reality is, over the last ten years, 10%
of London’s businesses have failed.
Damian Hockney (AM): I do not disagree with that.
Manny Lewis (Chief Executive, LDA): Second, directors of those companies are absolutely
entitled to form new partnerships and to continue trading and resubmit projects for delivery.
What we believe we will do now is to have the right level of due diligence, in terms of the
company search of that organisation and to ensure that it is financially viable and stable and that
there are not any known issues about delivery through that.
Damian Hockney (AM): But you will check? I agree 100% that you are right if something goes
wrong, but that is transparent and open. So now we would know if you gave £250,000 to
somebody that, for example – and there is nothing absolutely necessarily wrong with it that that
guy, or that person or that group of people – had had insolvency issues.
Manny Lewis (Chief Executive, LDA): This is the point I am trying to make which is that in
any company you have a whole number of directors. We do not have either the time or the
resources to do a check on every single director’s history as part of a particular company
Damian Hockney (AM): You can get that from Companies House. You can pay a small amount
Manny Lewis (Chief Executive, LDA): I know you can access it but what I am saying is that
when I -
Damian Hockney (AM): I do it in other situations as a matter of course so why can’t you?
Manny Lewis (Chief Executive, LDA): Exactly the point I just want to finish with is when you
have been through the sort of level of scrutiny that this Agency has faced, on these detailed issues
about assurance and due diligence, then you have to bring the lessons that are learnt and then you
have to weigh up the balance between the amount of administrative procedure and assurance that
you then apply in a new regime versus a timetable to get things done and not placing too high a
hurdle that is unreasonable on community organisations and voluntary organisations.
Damian Hockney (AM): I agree, but have the information, surely?
Manny Lewis (Chief Executive, LDA): Absolutely, and one of the outcomes of the work that
Andrew is doing now is to help us set the bar as to what level of intelligence and information we
will now acquire before we make any project funding decisions.
Damian Hockney (AM): Finally, then, what that does not do for us is to give us any confidence
that the question that Dee asked has actually be worked upon, because the very thing that she
mentioned would probably not have happened had something at least been in place and it appears
not to be.
Manny Lewis (Chief Executive, LDA): No, my point is we would not operate a single tender
action in the way that operated with Diversity International. Now, I have described exactly why
we would not. Second, we would have both a Corporate Investment Panel process that would
review that project with all the experience of those directors and we would also have a thorough
due diligence process that would compare the credentials of that business with their track record
of delivery. The collective knowledge of all of that, with the data we have on our portfolio
director systems, would enable us to highlight if there had been a problem with that supplier in
the past. All those things are in place now.
Damian Hockney (AM): We hope so.
Brian Coleman (Deputy Chairman): Mrs Reilly, taking us back to that last time you appeared
and the question Mr Blackman referred to, I am looking at the transcript of that meeting and
when asked by the Chair whether you had involvement with the Mayor’s Office, or Mayoral
Advisers, you said, ‘I can categorically state I have spoken to none of them in this year at all, since
1 January. I have been away. I have not spoken to anyone. Nobody has put pressure on us,
nobody has discussed with me this meeting at all.’ Then on page 12 of the transcript, of course,
you then back track big time by telling us that, in fact, you had forgotten because you had met the
Sally Hamwee (Chair): I think the phrase is, ‘corrected herself’.
Brian Coleman (Deputy Chairman): You corrected yourself. In response to Mr Blackman you
said you had forgotten about your meeting with the Mayor. Is it an easy thing to forget about
Mary Reilly (Chair, LDA): It was a genuine mistake. I understood the question that the Chair
asked me to imply, did the Mayoral Advisers put any pressure on me, on us and on me personally,
to change the report. The answer to that was I had not discussed the report with Mayoral
Advisers and I genuinely forgot about the 10 January meeting, which was late in the evening and
lasted less than an hour. It is a genuine mistake, and I do apologise to the Assembly if I misled
them, but I did correct myself later.
Jennette Arnold (AM): Mary, I have a number of questions for you. Am I right to recall that
you were a Board Member before you became Chair?
Mary Reilly (Chair, LDA): That is correct, yes.
Jennette Arnold (AM): So, if I talk about the first administration, the 2000 to 2004 period, were
you there during this time?
Mary Reilly (Chair, LDA): I was.
Jennette Arnold (AM): Just to get a Board Member’s perspective on a number of things; were
you as Board Members quite clear, in terms of reports to you, that the contracts and the work of
the officers were meeting the objectives of the Board?
Mary Reilly (Chair, LDA): The Board did take the officers to task sometimes about the quality
of the reports that were delivered and, as with the current Board, were fairly ruthless in going
through those. Also you have to realise that as Board Members we received comfort from
numerous internal audit reports which looked at the processes, and from the external audit.
Throughout the life of the Agency, it has had external auditors from the Audit Commission, the
District Auditor as you call it here. If there had been, as is almost the implication, a colossal
failure in processes, they would not have been able to sign those accounts.
Jennette Arnold (AM): In fact you have answered the question I have put to you because I am
just trying to understand and take this to a little bit wider level of debate in terms of who else is
part of the scrutiny of the LDA. I have looked and I cannot find any record of the District Auditor
saying there are huge failures. There is this seeming tide of corruption at the LDA. I have looked
for that and I could not find that and so I just wanted to ask you again, as a Board Member from
2000 to 2004, when you received the reports from those outside bodies – I believe you are audited
by the Department as well – were there any indications there that you had an organisation that, if
you like, was starting to go rotten because of corruption or bad practice?
Mary Reilly (Chair, LDA): There was no indication whatsoever. We were heavily scrutinised. I
think, as a businessperson, I was quite shocked really by the level of scrutiny. As you say, we had
to report to the Department of Trade and Industry, to the GLA, we had the District Auditor
looking at us, external audit reports, all of which came to the Board and there was, without doubt,
no implication whatsoever that there was serious failure within the organisation. Two Assembly
Members were also on that Board, Len Duvall and Andrew Pelling, and I am sure if they thought
there were serious issues they would have brought that back to the Assembly.
Jennette Arnold (AM): Of course we have heard of the one black organisation in 2002 where
there were practices where Manny would say that those were unfortunate practices and you have
moved on. It is the black organisations that I want to talk about.
We hear from the Mayor about his total commitment. I am a member of his party and party to his
manifesto production, so I absolutely know about those commitments, but is this a commitment by
all regional development agencies (RDA) to deal with that sector of the business community that
has issues about the capacity development and issues of working with the main market? Is that a
part of all RDAs’ remits?
Mary Reilly (Chair, LDA): Yes, it is very much so. RDAs are there to foster economic
development in their regions and one of the ways that you foster economic development is to
make sure that those people who are in most disadvantaged communities, are partaking in that
prosperity because clearly, if you have disadvantaged communities who are not partaking in the
economic prosperity, that leads to law and order problems and it also leads to economic decline.
By its very nature, we are there to help disadvantaged communities and that, certainly, in the
early days, was done through a lot of intervention into those communities by people within those
communities. What we have done since then, in the current Board, very successfully we tendered
and we let the Business Link contract to Serco plc, which as you know, is a very large FTSE
company. We have asked them to work with the communities and to get to those businesses. I
think one of the things that I have learnt from this whole process is that actually – and I said this
last time – there are occasions when we do have to deliver projects through very small
organisations. I think that what we at the Board have learnt from that process is that we need to
give them some support as well because often they do not have the capacity. I think we have
recognised that now and that is something I have asked the Risk and Resources Committee to
look at; how we might do that, going forward. It would be wrong not to give some of the grant,
the project funding, to smaller organisations just because they are small; they may be the best
organisation on the ground to deliver.
Jennette Arnold (AM): I totally support that, and in fact this week I was at the LDA putting
those very points forward to your Chief Executive, and I hope that he will be following up some of
Mary Reilly (Chair, LDA): I think he has had a pincer movement from both of us; he is unlikely
Jennette Arnold (AM): Given what you have said, is it not reasonable that you then would
expect some failure within that area of activity? If you then do accept that failure, can you tell us
is the level of failure greater than the expectation or less than? We have heard about some
mitigation, so now as Chair of the LDA are you comfortable? Are you feeling assured that that
risk mitigation is as good as it can be now?
Mary Reilly (Chair, LDA): There are two types of measures there that one can use. About 10%
or 11% of new businesses in London fail, so I personally do not have a measure of how many
companies we have funded have failed. Manny might have that. The other thing is, in many
ways, organisations like us, as local authorities as well, can be victims of fraud. Clearly, police
investigations are under way and I do not wish to elaborate on that but benchmarks that I have
seen suggest that fraud levels could be as high as 10%. If all the allegations were founded, and I
am not making any implication that they are, then we are looking at less than 0.1%, so I would be
very pleased if that is the ratio, that we are doing better than most organisations.
Jennette Arnold (AM): I have one last quick question for you, Mary. My colleague, Len Duvall,
read out something this morning, which was absolutely shocking and that is a senior reporter,
when asked about the reporting around the issue of the Mayor and some of these projects said,
‘Well, it’s not the press’s business to be concerned about collateral damage to black businesses. It
doesn’t really matter to them.’ Does it matter you about the possible collateral damage that could
be done to black organisations both that you are working with and those organisations that need
to work with you, that somehow or other that might damage them coming forward?
Mary Reilly (Chair, LDA): Absolutely. It matters a lot to me and it matters a lot to people out
there. I have talked to friends and colleagues and they are horrified as well.
Jennette Arnold (AM): Can I say that businesses out there can hear from you as Chair of the
LDA, that you will remain committed to fulfilling the remit of the LDA that is to look at the
economic impact that all businesses make but then dealing with those particular instances where
those businesses need the support that the LDA should give them and will give them.
Mary Reilly (Chair, LDA): Absolutely, I give my commitment. It is one of my top personal
Jennette Arnold (AM): Chair, Manny had information to add about this level of risk which is
central to the whole issue we are talking about.
Manny Lewis (Chief Executive, LDA): Absolutely, just two bits of evidence very quickly. First,
in terms of all the supplies and delivery partners where we have undertaken some assessment of
their financial status through experience checks, for example, out of 3,900 of those suppliers and
partners that we have worked with, 170 from that database, this is just an illustration, have gone
into liquidation, which is about 4.3% which compares to the average rate of London business
failure and survival rates of London businesses of about 10%.
I am not saying that that is a good or bad benchmark. I am just saying, just as a bit of evidence,
that the failure level in the Agency projects is lower in comparison to that of London businesses in
general. The second thing I want to say about risk assurance is that we have just had, dated
January 2008, so I cannot be more up to date than this, our internal auditors’, Deloitte, draft
internal audit report on our risk management. Their conclusion is, and I will just read this
sentence, ‘Based on our discussions with key staff, it appears that much progress has been made
this past year in developing and implementing the necessary risk management framework and
associated tools and creating a risk aware culture. These processes will require time to bed in and
become an integrated part of project management.’ Their analysis is that much progress has been
made and that we have the right risk management framework and associated tools in place.
Jennette Arnold (AM): Manny, at the meeting with you this week I shared with you my
concerns and a criticism about the LDA, in that maybe some of this you have to own, because
what you have not been good at is communicating the work that you do in this area. If we are
talking about some 0.1% of the projects that you actually fund, we hear so little about the projects;
I can think of the amazing work that has been done with the Turkish community, Turkish banks,
to help their community; I know of work with wonderful entrepreneurs within the black
community, working with them to enable them; business women all over, from many ethnic
groups. These are not known about, yet you spend a lot of time promoting your big hits; your
super work on the Olympics and what have you. Why is it that we do not hear more from you, at
the LDA, about this work, which is absolutely, I would argue, as important as anything else that
Manny Lewis (Chief Executive, LDA): I completely agree it is as important. I think we do have
a strong promotion strategy and it is at a different level so, for example, a lot of the community
related work that we do we tend to push with the local, sub-regional newspapers because that is
where a lot of the interest is, in local community groups and local residents wanting to know what
is going on in the community. If you take great projects that we have supported delivery of like
the Stephen Lawrence Centre, like the Bernie Grant Centre, like Rich Mix, then we have said loud
and clear that we are proud of those and the role that we played in them. On the other hand, there
is always more that we can do. I know that Lurene Joseph, our Director for Communications
[Group Director, Communications and Marketing], is even now on the case in terms of how we
can communicate more strongly our commitment to community related projects. If we look at the
press releases now, that we issue, it is much more balanced in terms of great things we are doing
in the community.
Just as a final point, I was absolutely delighted with the support we had from Valerie Shawcross
[Assembly Member] on addressing the issues at Offley Works in enabling new community
groups to go in this week, without any disruption and without any problems, which will benefit
community groups and benefit Lambeth and Kennington. Straight away, one of the things we did
was that we put that out in the public domain saying we have intervened and we have had great
support from Val. So we are learning the lessons and there is more for us to do. I accept that.
Jennette Arnold (AM): You have not produced an absolute plan about the LDA’s commitment
and work with the black business community since about 2002. Given what Mary has said and
given the need now to reinforce the LDA’s commitment to this business sector, then I really do
think that you need to look to review that and produce something as soon as possible.
Manny Lewis (Chief Executive, LDA): I completely agree, and indeed in Andrew’s report he
recommends that we do that, because the one thing we do not want is damage done to the very
important delivery roles that these community organisations secure. They are closest to
communities; they represent a network of interests and knowledge that we cannot, as large
organisations, have. We have said we will review it. One of my instant reactions was to convene,
last week, the panel that you were a member of, in terms of better engagement with BAME
business and, indeed, only just recently had an exchange of correspondence with Murad
[Qureshi] about the Asian business sector, which, again, is about more lessons learnt. I think we
need to bring all this together and ensure that we are fit for purpose and even more committed to
Valerie Shawcross (AM): I think my colleague, Jennette Arnold, has expressed superbly well the
concerns that I would share on this and I am very happy with the replies that we have heard here
today. I was going to ask Manny if he would like just to put into the public record what the
arrangement is now for those good community organisations based in the Offley Works, but that
is something we can do in writing if you are short of time. I just want to say that also I feel
extremely strongly, as I know Jennette does.
Manny Lewis (Chief Executive, LDA): Offley Works is in the process of redevelopment. We
have already gone out for architects to design the mixed-use development there and we will
redevelop it with developers over the period through to about summer 2009. It had been occupied
up until last Friday, as you know, by Brixton Base. A genuine concern of the local authority, the
Mayor and Val, representing the constituency, was that that building was going to go to waste
and not being occupied further by community groups doing good things. On the other hand, we
were concerned about the costs of continuing to run the building. However, I am delighted to say
that we have brokered a solution in that there was a smooth process for the existing occupiers to
leave the building last Friday. That has been very well managed because it is a sensitive and high
All of the unauthorised occupiers have left the property and we have secured a new lease with two
organisations who are both not-for-profit, charitable organisations. One is called Code Seven Ltd
and the other is Starlight Music Academy who do some fantastic work around training and
employment support for the most disadvantaged communities around music and around the
creative sector. They have taken the head lease; they will then manage the sub-letting to other
good community organisations. We have been able to do that only applying peppercorn rent
because actually the costs of occupation help offset our security costs in mothballing. All in all it
is a win/win situation. I just wanted to say, again, thanks to Val for helping us broker that.
Valerie Shawcross (AM): Can I say thank you as well because the comments that were made
earlier on about the campaign of innuendo from the Evening Standard and the Conservative Party
and now, of course, the British National Party, actually there are not just have theoretical victims;
it potentially had some real victims there in -
Brian Coleman (Deputy Chairman): The taxpayers of London. They are the victims of this and
don’t you lot forget it.
Valerie Shawcross (AM): - very good community organisations with a good track record, with
church links, that do enormously positive work with children in need within my community, and I
actually think it was very brave of the LDA to see through all of that innuendo and actually to
step back onto the plate and respond to these organisations. So, thank you very much for that.
Sally Hamwee (Chair): Can I ask – it is hardly a final question in this saga, no doubt – a final
question for today. I do not think that we have heard from you about the timescale for the further
tranche of the review. I do not know whether you are able to help us as to how long you expect
that to take and when you expect to be able to report further?
Andrew Travers (Group Director, LDA): We have put in place the arrangements to take
forward the review and who is going to help us do that work in terms of legal and financial project
management advice. We are meeting together towards the end of next week to agree the scope
precisely. The scope precisely, to some extent, will define the timescale, so I am not able to
answer definitively, today but of course I can follow up and let you know when we do know how
that will work.
Sally Hamwee (Chair): Thank you for that. Thank you to the three of you.