The chief executive of the Greater London Authority is re-examining complaints about a mayoral adviser's role in the distribution of grants.
The Tories are calling for Lee Jasper to be suspended
A complaint about Lee Jasper, the mayor's head of equalities and policing, has been made by the London Assembly Conservatives.
They want to know what has happened to £510,000 given to south London's Brixton Base project.
Mr Jasper has described the allegations as politically motivated.
The inquiry concerns money paid by the London Development Agency (LDA) - the mayor's business arm - to Brixton Base, which is run by Errol Walters, a friend and close associate of Mr Jasper.
Brixton Base received £280,000 from the LDA to pay rent, even though the LDA is the landlord, effectively money going back to the LDA. It also received £230,000 to stage three short courses in arts.
Richard Barnes, Conservative Group leader on the London Assembly, said: "This raises very serious issues about Lee Jasper's conduct and his fitness to hold the office of Mayor's Director of Equalities and Policing.
"And, given that there are allegations of intimidation surrounding these projects, it is imperative that Lee Jasper is suspended to ensure no interference with the investigation."
In a statement Mr Jasper said: "This is a purely politically motivated attack, and it is also an attack on black organisations.
"I am not going to be deterred from championing race equality for all Londoners in the way I have been for many decades."
London Mayor Ken Livingstone told BBC London: "Of course Lee Jasper was involved, he is the principal race relations adviser to the mayor.
"We have a complete audit trail of all these organisations."
The Greater London Authority's chief-executive Anthony Mayer said: "Richard Barnes in April 2007 raised issues in regard to Lee Jasper. I formally investigated these and exonerated Lee Jasper in July 2007.
"Richard Barnes wrote to me again on 25 October querying the results of my investigation and I naturally agreed to look into the issues he raised
"This however does not constitute a formal investigation."
Brixton Base is decribed as a creative hub for the black community giving people the opportunity to train in areas such as cinema and radio.