A senior council official has been suspended in the wake of an investigation into the mismanagement of millions of pounds.

The officer was suspended last month after a probe was launched into the use of funds under the Better Neighbourhood Initiative (BNI).

The official's position with the council places them in charge of a number of key departments and although the Guardian knows their identity, we have chosen not to name them at this stage in the investigation.

The Guardian also understands a second officer has consulted their staff association regarding a claim of harassment linked to the investigation.

BNI is financed through the Neighbourhood Renewal Fund (NRF) and previous audits have shown that laws to prevent fraud were routinely ignored and the spending of renewal funds was not properly administered or monitored.

The money was intended to benefit some of the borough’s most deprived areas but failings in the way it was being used were revealed as much as five years ago.

Council leader Clyde Loakes chaired the Local Strategic Partnership, which is responsible for keeping tabs on BNI/NRF spending, but has consistently denied responsibility, blaming officers for any wrongdoing.

EduAction, the private company formerly responsible for administering education in the borough, is also accused of using NRF cash to boost profits and a police investigation is ongoing.

The first fully independent inquiry into the failure to administer and monitor funds was launched in March when council chief executive Andrew Kilburn ordered the broadening of the investigation's scope.

Public sector heavyweights Sir Rodney Brooke CBE, former chair of the General Social Care Council, Lucy de Groot CBE, executive director of the Improvement and Development Agency, and Peter Rogers, chief executive of the London Development Agency, were brought in to spearhead it and they have appointed a team of independent investigators to ‘leave no stone unturned’.

A commitment has also been made to make the findings of the investigation public.

The council has so far neither confirmed nor denied any link between the officer’s suspension and the investigation.

A spokesman told the Guardian: “Any public discussion of a live investigation is likely to prejudice the fairness of that investigation and its outcome.

“This, coupled with the council’s duty of confidence to its employees, means we are unable to comment.”