UK - The assembly that oversees London mayor Boris Johnson has demanded an investigation into potential breaches in pensions regulations by one of its arm's-length companies.

Visit London, a tourism agency funded by the municipal government, filed for bankruptcy earlier this month, in the process dumping its £2.2m pension liabilities on the Pension Protection Fund, a government scheme funded by private sector employers.

A new company, London & Partners, has taken over the bankrupt company's role, 39 members of its staff and some of its assets.

The controversy centres on whether it is in effect the same company without the pension liabilities - which would put it in breach of pensions regulations.

A spokesman for the mayor's office today described as "inaccurate" a report in this morning's Financial Times that claimed the mayor had been responsible for winding up the company.

"It was a commercial decision any company might take," he told IPE. "The staff members who have moved across become members of [the new company's] pension scheme."

Despite the spokesman's protestations that the mayor had nothing to do with the decision - though his office is represented on the board - the new company will receive a four-year grant from the London Development Authority, which previously funded Visit London.

Asked whether he believed the funding should be withdrawn if the pensions regulator found irregularities, the spokesman said: "We'll have to wait and see."

London & Partners admitted it had rejected a deal that would have made it take on Visit London's pension scheme, but denied responsibility for the bankrupt firm's pension liabilities.

In a statement, it said: "London & Partners is an independent, private sector led company. It takes its own decisions."

The pensions regulator is understood to have launched an investigation into the case following discussions with British Tourist Board pension fund trustees.

However, spokeswoman Ruth Hallam said the UK pensions regulator was unable to comment on its own investigations.

Len Duvall, chair of economic development, culture, sport and tourism committee of the Greater London Assembly, has written to the mayor demanding clarification on the risks to the accrued pension rights of the 39 former staff members, whether those risks were taken into consideration when the decision was made to wind up Visit London, and who was present at the meeting that took the decision over pensions arrangements for transferred staff.

Today he told IPE: "This is not a decision that could have been taken by the new company alone. It all leads back to the mayor, and he can't walk away saying, 'It's nothing to do with me, gov'.
"It's wrong that any body funded by the public sector could behave in this way. It leaves a nasty taste."