TORY Communities Secretary Eric Pickles launched a dramatic power grab in London’s Tower Hamlets yesterday that will see an unelected team strip power from Mayor Lutfur Rahman.

The minister flexed his muscles after a £1 million report by accountancy firm PwC queried several transactions at the council — but failed to find any evidence of fraud.

Tower Hamlets had not followed “best value” procedure over a handful of property sales or properly justified the reason for several grants to community organisations, it said.

But the council, which now has 14 days to respond to Mr Pickles, said auditors had found no criminality.

“In our view there is no evidence that these flaws of process are ‘regular or endemic’, meaning that there is no failure to comply with our best value duty,” it said.

The council urged the minister to “act proportionately and to acknowledge the steps that we have already taken.”

But in the Commons yesterday Mr Pickles, who confirmed that locals in Tower Hamlets would be handed the bill for his probe, appeared set on the nuclear option.

Justifying a direct intervention that “goes against everything I really believe in,” Mr Pickles told MPs that PwC investigators had found a “worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration.”

Accusing Mr Rahman of acting like a “medieval king,” the Tory said he would dispatch a trio of unelected commissioners answerable only to himself.

They would decide on senior council officials’ recruitment and wield a veto over grant awards and property sales until 2017, he said.

Mr Rahman rejected Mr Pickles’s claims, saying the report had highlighted “flaws in processes — these are regrettable,” but had not substantiated “wild claims about fraud.”

The mayor vowed: “We will learn from this report and strengthen our procedures accordingly.”

Mr Rahman was re-elected in May after delivering progressive policies including thousands of affordable homes and free home care for the elderly.

But he has faced relentless attacks from mainstream parties on his record, including accusations of fraud and of favouritism towards the borough’s sizeable Bangladeshi community.
A police probe failed to find any evidence of illegality.