New Fraud Investigation Into Work Firm A4e

The Government has launched an investigation into an allegation of attempted fraud against the welfare to work company A4e.

The Department of Work and Pensions (DWP) has started its own audit after being told of the claim, which relates to a Mandatory Work Activity contract with the firm.

A4e, a private company paid millions by the taxpayer to get the jobless back to work, is already facing a police investigation in relation to previous allegations.

The Department said in a statement: "As a result of this new allegation, DWP has immediately commenced its own independent audit of all our commercial relationships with A4e.

"We have required A4e to make available all documentation which our auditors may require and provide full access to interview any A4e employees. This is separate from the independent review of internal controls which A4e has previously announced."

A4e's chief executive was told about the probe at a meeting with a senior DWP official earlier on Friday where the company was warned about the potential consequences.

"If, at any point during the audit or thereafter, we find evidence of systemic fraud in DWP's contracts with A4e, we will not hesitate to immediately terminate our commercial relationship," the DWP spokesman said.

The Mandatory Work Activity programme, which sees the jobless put onto four-week placements, was launched last year and more than 24,000 people have now been through the system.

It sparked controversy because anyone failing to complete a placement without good cause faces losing their Jobseeker's Allowance for at least three months.

A4e, which has been awarded several large Government contracts and is paid around £160m a year by the state, was then plunged into crisis when four of its former employees were arrested.

Its millionaire boss Emma Harrison was forced to quit as the Government's "back-to-work tsar" and step down from the company following the arrests.

In a statement on Friday, A4e said: "The board has made consistently clear in all previous statements that we take any allegations of fraudulent or otherwise illegal activity extremely seriously. There is absolutely no place for this type of misconduct at A4e.

"We obviously acknowledge the concerns raised by DWP, and we welcome and will cooperate fully with their planned investigations."

The company confirmed that nine cases in total since December 2005 had been referred to the DWP for review. Of those, one from May 2008 had led to prosecution.

Another is the case now being handled by Thames Valley Police, it said. The others are closed cases that have been judged not to be incidences of malpractice.

A4e has asked lawyers White & Case LLP to lead an "independent and thorough review" of its controls and procedures and pledged to hand their findings to the DWP.