THE owners of London’s 2012 Olympic site in east London are preparing to bring in an investment bank to mediate over a bitter war of attrition that has broken out between them.

Westfield, an Australian company headed by Frank Lowy, the property magnate, has fallen out with the Reuben brothers over the development of a 180-acre site in Stratford.

Last Monday morning in a private meeting with the mayor of Newham, the London borough, involving all the development partners, a senior Westfield director said he was unable to work with the two brothers.

The third company involved, Stanhope, is so far believed to have kept its own counsel. One individual at the meeting described the atmopshere as “very tense”.

If the battle is not resolved it could delay development of the site, which will house part of the Olympic Village.

The row was inflamed last week by Ken Livingstone, the mayor of London, when he said he “wasn’t sure” how serious the billionaire property tycoons — who speak for 50% of the scheme — were about staying with the project.

He then praised Westfield, the Australian shopping centre giant, which has a 25% stake in the consortium called Stratford City Developments. However, the brothers have been supported by London & Continental Railways, which owns the land and has a development agreement with the three companies. Stephen Jordan, managing director of LCR’s Stations & Property division, said: “The Reuben brothers have been, and remain, stable and committed shareholders within LCR’s development partner. Why the Reubens should be singled out in this way is a mystery.”

The investment bank NM Rothschild has been attempting to mediate between the different site owners, but it has proved difficult. Now it has been approached to hold a “shoot out”. This would force the trio, who all have a pre-emption agreement to buy each other’s stakes, to sell to the highest bidder. One property entrepreneur with close knowledge of the argument compared the process to a divorce.

The brothers have been enraged by Livingstone’s comments and they are now prepared to buy out the interests of Westfield, which owns a 25% stake, and Stanhope, a private-property company headed by Sir Stuart Lipton, who owns the remaining 25%.

However Westfield, which is one of the world’s biggest shopping-mall owners, is also keen to buy out its partners.

At the moment, a 25% stake is worth anything up to £50m.

Total ownership of the site would give the eventual owner exposure to a £3.5 billion development, including 4,500 homes — 2,000 of which would initially be used by the Olympic Village — offices, hotels and a huge shopping centre.

Multiplex, the Australian company that has made huge losses building Wembley stadium, was the fourth member of the development consortium, but it is thought to have agreed to sell its interest to the Reubens.