Eric Pickles uses emergency powers to take over London council Eric Pickles says there is a 'culture of cronyism' at Tower Hamlets Council Council has faced accusations over mis-selling of assets and grant funding Communities Secretary will appoint three commissioners to the council Troubleshooters will report back to Mr Pickles every six months Report by PricewaterhouseCoopers found grants made to 'ineligible' groups Poplar Town Hall was sold for £875,000 to a supporter of council's mayor Eric Pickles said there is no place for 'rotten boroughs' as he used emergency powers to take control of a London council following a damning report into its finance and administration. The Communities Secretary said there was a 'culture of cronyism' at Tower Hamlets Council, which has faced accusations around the mis-selling of assets including Poplar Town Hall and claims about the allocation of £400,000 of grant funding. Mr Pickles also told MPs that 'executive power is unchecked and executive power has been misused' at the East London authority, and said he would be appointing three troubleshooters to the council, who will report directly to him. Damning: Eric Pickles (left) said there is no place for 'rotten boroughs' as he used emergency powers to take control of Tower Hamlets Council, where Lutfur Rahman (right) is mayor, following a damning report into its finance and administration He has written to the council seeking representations on his plans, which involve the three commissioners being appointed and reporting back every six months on an action plan to resolve the problems identified by PricewaterhouseCoopers (PwC). The report found grants were awarded to organisations 'ruled ineligible', and £407,700 given to groups that failed to meet the council's own minimum criteria, with council officers who objected often over-ruled. Grade II listed Poplar Town Hall was sold for £875,000 to one of the council's mayor Lutfur Rahman's political supporters, even though the bid had arrived late, and after rival bids, including a higher offer, had been opened, 'creating a risk of bid manipulation', according to the report. The report and action by Mr Pickles comes after claims that grants were awarded to Bangladeshi groups linked to supporters of Mr Rahman. Mr Rahman has also faced claims of fraud over the last 12 months and sparked a protest after he raised the Palestinian flag over the town hall "in solidarity with Gaza." The raising of the flag came in July, barely 24 hours after it emerged that he was to face trial over claims he committed widespread voting fraud. People were allegedly promised council houses if they backed him and Islamic voters were told they should be "good Muslims" and support him. His supporters were accused of doctoring ballot papers, manipulating postal voting and sabotaging the chances of his main rival, Labour candidate John Briggs, by branding him racist and anti-Islamic. Sold: Grade II listed Poplar Town Hall was sold for £875,000 to one of the council's mayor Lutfur Rahman's political supporters, even though the bid had arrived late, and after rival bids Mr Rahman was a member of the Tower Hamlets Labour Party and was its candidate to be the first directly elected mayor of the borough in 2010. But he was expelled from the Labour party after allegations surfaced about his close links with an Islamic extremist group called the Islamic Forum of Europe. He was accused of using illegal tactics to win the mayoral election in Tower Hamlets in May. But, in a statement released ahead of Mr Pickles' statement to MPs, independent Mr Rahman, said allegations of fraud had been rejected by the PwC report. However, Mr Pickles told MPs: ' (The report) paints a deeply concerning picture of obfuscation, denial, secrecy, the breakdown of democratic scrutiny and accountability, and a culture of cronyism risking the corrupt spending of public funds.' He added: 'I am satisfied the council is failing to comply with its best value duty, therefore I need to consider exercising my powers of intervention to secure compliance with the duty. I am writing to the council asking them to make representations, if they wish, both to the PwC report and to an intervention package I am proposing. This proposed package will need to do three things. Mr Pickles said this would include ending council activities not compatible with best value duties, remove the risk of any further failures and finally to rebuild governance and financial management at the council. He said a key problem was senior positions, head of paid service, the chief financial officer and the monitoring officer, being staffed only on an interim basis. Reply: In response to the report, Mr Rahman said it had not found evidence of fraud, and said the council would learn from the report and 'strengthen our procedures accordingly' 'My proposed intervention is centred on putting in place a team of three commissioners who will be appointed and be accountable to me,' said the Secretary of State. Their role will be to oversee or as appropriate exercise certain functions of the council ... I envisage commissioners will be in place until March 31, 2017. 'To help me assess the progress, I am proposing that within three months of launching the intervention the council will, with the commissioners, draw up and agree an action plan to secure the council's future compliance with best value duty. The commissioners will report to me on six monthly intervals on progress being made. On grants awarded by the council, Mr Pickles said: 'PwC found the mayoral administration grants programme handed out taxpayers' money with no apparent rationale to the grants awarded. 'There were no objectives, fair or transparent approach to grants, which a council's so-called corporate grants programme board was supposed to ensure. There was no proper monitoring - grants were systematically made without transparency. Officer evaluation was overruled. Across mainstream grants, 81 per cent of all officer recommendations were rejected. Over £400,000 was given to bodies which failed the minimum criteria to be awarded anything at all. Turning to land disposals, Mr Pickles also outlined how properties were sold to third parties 'without proper process'. Mr Pickles said the council had 14 days to make representations on the report and his proposed intervention package. Solution: Mr Pickles told MPs that 'executive power is unchecked and executive power has been misused' at the council, and said he would be appointing three troubleshooters to the council, who will report directly to him The report, he said, which cost just under £1 million would be borne by the council, adding: 'It would have been much cheaper had the mayoral administration had not been so obstructive.' There was no place for 'rotten boroughs' in 21st century Britain, Mr Pickles added. Mr Pickles said a copy of the report would be sent to the police for their information, he added: 'If I was the mayor of Tower Hamlets I would be holding my head in shame, because what he's allowed to occur in Tower Hamlets is shameful, not that I've made a final decision.' In response to the report, Mr Rahman said it had not found evidence of fraud. 'In April 2014, Eric Pickles announced that he was concerned about potential fraud and the Evening Standard ran these claims on its front page,' the mayor said in a statement released before Mr Pickles' remarks in the Commons,. These allegations have been rejected by PwC. The report highlights flaws in processes. These are regrettable. We will learn from this report and strengthen our procedures accordingly. I was always confident wild claims about fraud would not be substantiated. Both my officers and I want to get on with our jobs serving all residents in Tower Hamlets. A Tower Hamlets council spokeswoman, also speaking before Mr Pickles, said: 'We urge the Secretary of State to act proportionately and to acknowledge the steps we have already taken to tighten up processes as well as the high performing nature of the council's services.' During questions from MPs, shadow secretary of state for communities and local government Hilary Benn said Mr Pickles was 'clearly right' to exercise the powers granted to him under the Local Government Act 1999.