THE man who uncovered widespread financial failings at the town hall has said the council leadership should "hang its head in shame" after evidence of fraud emerged at a collapsed charity with close ties to the authority.

Research by Nick Tiratsoo, a community worker of Odessa Road, Leytonstone, showed rules to prevent the fraudulent use of taxpayers' money were regularly ignored by officers between 2004 and 2009.

Despite an internal review which promised to tighten procedures a independent inquiry was later launched when further evidence of malpractice emerged.

This inquiry found spending data was so poorly maintained it was not possible to prove whether millions of pounds allocated to projects to help vulnerable residents had been spent effectively.

It also found senior officers were protected from action when evidence was found that contract rules had been broken.

Despite assurances that the council had solved the problems, Mr Tiratsoo said the latest revelations about O-Regen, which collapsed last year, show nothing appears to have changed.

He said: "After its spectacular mismanagement of regeneration funds between 2004 and 2009, Waltham Forest Council promised to turn over a new leaf, but three years later, history is repeating itself.

"O-Regen fails with four Worknet contracts, and what does the council do? Award it a fifth, this time worth over a million pounds.

"And when, to disguise its failures, O-Regen then apparently engages in ‘double counting’ (flipping staff and clients between projects, according to which monitoring officer is visiting), what does the council do? Almost nothing.

"The upshot is that young people in need of work experience and training get short changed. Waltham Forest’s Labour establishment should hang its head in shame."

Cllr Afzal Akram accused O-Regen bosses of providing fictional figures and questioned them on evidence of double counting during a meeting about the charity's poor performance in January last year.

He later pledged to provide them with details on funding for future projects and offers to act as a facilitator for sub-contractors.

Cllr Afzal Akram said: “The O-Regen contract that started in July 2010 was awarded after an open procurement process conducted in line with the council’s contract procurement rules. After the evaluation of submitted tenders O-Regen achieved the highest score on the assessment criteria and was therefore awarded the contract.

“The council has processes in place that not only identify issues with performance, but initiate measures that first reduce the contract, then terminate it if necessary – as happened in this case.

“It goes without saying that we are disappointed that the contract was not delivered successfully by O-Regen, but I am confident that not only did we follow proper procedures in awarding it, but that we monitored performance carefully and reacted appropriately to the situation as it developed.”