Civil servants slammed over Bradford free school fraud probe

Margaret Hodge MP questioned why civil servants did not pass on evidence to the police after it discovered invoices had been fabricated by the Kings Science Academy in Bradford.

She said it was stupid for the Government to have only taken action after the matter was leaked and broadcast on Newsnight.

The allegations were discovered during an Department for Education internal audit investigation report in May last year but a police investigation was not launched until the end of October after the report was leaked.

The DfE did not provide its investigation report or the actual invoices when it first reported the matter to Action Fraud - a national fraud reporting centre - with a phonecall on April 25.

Action Fraud wrongly classified the call as being for information only which meant a criminal investigation did not take place for several months. West Yorkshire Police is now investigating.

Yesterday at the Public Accounts Committee hearing into free schools Mrs Hodge demanded answers over the DfE’s actions.

She warned Peter Lauener, the chief executive of the Education Funding Agency, that he had a duty to ensure that potentially fraudulent invoices were pursued.

Mr Lauener had told the committee that the DfE gave information about the suspected fraud in a phonecall to Action Fraud

He said: “We didn’t send the report to the fraud authorities, we used the system that was established, a bit of the fraud system called Action Fraud and we notified them in the way we were asked to notify them and gave them all the information about the details of the fraud.”

Mrs Hodge repeatedly asked if the department provided Action Fraud with the potentially fraudulent invoices.

Mr Lauener said: “We didn’t give them the documentary evidence because we were making the notification and we would have expected that then would have been followed up.

Mrs Hodge replied: “And when it wasn’t why didn’t you do anything about it? In the first instance if you didn’t give then the evidence then they would come back and say we are noting this, which is what they did so I can’t understand why you didn’t give them the evidence in the first instance.”

She added: “You shouldn’t have had to wait for public disclosure for everybody to act.”

Mr Lauener said that before the Newsnight programme was broadcast the DfE had contacted Action Fraud to check whether they were pursuing and were told they were not.

He accepted that the outcome was not “wholly satisfactory” but said this was because Action Fraud had made the “incorrect adjudication” in classing the matter as an information report.

He also highlighted the fact that Action Fraud had apologised to the DfE for this mistake.

Mr Lauener told the committee that the DfE had taken steps to improve governance at the school and that its most recent accounts had been submitted on time and were unqualified by the school’s auditors.

Last week the school’s principal Sajid Raza was arrested and bailed pending further enquiries as part of the West Yorkshire Police’s investigation into alleged fraud at the school.