The Mayor and Our Money Panorama

This is Britain's first directly-elected Asian mayor. Last

year a Government minister accused him of divisive community politics.

Lutfur Rahman claims he stands for what he calls, One Tower Hamlets. It

is about giving a facility... Has the system given too much power to

one politician? We have a lot to thank him for. If he cannot do it,

he will tell you that. That is what you can ask of a politician. Tell me

the truth. Opponents say he's handed out favours to help him win the

upcoming mayoral election. It is untrue. It is untrue! Tonight,

Panorama investigates the most serious questions raised so far

about our system of directly-elected mayors.

The allegation allegations that Panorama rise are of a completely

different magnitude to worries and concerns that we have with other

councils. This is Tower Hamlets, in East

London. One of Britain's most ethnically-diverse boroughs. It has

some of London's most iconic landmarks too. And it is also home

to some of its poorest inhabitants. Tower Hamlets is perhaps the most

political borough in Britain. It has a long history of

bear-knuckle politics. -- bare-knuckle politics.

Thank you very much! Those who have done 12 rounds here tell me it has

rarely been more brutal than it is today.

Three-and-a-half years ago, the residents of Tower Hamlets voted for

their first directly-elected mayor. Lutfur Rahman, having polled 56% of

the vote... APPLAUSE

I will work for you - each and every member of Tower Hamlets.

Lutfur Rahman won with a fraction of the electorate, just 13% of

registered voters. Of the people that did turn out to

vote that day, nearly two-thirds were from his own Bangladeshi

community. Lutfur Rahman stood as an

independent. Vilified by opponents, his supporters saw him as a David

standing as against the goly yacht of his -- Goliath of his old party,

Labour. Four years on, it has shifted. The mayoral system is we

elect people who are accountable and visible to the community. This is

moving to a more Presidential system rather than a parliamentary one.

This is in order that we have strong visible leaders who can make

decisions and the public know who they are because they have directly

elected them. An early decision from Mayor Rahman

was the creation of a new logo for the new Office of Mayor. Of mayor.

He uses both his name and photo. He has even branded the council's bin

men. The mayor has already created an

image within the community that he's someone very powerful. He would like

to give the message that he's the most powerful man around. That's the

kind of image he wants, with his pictures around the borough. The

other side... I have a lot of questions for the mayor. First, he

insisted on shows me some of his achievements. He also lined up some

supporters, like Lillian Collins, who lobbied the mayor to renovate

these art deck co-swimming bars in Poplar. So, after eight years we got

this wonderful man here as our leader.

The mayor says he upholds the highest standards of problemty and

transparency. Like not using public money to promote himself beyond, of

course, explaining his policies. Like many mayors, Mayor Rahman funds

a news sheet from the public purse. Unlike any other mayor, his is

actually a weekly newspaper, as well as reporting the news, the mayor's

newspaper has made the news. No power exists to tackle its

political propaganda sheet. It is further evidence of a worrying

pattern of divisive community politics and miss management of

council staff and resources by the mayoral administration.

A recent council survey of council Hamlets' residents say they don't

think that East End Life is bias. Council newspapers are supposed to

reflect the make-up of the council as a whole. So, I have been through

every edition of East End Life over the past year. Even though

opposition parties outnumber the mayor and his party by more than two

to one, the mayor and his party still get 29 times more mentions.

The council's own new publicity code requires coverage to be fair and

balanced. I asked the mayor's former communications chief if he thought

the mayor abided by the code. Do you think, having 97.3% of

quotes, sharing them between him and his Cabinet, do you think that

amounts to political advertising? It sounds like it to me, yes. Because

if this newspaper is going through over 90,000 letter boxes every week,

that's the level of exposure that the mayor is getting, to me it is a

personality. Our Review Shows over that year, 97.3% of quotes were from

you and your Cabinet, does that strike you as balanced? It is a fair

and balanced paper. It has been around for the last 20 years. The

style and format has been the same style and format since I have been a

councillor, about 15 years ago. It is about to reporting on the

services we deliver. Is 97.3% fair and balanced? It is a fair paper,

reporting on the services of this council, what we deliver. Does it

amount to political advertising? Absolutely not.

From today, a new law on council publications will outlaw East End

Life from publishing in its current form.

It is partisan, it is there promoting not only the mayor but the

mayor's party. The mayor would say, look directly elected mayors were

elected to become the face of the council - the face of campaigns, so

you would expect a higher concentration of coverage on one

individual. And let him use his own money to do that. He shouldn't abuse

his position and use taxpayers' money for that and, with due process

and consideration, we may well be issuing instructions to the mayor to

stop. Mayor Rahman has an unorthodox relationship with some local TV

stations. One that is also unique among elected mayors. This is

Channel S. Passionate about exceeding expectations. It

broadcasts to the nearly 500,000 bang Bangladeshis who live in the

UK. It is influential among the 80,000-odd who live in Tower

Hamlets. Channel S is a powerful channel.

A lot of people 's opinions is it is bay yased to us, the mayor's team.

Under Mayor Rahman Tower Hamlets has given Channel S ?17,000 of public

money to sponsor programmes and events.

The mayor has also been made very welcome on Channel S. I am grateful.

You want to me me accountable to the people of Tower Hamlets. The channel

seems to have let the major promote himself.

What do you think of the clip you have just seen? I have never seen

anything like it before. It is just so partial, it is beyond belief. I

am trying to think what the broadcast equivalent of Vanity

publishing is. That is what we're talking about, isn't it? Let's go

for a break then! Since 2008 Channel S, who declined

to comment, has been found guilty of bias, in favour of Mayor Rahman by

Ofcom three times, including once when he last stood for election.

Mayor Rahman has paid the chief reporter of the channel which has

promoted him ?50,000 a year to be his community media adviser.

So, I asked the mayor, didn't that amount to a serious conflict of

interest? Mr Jubair does not report on any

issue of the mayoralty or any issue... That is not true. Ly, but I

think -- I will double-check, but I think that is not correct.

He denies reporting on the mayor. Yet here is the mayor's well-paid

adviser, reporting on his boss. What's more, the mayor sponsored the

event for ?5,000. And he also got a platform to

promote his administration. The investment that we are making in

Tower Hamlets clearly shows it has paid off. One of our young people, a

young woman, has won your educational achievement award.

Do you have any concept of how all of this close relationship with

Channel S appears to be? Channel S is a small regional, digital TV

station. We have a professional relationship... A cosy relationship.

Cosy relationship. It is a professional relationship, all the

local media. There is little scrutiny of the mayor in the

Bangladeshi community generally and what scrutiny there is risks being

treated with suspicion, as we discovered. In the course of making

this programme, we hired a train trainee Bengali journalist. Within

days she had copied some of our confidential material and handed it

to the mayor's office, presenting herself as a whistle-blower.

Apparently she felt our approach had been racist and by yasts. -- bay

yast. -- biased.

The mayor says his priority is to create harmony across tower Tower

Hamlets' diverse faiths. He calls this One Tower Hamlets. He is

especially proud of building new homes and improving etat estates

like this one. There had not been work done before you became leader?

Not at all. Even some critics agree with supporters like Brenda Daley

that he has a good record on housing. Now you come in, it is

open, it is green and it is lovely. And you know, I love living here,

basically. We have a lot to thank him for. We really do. So he has

your vote? Yes. He has my vote. If someone promises you something and

they deliver, then you think, you know, if he cannot do it he would

tell you that. That is all you can ask from a politician, don't tell me

lies, tell me the truth. It may be One Tower Hamlets - however his

Cabinet and advisers, none of whom were available for interview, are

all Bangladeshi, as were nearly two-thirds of the voters on the day

he was elected. Even though the borough is only one-third

Bangladeshi. To win next May, the mayor is

expected to need a high Bangladeshi turnout once again.

This has led to accusations that for all his talk of one One Tower

Hamlets, some of his policies are divisive.

Mayor Rahman has become the first and only mayor to fund faith

directly from local taxes. He's set up a ?3m fund to preserve what he

calls faith heritage. He says he was inspired by a visit to this

synagogue. It's a wonderful building, beautiful architecture.

But see the way the rain is seeping in. The walls are cracking. I

believe it needs us to protect it, and protect the heritage and history

of a very important part of our borough.

However, so far, most of the applicants for the mayor's faith

fund have been mosques. When Labour ran Tower Hamlets, religious groups

were given public funds to provide social services. But Mayor Rahman's

faith grant scheme comes with no such strings attached.

Although it's been popular with faith groups, a number of local

Muslims told me it was potentially divisive. Only one was prepared to

voice his opposition publicly. Faith divides people. I mean, we are

living in a multiculture society. If I am a strong believer of a

particular faith, I have to have a different opinion about a particular

opinion about if you are belonging in a different faith. Faith should

be kept within yourself, and I don't believe that it basically unites

people, rather it divides people. The mayor says his faith grant helps

build community cohesion. Does it? This is the Esha'atul Mosque. So far

the mayor has given them ?25,000. Last December the mosque gave a

platform to a senior Saudi imam, even though, when interviewed, he

doesn't seem to have a clue about community cohesion.

Sheikh Al-Kalbani has previously been a guest of the mayor. Amid

press criticism of his return visit last December, the Home Secretary

cancelled his visa. My question is, how does inviting a

cleric with those views contribute to community cohesion? I condemn any

discrimination based on race, religion, gender. I'm sure you do.

So why give them any money? So why give them any money? If anyone

breaks the law, I will condemn them, if you have any... It's not

necessarily a breach of the law, it's a question of values. If you

have any evidence that someone in my community have broken the law, Mr

Ware, Mr Ware, forward it onto my monitoring officer. That's not my

question, you know it's not my question.

Tower Hamlets is one of the most deprived boroughs in the country.

Many residents depend on council funded charities.

This community association, which is also a mosque, has been given nearly

?100,000 by the mayor to run a lunch club, advice service and homework

and sewing classes. In the run-up to the election, the

mayor had good news for hundreds of charities in Tower Hamlets. He said

he wanted to fund many more of them from the mayoral-grant pot. And by

our calculation he increased that pot to a record ?14m. However, the

opposition were sceptical. We now return to members' questions. Next

question is from Councillor Rachael Saunders. Is there any link between

mayor's funding to new organisations in the borough and the mayor's

campaign? I have a very short and simple answer. There is nothing

improper about what we do. That's the bottom line, there is nothing

improper. Alibor Choudhury is one of 14 councillors in the mayor's new

party, Tower Hamlets First. Despite emphatic denials, the opposition

still believe there was something improper about the way the mayor

exercised his personal power over grants.

I am pretty sure there is some quid pro quo in some of those grants

decisions being made. I am pretty sure that part of that quid pro quo

is about supporting the mayor politically on the ground in the

run-up to the election. Because he doesn't have a political machine and

he needs organisations out there making sure the electorate turns out

to vote for him. Suspicion that electoral advantage

was the mayor's motive has been fanned by opposition claims about

the process he used to award the grants. If the mayor's selection of

which groups to fund was based on who he thought would get the vote

out for him, well, that would be unlawful.

Because the mayor insists he upholds the highest standards of probity and

transparency, we approached the financial standard setters for local

government. It's very important that the process

isn't behind closed doors. When it's behind closed doors, it calls into

question whether or not that process is being properly followed and

whether or not the decisions are being soundly made. So up and down

the land, you will see councils very keen to ensure that their decision

making in this regard, in these areas, is very much in public.

And that's the way it was until the mayor took his grants process mostly

behind closed doors. We've had access to confidential council

paperwork relating to nearly ?9m worth of grants he approved. What

they show is how officers tried to do what the mayor wanted to help

some of the neediest in the borough. What they also show is the sheer

scale of how the mayor rejected this advice.

You're determining who will execute your policies best and after a

rigorous process you come to a set of recommendations. But the mayor

didn't like most of his officers' recommendations, so he redistributed

nearly ?6m between hundreds of his chosen projects. More than half

these changes were because the mayor funded projects which officers

hadn't recommended, or because he rejected projects which they had.

I don't know the specifics of a case. Of course, it will change a

bit, that's why we elect people, in order to make final decisions on

behalf of the community, spending public money. But it's very unusual

for that degree of material change to take place.

Inside Tower Hamlets, a council lawyer warned that the authority was

vulnerable to legal challenge. The man representing Tower Hamlets

charities also complained there was no explanation for the scale of

changes. Khadiru Mahdi is chief executive of Tower Hamlets Council

for Voluntary Service. As the one outsider given access by the mayor

to the otherwise secret process, he was intended to be the eyes and ears

of the charity sector. Yet in this confidential memo, he said that he

was being kept in the dark. The information fell short of what

was required. I have not been privy to the detailed review. It's in the

best interests of the council for the process to be fair and

transparent. A fair and transparent process means

providing detailed explanations when major funding changes are made. And

yet the only explanation given for hundreds of changes amounting to ?6m

is contained in just a few words - that local knowledge was applied and

that it was known where money needed to be redistributed.

Rebel I'd expect a detailed explanation in the audit trail of

why decisions had been made. Not just the odd sentence? No, no, you

expect detailed explanation of why decisions have been made. And if

there isn't an explanation. Then the decisions are challengeable. You

mean in the courts, judicially reviewable. Yes.

Our analysis covers 362 grants worth nearly ?9m approved by the mayor.

The biggest winners by far have been charities run by Bengali or Somali

trustees. Officers had originally recommended that these groups should

receive ?1.5 million. Mayor Rahman increased that by nearly two and a

half times to ?3.6m. To pay for it, he dipped into the council's

reserves, and he cut what was left for everyone else by 25% overall.

The last mayoral election had a high Bengali turnout. So if the mayor was

using grants to build up his voter base, it would make sense to push

the money towards organisations who'd help him get elected.

? You've more than doubled the grant

officers recommended to Bangladeshi and Somali organisations. Right,

right. And you've cut everyone else's or many others' to help pay

for it. And that's why the opposition say that this is as much

about electoral advantage as it may be about need. What do you say to

that? OK. Listen, it went through a vigorous process, Mr Ware. So the

allegation that's made by your... It's untrue, it's absolutely untrue.

But can I just say, my principle has all along been that we will

distribute the money to as many organisations as possible? Because

they benefit the community of Tower Hamlets, Mr Ware. The maths show

that you made very significant changes to officer recommendations.

There isn't an adequate explanation for the changes that you made. In

fact, the only reason given really is that local knowledge is applied.

Sure. Why is there no adequate audit trail? Oh, there is adequate audit

trail, Mr Ware, your informants, your researchers just give you

selected information. No, I've read all the papers. Or you choose to,

you choose... You choose to air selected information.

Directly elected mayors have more personal power than ordinary council

leaders. In return, they're expected to be personally accountable.

The mayor is asked many questions at council and the response is always

the same, total silence. We were frustrated to find that the mayor

was we were told by the legal officer

that not only was he not subject to the constitution but it would be

against his human rights to answer. Against the human rights of an

elected mayor? It would be against his human rights to force him to

answer questions from members of the public and from elected

representatives in a public council meeting.

Trying to hold the mayor to account has become a familiar battle in full

council meetings. Look, it is not about being a Bengali mayor or an

Asian mayor or black mayor. It's nothing to do with that. It is about

decisions you make on behalf of the residents. If you are divisive, if

you make decisions on grants, I want to see much more accountability,

transparency from the mayor. The one committee where all decision

makers are expected to be held to account is called overview and

scrutiny, or O And yet in the last year, Mayor Rahman is the only

one out of all England's 15 directly elected mayors not to have answered

questions at O or full council. Can I just say my disappointment

again, Mayor Rahman, for your nonattendance and again on the

eighth occasion that you have declined to attend the overview and

scrutiny committee? Since then, it's gone up to ten. By our count, there

have been of the order of ten requests to the mayor. He has not

presented himself. Is that unusual in your view? That's virtually

unprecedented. And I'd be very interested in understanding why an

important part of the local government settlement having

scrutiny is not happening. Why haven't you been prepared to

turn up and answer questions about the grants? Mr Ware, let me answer,

please, yeah? Three grants panel, four cabinet meetings, two O

meetings about the grants, a vigorous process after which I made

the final decision. But you didn't answer any questions. So what was

two overview-and-scrutiny committees? My executive members

attended answered each and every question and gave a proper answer.

They didn't, actually. They did. No, they didn't. No, that is your

interpretation. The 17th of December, no-one turned up, you said

you had other business. Mr Ware, Mr Ware... That's a fact. It's in the

record. We took a summary of our research to

the man ultimately responsible for the ethical framework of local

government. I will look at it very carefully, and if I feel the

allegations that you made are substantial and serious, I will

actively consider intervening. In what way? Well, I have powers to put

in an inspector to look at the way that the council's been run.

This is International Language Day, Tower Hamlets' annual celebration of

diversity. This annual occasion gives us the

opportunity to celebrate our cultural differences. We are a

microcosm of what this country is today.

In two months, the electorate will decide the difference between the

mayor and his political opponents. He has accused Panorama of becoming

their mouthpiece, a portent of just how visceral this contests is set to

be.