Labour has urged Boris Johnson to address claims he failed to declare a potential conflict of interest in how money was given to a US businesswoman while he was London mayor.
The Sunday Times said Jennifer Arcuri, an entrepreneur associated with Mr Johnson, joined trade missions he led and was given £126,000 in public money.
She told the paper this was part of her role as a legitimate businesswoman.
No 10 declined to comment. A government department says it is investigating.
Ms Acuri was quoted by the Sunday Times as saying: “Any grants received by my companies and any trade mission I joined were purely in respect of my role as a legitimate businesswoman.”
The BBC has contacted her for comment.
The newspaper says she moved back to the US in June 2018, but her latest company won a £100,000 grant intended for “English-based” businesses earlier this year.
The Sunday Times said it had found the registered address on the grant application form is a rented house in the UK and no longer connected to her.
The paper said the Department for Digital, Culture, Media and Sport was investigating the award of the grant after the newspaper’s inquiries.
The government has now confirmed to the BBC it is investigating. But it highlighted the funds were awarded to a UK-registered company.
A statement from the Department for Digital, Culture, Media and Sport said: “Funding for this scheme was awarded through open and fair competition.
“We regularly monitor grant initiatives and treat any allegations of impropriety with the utmost seriousness.”
The Sunday Times also claims one of Ms Arcuri’s businesses also received £10,000 in sponsorship money from a mayoral organisation when Mr Johnson was in office, and she received a £15,000 government grant for foreign entrepreneurs to build businesses in Britain.
Call for disclosure
Jon Trickett, shadow minister for the Cabinet Office, said Mr Johnson should provide full disclosure on the allegations.
“Boris Johnson must now give a full account of his actions in response to these grave and most serious allegations of the misuse use of public money in his former role as mayor of London,” Mr Trickett said in a statement.
“The public has a right to know how and why these funds were used for the benefit of a close personal friend without on the face of it legitimate reason.
“This cannot be swept under the carpet. It is a matter of the integrity of the man now leading our country, who appears to believe he can get away with anything.”
Mr Johnson was London mayor between 2008 and 2016.