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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A second man arrested after the murder of a teenager near a boxing venue has been released on police bail.