LONDON mayor Ken Livingstone has defended his insult against two Jewish billionaires in a new racism row.

Yesterday he slated David and Simon Reuben, the businessmen behind the massive Stratford City development in east London a key part of the 2012 Olympic facilities.

"Perhaps if they're not happy they can always go back (to Iran) and see if they can do better under the ayatollahs," Mr Livingstone said during a press conference at City Hall.

The Reuben brothers are not Iranian, but were born in India from Iraqi Jewish parents.

Mr Livingstone blames the two tycoons for delays at Stratford City, which could cost taxpayers up to £700 million.

Unaware

This morning the mayor told the London Assembly he was unaware of the brothers' faith and origin. "I don't wander around asking people's religion," he said.

Yet the only apology he offered was to the "people of Iran", for "any suggestion that they be linked in any way to the Reuben brothers".

The mayor claimed the magnates caused "serious deadlines" to be missed in planning applications for the £4.5 million development.

The Reubens has a 50% stake in the project, which includes plans for 4,500 homes, a huge shopping mall, 5 million sq ft office space and three schools. During the 2012 Olympics, it would form a large part of the athlete's village.

£700 million bill

Last year strife between the brothers and three other developers prompted the London Development Agency (LDA) to threaten them with a compulsory purchase order (CPO) for the site. That could have ended the entire scheme.

But an agreement was reached, allowing the LDA to take over the site if the work fell behind schedule.

Such a move would cost the taxpayer up to £700 million, Mr Livingstone said today.

"It is actually time that the wider public know there is a risk," he told the assembly.

"I don't care where (the Reubens) come from, what their religion is or what their names are. If they're threatening the progress of the Olympics and threatening the taxpayer with another £700 million, I'm going to be critical of them."

Nazi jibe

The latest controversy follows a three-man adjudication panel ruling that the mayor had been "unnecessarily insensitive and offensive" to a Jewish journalist.

At a party in February last year the mayor compared an Evening Standard reporter with a Nazi concentration camp guard.

The panel suspended the mayor for a month, but the High Court postponed the punishment while it hears his appeal.

London Assembly member Brian Coleman said Mr Livingstone's ayatollah jibe was his "latest anti-Semitic remark".

Suggesting that the Reubens, who are Jews, go to a radical Islamic regime in Iran was "shocking, outrageous and grossly offensive to the entire Jewish Community".

The brothers released a statement saying: "The Reuben brothers remain completely committed to the Stratford City project in its entirety as well as the Olympic opportunity.

"They are working extremely hard to deliver the development for the long-term benefit of London and Londoners. That is what they shall continue to do."

The other developers at Stratford City are Westfield, the Australian shopping centre specialists, and Stanhope, a private property company. The 25% stake of the fourth player, Multiplex, is thought to have been bought out by the Reubens.