A4e managers ‘knew of possible fraud in 2009’

An internal audit of the Sheffield-based company’s 20 best performing recruiters found examples of claims being made for securing jobs for people despite the positions not existing, as well as other “potential” risks.

The report, which was leaked to the BBC, found 4 per cent of the claims examined were “potentially fraudulent” or included “irregular activity” and another 12 per cent were classified as containing “reputational” or other risks.

The draft document, from 2009, showed auditors were only certain A4e was entitled to the money the company claimed in 70 per cent of the cases.

The Department for Work and Pensions said last night it would be looking at the issues as part of its ongoing investigation into allegations of fraud involving the company, which is also facing a police investigation into previous allegations.

But it adds to pressure on the Government to suspend its contracts with A4e, which is one of five prime contractors to its flagship Work Programme.

Liam Byrne, the Shadow Work and Pensions Secretary, said: “The Government has now got a great deal of explaining to do.

“They must tell us immediately if they knew about this damning A4e report when they awarded the firm a huge £440m contract and if not, why not?

How on earth can a firm with these types of questions hanging over it be awarded such a massive contract?

“Two weeks ago DWP told us that if they discovered any evidence of systemic fraud at A4e they would terminate all contracts.

“Ministers must say urgently whether they have this report, whether it’s under investigation and if they shut the contract down, who will now be in charge of the critical task of getting people back to work?”

A4e was set up by Yorkshire entrepreneur Emma Harrison more than two decades ago to help redundant steel workers in Sheffield get back into work.

Ms Harrison stepped down as chairwoman last month, amid the police investigation and shortly after she quit her role as the Government’s Family Champion.

An A4e spokeswoman said the draft document related to an internal audit in early 2009 which “looked into a number of cases of potential risks”.

“As a result we made significant enhancements to all our systems, including the appointment of external auditors.

“To get this into its proper context, while this investigation uncovered a number of areas where procedures may have been lacking, the final audit and further investigation determined that five claims were irregular and related to one former employee.

“This was reported to the DWP Risk Assurance Division, which confirmed the action taken by A4e fully met their own audit requirements and that they considered the matter satisfactorily resolved.

“A4e repaid the value of these three claims in full, which totalled less than £5,000.”

A DWP spokesman said: “A 2009 A4e internal audit and risk document, relating to programmes contracted by the previous government, has today been passed to the department.

“The Work and Pensions Select Committee was made aware of this audit at the time and the department later received assurances from A4e that it had not uncovered any major issues.

“When an allegation of attempted fraud was recently made in relation to a current Mandatory Work Activity contract with A4e we immediately announced a formal investigation of that allegation. Alongside that, we announced we would commence a separate and independent audit of our current contractual relationship with the company. That process is ongoing.”