A SENIOR council officer, Bob Bennett, has been suspended while an internal investigation is carried out into the efficiency of management of the Le Cheile project.

A separate police inquiry is investigating the use of £123,000 allocated to the borough by the European Union project, which was meant to help regenerate poor communities in the borough.

Waltham Forest Council was asked to leave the project by other European partners because of concern that there was too little to show for the borough's part in the scheme.

It is believed that Mr Bennett, who is head of planning and development services, was aware from early on that the man chosen to co-ordinate Le Cheile locally Shaukat Khan had previous convictions for theft and forgery, as reported in last week's Guardian.

Mr Bennett is understood to have referred the matter to the personnel department and was told that Mr Khan, a former Sheriff of Nottingham, could be employed on the trans-national project.

It was the ultimate responsibility of Mr Bennett to make sure the project ran smoothly. It is normal procedure to suspend an officer while such an investigation is carried out.

Mr Khan, a former Nottingham Labour councillor, was jailed in 1993 for a year of which he served six months for seven counts of forgery and four of theft.

The 51-year-old father of four was convicted of stealing nearly £10,000 from ethnic minority organisations in the East Midlands.

After his contract with Waltham Forest Council was terminated earlier this year, Mr Khan became a project manager at the Eton Road Community Centre in Ilford, which has just received a £150,000 Home Office grant for Pakistani community schemes. He resigned this week.

Bashir Chaudry, the founder of the centre, said he was unaware of Mr Khan's past.

"I am more than a bit worried. He never mentioned this," he said.

Mr Khan, speaking about the failed Le Cheile project, told the Guardian: "The partners decided Waltham Forest was to be excluded and there was no more money coming in, so they could not keep me on."

About his prison sentence, he said: "It was a technical matter. I was filling in funding forms for people. We often help people do that. I was made an example of."

Mr Khan had previously worked in Waltham Forest from 1978 to 1983 and has also worked with the Indian and Asian Young People's Research Unit.

He returned to the area in about 1997 after his time in Nottingham to work at the London East Asian Business Centre.

A council spokesman said: "When the current council management began to investigate the reasons for the failure of the project, a number of management issues came to light that are the subject of current disciplinary procedures.

"As soon as the investigations have been concluded, a report will be prepared for cabinet. This is likely to be early in the New Year. The council is not in any position to make any comments about specific allegations before them."