A4e hit by fresh allegations of an “unethical culture” and “systemic fraud”

Embattled ‘welfare-to-work’ company A4e has been hit by fresh claims of fraud and impropriety this morning, reports Shamik Das.

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Embattled ‘welfare-to-work’ company A4e has been hit by fresh claims of fraud and impropriety this morning.

Today’s Telegraph reveals that in secret evidence to a Parliamentary committee on Tuesday, A4e’s former head of audit, Eddie Hutchinson, provided documentation showing how an “unethical culture” led to “systemic fraud” at the company, which still holds several government contracts, despite being stripped last week of its Mandatory Work Activity contract in the south-east.

The session of the public accounts committee where Hutchinson made his claims was held in camera following protests from Tory MPs. He also says another welfare to work provider, Working Links – which runs three major contracts on the coalition’s £5 billion jobs scheme – is also lacking in probity.

The whistleblower alleges:

• A bonus scheme for employers “drove inappropriate behaviour” by staff willing to commit fraud;

• Staff acted in the belief that if their irregularity was discovered, they could resign in the knowledge no further action would be taken;

• Two years on from a 2009 audit report warning fraud was not confined to one part of the country, fraud was still “systemic”.

With the Telegraph adding:

In his evidence, Mr Hutchinson claimed that the leaders of both companies [A4e and working links] oversaw a “disgraceful misuse of government and taxpayer funding”, characterised by unethical behaviour, mismanagement, inadequate corporate governance and risk management and excessive payments in salaries.

An auditor with 30 years’ experience, Mr Hutchinson’s statement discloses that despite his discovery of an “ever-increasing volume of frauds”, with two or three new allegations arising on some days, the company failed to act. It cultivated a culture that discouraged employees from revealing improper practices, the document states.

“I encountered unethical behaviour or wrongdoing that fell way below standards that should be expected of organisations funded by significant sums from the public purse,” he wrote.

The repeated incidents of malpractice in the sector have led to a “multi-billion pound scandal”, he claimed in his statement.


See also:

Fired! Government gives disgraced A4e the boot 15 May 2012

Charity survey slams the shambolic failure of A4e 1 May 2012

The ‘Youth Contract’ – where the government hands million-pound contracts to companies like A4e 2 Apr 2012

New report reveals “devastating evidence of systemic fraud within A4e” 22 Mar 2012

The document A4E doesn’t want you to see 5 Mar 2012

A4e: Corruption, fraud and the £200m failure to help the unemployed 2 Mar 2012

A4e’s fall from grace has been in the pipeline for two years 2 Mar 2012


Last night, the public accounts committee said it will “insist that the allegations are fully investigated and results of the investigation published”, while A4e and Working Links both denied Hutchinson’s claims; A4e insisted none of the allegations “stand up”, with Working Links saying they “firmly reject any assertion of widespread fraud within our business”.

As with the sundry other probes into the company, and the criminal investigations against several individuals, only with the passing of time will A4e’s denials be tested and the truth be known.


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