A MAN with convictions for theft and forgery was employed by the council to run an EU grant-aided project.

Former Sheriff of Nottingham Shaukat Khan was Waltham Forest's project leader on the trans-national Le Cheile Project. Police are investigating the use of £123,000 allocated to the borough by the fund.

The project was to help small businesses regenerate poor communities, but the council was removed from it when European partners became alarmed about how little there was to show for the money.

It has now been revealed that Mr Khan, who was responsible for financial record keeping on Le Cheile, had previous convictions for stealing nearly £10,000 from ethnic minority organisations.

In 1993 he was jailed for a year, of which he served six months, for seven counts of forgery and four of theft.

The council gave him a contract to run the Le Cheile project at the end of 1999.

Officers claim they did not know about Mr Khan's chequered past when they employed him but seem unable to explain why they did not remove him when they found out.

They admit seeing newspaper cuttings about his previous convictions but deny they were told at the interview about his past.

Mr Khan claims he was honest about his prison sentence when he applied for the post.

He says that he left his post voluntarily to take up another job when the project failed and the council offered to relocate him in the borough.

The council says it terminated his contract when the authority was asked to leave the project.

It has carried out an internal investigation and suggests the project failed due to poor organisation and failure to follow guidelines. There is no suggestion that Mr Khan or other officials took any of the money.

Four people are involved in an internal inquiry, including two still work at the council.

Mr Khan is now working at the Ilford Community Centre and has recently been involved in the £500,000 renovation of the Eton Road Community Centre in Ilford to work with Pakistani community groups.

A council spokesman said: "There are many concerns about what happened in this case. There are ongoing police inquiries and internal disciplinary procedures.

"We cannot give any further information until the outcome of the inquiries."