The co-founder of NI21 last night insisted: "I've done nothing wrong," as police launched an investigation into allegations of financial fraud in the party.

In a development which will shock the world of local politics, detectives swooped on the County Down home of John McCallister MLA yesterday morning.

They questioned him over allegations relating to the misuse of public funds.

The South Down MLA and a 41-year-old man have now been reported to the Public Prosecution Service. Authorities at Stormont have been informed by police of the probe into the financial dealings of NI21.

A number of items, including a computer, were seized by investigating officers.

Mr McCallister, who dramatically walked away from the party last year after a public falling-out with its leader Basil McCrea, said he was "shocked" by the developments and vowed to robustly defend any allegations against him.

"Yesterday morning I was contacted by the police who indicated that in the course of ongoing investigations, about other matters, statements had been taken," he said.

"These had raised some financial aspects from my difficult time in NI21. They were seeking to clarify my position and I was happy to deal with their queries immediately and voluntarily." The father-of-three added: "I wish to stress I have nothing to hide and deny there was any wrong-doing on my part.

"I look forward to the police concluding their investigations and this matter being quickly resolved."

PSNI Chief Superintendent Peter Farrar said police were investigating allegations of the misuse of public funds.

"The allegations relate to potential fraud and theft by a small number of individuals relating to money available under the Financial Assistance to Political Parties Fund," Mr Farrar said

He added: "Two men aged 43 and 41 were interviewed today and are to be reported to the Public Prosecution Service. A number of items have been seized as part of ongoing police inquiries. Authorities at the Assembly have been advised of the police investigation."

A statement issued from Mr McCrea on behalf of NI21 said that the party has been the "victim of criminal activity" and that no members were under investigation.

It said: “NI21 has been the victim of criminal activity which along with other related matters is being investigated by the appropriate authorities.

"The party welcomes these developments and wished to make clear that neither the party nor any of its members are under criminal investigation.

"As these investigations are on going it is not appropriate to comment further.”

Mr McCallister and his former friend Basil McCrea broke away from the Ulster Unionist Party to set up the opposition NI21.

However, on the eve of the election the party imploded following claims from a number of women of inappropriate sexual activity by Mr McCrea. An investigation by the Assembly's Standard Commissioner Douglas Bain into the allegations is continuing.

Mr McCrea has strenuously denied all allegations against him.

Mr McCallister, the party's then deputy leader, initiated an investigation by independent counselling group Carecall after hearing reports about Mr McCrea. He then left the party following a row with Mr McCrea over the party's handling of the allegations. Mr McCrea denies the allegations.

Since then Mr McCallister has been sitting in the Assembly as an independent unionist for South Down, where he lives with his wife and three young children.

Mr McCallister, a farmer, only entered politics in 2007 when he was elected to the Assembly as a member of the UUP.

Factfile

NI21 was founded in 2013 by ex-Ulster Unionist Party MLAs Basil McCrea and John McCallister.

The party went into meltdown after allegations of misconduct surfaced against Mr McCrea.

Tina McKenzie, the European parliamentary candidate and former chair, resigned from the party executive half-an-hour before voting ended on local government election day in 2014. She said the crisis made it "difficult for Basil McCrea and John McCallister to remain as leader and deputy leader of NI21", before leaving politics completely.

Belfast Telegraph