West Midland MEP Nikki Sinclaire announced she would be referring Coventry City Council to the EU's anti-fraud department during a speech at the European Parliament in Strasbourg.
She claims there are "discrepancies" in the way the council used Regional Development Fund cash, compared to what the European Commission believed it would be used for.
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The crash which happened last year, left two teenagers needing leg amputations and several other passengers seriously hurt.
But the Home Secretary has pledged support for an application to the Legal Aid Agency to fund legal representation at the inquests.
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