The police watchdog is to decide whether or not to investigate Boris Johnson for a potential criminal offence of misconduct in public office while he was London mayor.
It is alleged businesswoman Jennifer Arcuri received favourable treatment due to her friendship with Mr Johnson.
The prime minister was referred by the Greater London Authority on Friday.
Mr Johnson has denied any impropriety, while a government source described the referral as “politically motivated”.
The allegations regarding Mr Johnson’s friendship with technology entrepreneur Ms Arcuri first emerged last weekend in the Sunday Times.
They refer to claims that Ms Arcuri joined trade missions led by Mr Johnson when he was mayor of London and that her company received several thousand pounds in sponsorship grants.
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The Greater London Authority’s monitoring officer – whose job it is to monitor the conduct of the mayor and other members – said it had written to the police watchdog, the Independent Office for Police Conduct (IOPC).
It said it had referred the PM to the IOPC “so it can assess whether or not it is necessary to investigate the former mayor of London for the criminal offence of misconduct in public office”.
It added that it has recorded a “conduct matter” against Mr Johnson which happens when there is information that indicates that a criminal offence may have been committed.
But it does not mean that a criminal offence is proved in any way, the GLA’s monitoring officer added.
“The IOPC will now consider if it is necessary for the matter to be investigated.”
The reason the IOPC is involved is because the role of the mayor of London is also London’s police and crime commissioner.
The IOPC deals with complaints against police forces in England and Wales
In a letter to the PM setting out the referral, the monitoring officer says: “The conduct matter relates to your time as mayor of London between 2008 and 2016.
“During this time it has been brought to my attention that you maintained a friendship with Ms Jennifer Arcuri and as a result of that friendship allowed Ms Arcuri to participate in trade missions and receive sponsorship monies in circumstances when she and her companies could not have expected otherwise to receive those benefits.”
‘Politically motivated attack’
Responding to the referral, No 10 said: “The prime minister, as Mayor of London, did a huge amount of work when selling our capital city around the world, beating the drum for London and the UK.
“Everything was done with propriety and in the normal way.”
A senior government source said the timing of the referral, coming days before the start of the Conservative Party conference, was “overtly political” and “a politically motivated attack”.
“No evidence of any allegations has been provided by the monitoring officer nor was the PM given any opportunity to respond to the monitoring officer prior to the publishing of a press release late on a Friday night,” the source said.
“The public and media will rightly see through such a nakedly political put-up job.”
Shadow chancellor John McDonnell tweeted: “It’s important to note that this was a decision by the GLA monitoring officer, who is a completely, independent non political official.”
Arcuri’s foreign trips with Johnson
By the BBC’s Home Affairs correspondent Daniel Sandford
The BBC has now spoken to several people who went on the overseas “trade missions” with Boris Johnson to Malaysia and Singapore, to New York, and to Tel Aviv.
They said that Jennifer Arcuri seemed a bit out of place on the trips, as her companies were much less substantial than those of the other participants,
Jennifer Arcuri was originally turned down for the trip to Malaysia and Singapore, but then re-applied using a different company and was accepted.
She was told her companies were not relevant for the trip to New York, but she went under her own steam and was allowed into some of the events.
She was also turned down for the Tel Aviv trip, but Boris Johnson’s office intervened and she was allowed to join the trade mission. She paid for her own flight, and although the organisers of the trip, London & Partners, booked a hotel for her, she settled the bill.
Earlier this week, Mr Johnson denied any wrongdoing, telling the BBC’s John Pienaar: “All I can say is I am very proud of what we did as mayor of London… particularly banging the drum for our city and country around the world.”
He added: “I can tell you that absolutely everything was done entirely in the proper way.”
On Friday, Mr Johnson said he would comply with an order from the London Assembly to explain his links to Ms Arcuri.
However he added: “But on this particular matter, I think they are barking up the wrong tree.”
Separately, a junior minister, Matt Warman, has said the government has launched a “review” of the £100,000 award made in February this year to Ms Arcuri’s training company Hacker House.
But he insisted it had been an “open, transparent and competitive process”.