Councillors suspended in fraud inquiry

Mr Murshid denies any wrongdoing

A mayoral advisor and two other east London councillors have been suspended by the local Labour Party over fraud allegations.

Kumar Murshid and two other Tower Hamlets councillors are being investigated over allegations of fraudulent use of public funds.

The allegations relate to a company, Millennium Advanced Technology Training (MATT), which provides IT training for young people.

Police and the council are carrying out a separate investigation into the company, which receives hundreds of thousands of pounds from local, national and European grants.

Mr Murshid, chairman of the National Assembly against Racism, is a high-profile figure.

Last month he launched a Muslim coalition at City Hall and is an unpaid advisor to mayor Ken Livingstone.

He denies any wrongdoing and says he is outraged at the allegations.

He says he is the victim of 'political skullduggery' at a local level and says he will be seeking further legal advice.

"I have no involvement with this company, I have never had a business relationship with MATT," he told BBC London.

In a statement the Labour Party said the suspension was not a punitive act and did not imply guilt.

The council has also referred the matter to the Standards Board, which investigates allegations about councillors' conduct.

A MATT spokesman also denied any wrongdoing.