23 March 2012

Leaked Internal Audit Found 'Systematic Fraud' At A4e

A leaked document suggests that welfare-to-work firm A4e knew of widespread potential fraud and systemic failures by management to control it.

A confidential 2009 internal audit was obtained by BBC Newsnight and is understood to show that the auditors found staff claiming for putting people into jobs which did not exist, jobs which did not qualify for payment and fabricating paperwork.

A4e have responded by saying the report was only a raft document.

It said that as a result of the internal audit it had made "significant enhancements" to all its systems, including appointing external auditors. It added that further investigation had found only five irregular claims had been made, all relating to a single employee.

A4e said it had reported this to the Department for Work and Pensions' Risk Assurance Division and that the department had said it was satisfied the matter had been resolved and that its audit requirements had been met.

The Department for Work and Pensions, which was passed a copy of the leaked document on Thursday, issued a statement saying:

"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."

After being passed a copy of the report on Thursday, the Department for Work and Pensions issued a statement saying:

"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."

"…while the internal A4e document relates to programmes delivered by the previous government, our investigation into current contracts will ensure the issues this report raises have been fully addressed".

However MP Margaret Hodge, chair of the public accounts committee, said: "This appears to be devastating evidence of systemic fraud within A4e. Either A4e failed to act or to inform DWP, or they did inform DWP and the department failed to investigate properly.

"Whichever, it is completely unacceptable. Once again, I am urging the department to suspend all its contracts with A4e immediately."

A4e were responsible for placing unemployed people into work which was to last at least 13 weeks, with employers expected to sign a form confirming the job was real and that the employee would be working a minimum of 16 hours a week.

The auditors discovered that in offices across the country some of A4e's best recruiters were claiming for putting people into jobs that did not exist or did not qualify for a job outcome payment from the government, and fabricating paperwork to back up their claims.

They found that A4e staff thought there was "nothing wrong" with filling in forms that should have been completed by the employer for the claim to be valid.

The auditors concluded that 4% of the claims they examined were "potentially fraudulent" or included "irregular activity" and another 12% were classified as containing "reputational" or other risks.

They said that they could only be sure that A4e was entitled to the money the company claimed in 70% of the cases.

(H)