AUDITORS have called for an investigation into a £102,000 contract awarded by a group set up to distribute European funding to county fishing projects.

The Fisheries Local Action Group (FLAG) was established with a pot of £221, 226 – half of which came from the European Fisheries Fund, with the rest from East Lothian Council.

The group, which until this year was administered by the council, identified community projects in Cockenzie and Port Seton, Dunbar and North Berwick.

However at a meeting of the council’s audit and governance committee, it was revealed that concerns had been raised about a contract which had been awarded by the group “in excess of £90,000”.

Mala Garden, council internal audit manager, said the incident had been flagged up as a high risk act by the group, as their books were examined.

She said: “In one case the applicant (FLAG) had awarded work to a contractor; however, there was no evidence on file to confirm that the contractor had submitted a tender. The project costs were in excess of £90,000.”

Members of the committee asked if there had been other contractors bidding for the cash or if it had been an emergency decision, and appeared shocked when Ms Garden confirmed: “There were tenders received in this case but we did not find a tender for the contractor who received the award.”

She added: “It is being followed up by economic development.”

The audit revealed other concerns including missing bank statements and said there had been a lack of segregation of duties, adding “the checking and approval of grant claims had been undertaken by the same officer”.

Councillors John Williamson and John Caldwell, both from Musselburgh wards, raised their own concerns at the decision by the group – which was set up to fund local communities affected by a decline in fishing activities – not to include Fisherrow in its communities.

Mr Caldwell said: “Musselburgh was one of the biggest fishing communities at one time and is now down to one boat. It is strange it was not included."

The committee was told the 2015-2020 FLAG programme would not be administered by the council but was recommended to address the weaknesses identified in the audit to satisfy its obligations.

A council spokesperson confirmed the contract for a project costing £102,221 was granted by FLAG, which paid 75 per cent of the cost – £76,665.

They said: “Our review of FLAG highlighted that there was no evidence on file to confirm that the contractor who undertook the work had submitted a quote. The council’s economic development section have requested further information from the applicant."