'Whitewash' claim after £100,000 grant awarded to Boris Johnson's friend Jennifer Arcuri deemed 'appropriate'

A £100,000 grant awarded to a cyber-firm owned by Boris Johnson’s friend Jennifer Arcuri was “appropriate”, government officials have ruled – despite evidence it was being run from the US.

The award to the former model’s Hacker House company was investigated after criticism it was intended for businesses in the UK, yet she and her business partner had moved to California.

But Whitehall’s internal audit agency has decided that “documentary evidence supported the decision to allow the application to proceed”.

“In respect of the grant award to Hacker House Ltd, the assessment of eligibility and subsequent award of a reduced value of £100,000, is considered appropriate,” it concluded. The firm had applied for £273,000.

Tom Watson, Labour’s deputy leader, attacked the conclusions as “a complete whitewash”, saying: “No one reading Hacker House’s grant application would give the company a penny, let alone £100,000 of tax payers’ money.

“The fundamental question of why Hacker House was ever given this grant remains unanswered. The public deserve to know why their money was handled so irresponsibly. We will not let this lie.”

The verdict still leaves Mr Johnson facing a possible “misconduct” inquiry over his close relationship with the US tech entrepreneur, who was allowed to join trade missions when he was Mayor of London.

The Greater London Authority asked the Independent Office for Police Conduct to assess whether the prime minister should be formally investigated, to examine whether “a criminal offence” was committed.

The prime minister has insisted “everything was done entirely in the proper way” – while refusing to answer questions about whether he had a sexual relationship with the much-younger woman.

He was a regular visitor to Ms Arcuri's flat in East London, and attended numerous events promoting her fledgling company.

The department for digital, culture, media and sport investigated the £100,000 grant after it emerged that Hacker House was registered from an old rented flat in Macclesfield.

It was then reported that Ms Arcuri had relocated to the US before it was awarded, in January – and that the firm was then re-registered to a “virtual office”, in London, with no staff.

The five-page report does not address those issues in detail, but concludes of Hacker House: “It has a registered address in the United Kingdom, a Companies House registration number and is registered for VAT in the UK.”

It says the grant had to meet twin objectives of both successfully training candidates in cyber security and for the company to become “self-sustainable within 12 months”.

“The application by Hacker House Ltd met both requirements,” stated the government internal audit agency.

Ms Arcuri refused to say whether she had an affair with Mr Johnson, but insisted: “Never once did I ask him for a favour. Never once did he write a letter of recommendation for me.”