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Exclusive: Barclays To Fund Tech City Project

(c) Sky News 2012

A Government-backed technology project is to accept hundreds of thousands of pounds in funding from Barclays (LSE: BARC.L - news) in a move that could arouse controversy so soon after the emergence of multiple investigations into the British bank.

I have learned that Barclays, which is mired in controversy over its role in the manipulation of the interbank borrowing rate Libor, is to provide an anticipated six-figure sum to Tech City, a digital hub in east London launched by David Cameron in 2010.

The Government and other stakeholders in the project, who include Boris Johnson, the Mayor of London, will announce on Friday details of an initiative to provide affordable workspace for digital start-up companies. Another organisation called Central Working is also understood to be involved.

The announcement will be made as part of a series of trade promotion summits convened during the Olympic Games. Friday's event, which will focus on the information and communication technology sector, is also expected to include details of FinTech, a new project in which Mr Johnson's officials will attempt to fuse two of the engines of London's economy - technology and financial services.

The exact scale of Barclays’ financial backing for the workspace venture is unclear although it is likely to be a six-figure sum, people close to the bank tell me.

The bank's involvement comes weeks after it withdrew its backing from the Coalition’s Global Investment Conference, held the day before last week’s opening ceremony of the Olympic Games.

That decision was designed to avoid embarrassment for the Government following the sudden resignation of Bob Diamond, Barclays' chief executive, and other directors in the wake of its £290m Libor-rigging fine.

Since then, Barclays has announced the launch of an independent inquiry into its business practices and culture, and admitted that four of its past and former employees are the subject of a separate regulatory probe into issues related to its capital-raisings in 2008.

A Barclays spokesman declined to comment, saying that its involvement in Tech City was "for the Government to announce".