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The E11 Business Improvement District Company is over £40,000 in debt
Waltham Forest Council has been dragged into a dispute over the finances of a business improvement company.
The E11 Business Improvement District (BID) Company, which collects a levy from around 300 companies in Leytonstone and also receives public funds, is over £40,000 in debt and faces an uncertain future.
But evidence has emerged of financial mismanagement and the Guardian understands a criminal complaint has been made relating to the company's finances.
Waltham Forest police have launched a fraud investigation.
But E11 BID managing director, Fawaad Shaikh, claims the debt has accumulated because the council has acted improperly.
“Billing didn’t start as legally obliged on the first of January,” he said.
“I was instructed last week by British BID that the council has acted improperly in not billing businesses.”
He claims the BID’s running costs put the company in debt and if the council had collected this year’s levy all debt would be cleared.
At a meeting on Wednesday council officers said the authority had ceased collecting the levy because it would be irresponsible to do so due to evidence of financial mismanagement.
They said they fear the money would be used to pay debts rather than provide mandated services.
However, it has been revealed in a series of audit reports from the financial years 2010 and 2011, which have been seen by the Guardian, that debts had accumulated as a result of a failure to pass on national insurance and PAYE employee payments to Revenue & Customs.
Some business owners blame Mr Sheikh and the board, claiming the BID has been run irresponsibly, prompting the resignation of three board members.
The deputy leader of the council, Clyde Loakes, was an E11Bid Company board member between November 2010 and August 2011.
Former director Shah Ahmed, who runs the Star of India restaurant in Leytonstone High Road, said: “My opinion, and the opinion of the directors that have resigned recently, that information has been witheld from directors.”
He added that the council was supposed to receive an audit report from the BID every year, but that it had never done so.
“The idea of the BID is brilliant,” he said.
“This is a unique opportunity of raising money and putting it back into the community. The problem is the management.”
The council has been approached for comment.
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