Communities Secretary Eric Pickles has said he may send in inspectors to investigate a London borough.
Panorama has found that Lutfur Rahman, the Bangladeshi mayor of Tower Hamlets, has more than doubled funding recommended by officers for Bengali-run charities.
Opposition councillors say they believe the grants were made in return for electoral support.
Mr Rahman categorically denies the accusation.
In 2010, residents of Tower Hamlets voted in Britain's first directly elected Asian mayor.
Mr Rahman won as an independent with only 13% of registered voters.
Almost two-thirds of those who turned out to vote that day were from his own Bangladeshi community. [BBC] Read more