The plight of Ethnic Mutual

Graffiti covers the external walls of Ethnic Mutual’s offices. Placed next to Deptford Junction DLR station, in a run-down area of South-East London, they have suffered the effects of the fraud accusations aimed at the London Development Authority (LDA).

Inside, there are cracked windows and Titus Boye-Thompson, a company trustee, is sat in his office. It looks more like a lounge, littered with family photos and an electric organ, rather than the workplace of a company that has an annual turnover of nearly half a million pounds.

Ethnic Mutual, a loans and finance company to minority businesses, is one of six companies currently under police investigation after allegations of fraud relating to Lee Jasper, a senior race advisor to the Mayor of London Ken Livingstone.

Boye-Thompson is livid with the LDA and the ongoing police investigation. He blames them for creating this mess by not using funds correctly.

He said: “The LDA thinks that retail is buying a can of coconut milk, cooking the can of coconut milk and selling a can of coconut milk but it is so much more complicated. You couldn’t just set up an African shop in Yorkshire. No-one would buy anything.

“Instead, we’re being put in a situation where we are led to believe that government funding plus black people equals corruption. That is simply not the case.”

His point is that funding for black, asian, minority and ethnic (BAME) businesses, especially retailers, can only suffer under new tighter scrutiny created by the most recent allegations, despite it being the area requiring most assistance.

London Assembly Labour member Jennette Arnold said: “The LDA plays a crucial role in sharing London's prosperity with those areas blighted by economic inactivity and despair.

“It works with projects in which the private sector will not get involved or where the market has failed. If there were a profit to be made, the private sector would be there.

“It is precisely because these projects are so difficult, complicated and not necessarily run by experienced businessmen, that the LDA is involved. It is also the reason why some of them have collapsed or failed and their books may not be up to scratch. Does this equate to corruption?”

Not all people agree. Dee Doocey, a Liberal Democrat assembly member accused the government of wasting public money. She said: “At least half a million pounds of taxpayers’ money has just been flushed down the toilet” while questioning Ken Livingstone at the recent City Hall meeting. She was very careful not to mention the ethnic background of a majority of the businesses under investigation.

Leading black organisation the 1990 trust said: “Where are equally vigorous critical examinations of other candidates and a balance of views, instead of a singular focus on London's black community organisations? Why has the media not been as quick to investigate the finances of LDA funded 'white' organisations? How many have folded or gone bankrupt. How many know or are 'associated' with other prominent figures?”

Ken Livingstone said the entire issue was a “racist smear on [Lee Jasper]”.

Ethnic Mutual is, according to a member of staff, ‘not operating’, but then Boye-Thompson quantified this as ‘not currently taking on new business’. It is only offering loans of up to £20,000 due to current financial limitations from problems with funding.

He was interrupted throughout the interview by phone calls regarding offloading property. The company, by his own admission, has been made impotent by the police, which seized all working files from the offices.

He is adamant that the police will find nothing, and is even more confused by the issue of Lee Jasper and the LDA. He said: “We have never received a penny from them. We received grants from the DTI (Department of Trade and Industry) but we are currently involved in a legal case with the LDA over arranging funding.” He believes that questioning the funding, directly led to police raiding Ethnic Mutual’s offices, then his home.

Much of the media and many politicians are calling for a shake-up in the way the Mayor’s office influences funding decisions. But if, as Jennette Arnold says above, the LDA is there to fund businesses that are not economically viable then fraud is not the problem.

Being unable to provide gleaming accounts does not make a company fraudulent, but it does make them incompetent. Applying for funding with a commercial venture that most likely will fail draws a similar conclusion. But these companies only form a small percentage of what the LDA does. Ken Livingstone quoted it as “less than one tenth of one per cent” but the danger is that all BAME enterprises will be treated differently because of it.

Jennette Arnold said: “For the black projects working at the frontline, the danger is that mud sticks. Nothing the police, the district auditor or anyone else says will satisfy those doing the throwing.

Until they find the smoking gun with the mayor's fingerprints on the handle, the mudslinging will continue and London's black community will be in the firing line.”