Monday, May 28, 2012
A former chief auditor of the welfare-to-work company A4e, who alleges that an 'unethical culture' within the company led to 'systemic fraud', was forced to give evidence in private last Tuesday to the Commons public accounts committee - from which the public was excluded - after objections were raised by Conservative members of the committee.
Last week the government said that it had no evidence of fraud in contracts that were held by A4e but this has been questioned by the National Audit Office (NAO), who say that the Department of Work & Pensions (DWP), missed vital evidence during its asssessment of fraud. Though Employment Minister, Chris Grayling, told MPs that an internal inquiry had found no evidence of fraud involving A4e, the DWP withdrew one of its contracts from the company to provide 'work experience' placements, because of 'significant weaknesses in internal contracts.'
In his evidence Mr. Hutchinson says that inappropriate behaviour was driven by a bonus scheme paid by A4e and that staff acted in the belief that any irregularity, would go unpunished and that they could resign without further action being taken. He also says that when his concerns were brought to the attention of senior managers within A4e, little was done to address the widespread abuse of taxpayers money. He told MPs, 'In my professional view, it was systemic.'
In his evidence to the committee, Mr. Hutchinson, also referred to serious problems with another welfare-to-work provider known as 'Working Links' which runs three major contracts on the government's £5bn 'Work Programme'. As a former employee of Working Links, which is partly owned by the State, the private sector and a charity, he told MPs that the level of fraud at Working Links, had escalated to a "farcical situation" but at the time, he'd faced a 'stonewall' from management. In his evidence he says that in May 2008, he had compiled a list of 15 different frauds in excess of £250,000 relating to four different tax-payer funded programmes and had warned Working Links that fraud within the organisation was 'endemic'.
Although all of A4e's UK turnover is derived from government contracts, the company has been criticised for its 'abysmal' record of delivering government programmes. Earlier this year, it was also reported that the founder of A4e and majority shareholder, Emma Harrison, - who unlike many of her clients, enjoys a champagne lifestyle at the taxpayers expense - received an £8.6m dividend. Despite its 'abysmal' record and being subject of a police fraud investigation, in which eight of its employees have been arrested, A4e currently holds £438m of Work Programme government contracts.
A4e and Working Links deny the accusations of systemic fraud and say that many of the allegations relate to historic contracts and that any specific allegations that have been raised, have been addressed. Although A4e has been investigated nine times by the DWP and has repaid public funds on five separate occasions, after government inquiries into alleged fraud, the company says that it has a 'zero-tolerance approach to fraud.'