ANTI-FRAUD investigators are examining the circumstances which led to a lucrative contract being awarded to a consultancy firm.

The probe follows a complaint about the way it was commissioned and the quality of the research.

In September 2006, Dr Foster Intelligence was paid £47,000 from the Better Neighbourhood Initiative budget, allocated to help some of Waltham Forest's most disadvantaged residents.

The brief was to gather data on the health risks in deprived areas so that targeted action could be taken.

However, doubt has been thrown on whether council tendering guidelines, designed to ensure efficient and fair use of taxpayers' money, were followed.

In addition, the subsequent report, entitled Understanding the Health Needs of Waltham Forest's Neighbourhood Management Areas, contained "facts" which contradicted existing statistics and commonsense, it has been claimed.

The investigation by the council's internal auditors was launched after Nick Tiratsoo, a community activist, formally raised concerns about the integrity and transparency of the tendering process in August.

He said a promised thorough evaluation of the "innovative and therefore perilous" project appeared not to have taken place despite the Local Strategic Partnership Executive Board being led to believe it had been independently appraised.

He also said written quotes by three separate organisations were not secured before the contract was awarded, as required.

Mr Tiratsoo claimed the Dr Foster report contravened both the council ethics committee's code of conduct and what he believes "should be a consultant's routine duty of care responsibilities to its clients".

He said it was littered with vague assertions, inconsistencies and confusing terminology, and reached conclusions that were at odds with expert opinion.

A total of 80 out of the 207 postcodes listed in the report for the Cann Hall and Cathall areas were also found not to exist.

Despite writing directly to the council chief executive, Roger Taylor, and making requests under the Freedom of Information Act, Mr Tiratsoo says he is still waiting for an explanation.

Cllr Marie Pye, cabinet member for communities and housing, said: "We take our responsibility around the expenditure of public money very seriously and have stringent safeguards in place to ensure all contractors deliver what is expected of them.

"In this case there is an ongoing investigation and it would be inappropriate to comment further."

Consultancy firm Doctor Foster Intelligence says it stands by the findings of the controversial report.

However, a spokeswoman said a complaint from a member of the public has prompted a formal internal review, which is expected to conclude shortly.

On being asked whether the report provided value for money, she said: "We are not in a position to comment on local council or Primary Care Trust (PCT) funding and expenditure.

"It is up to the PCT and local council to determine how they spend their budgets and to assess value for money.

"The report was never published and was a private and confidential document, intended only for the client."