PM's former 'family champion' steps down at her company after arrests of former employees and furore over her reward package

This article is the subject of a legal complaint made on behalf of A4e.

Emma Harrison, the controversial boss of the welfare-to-work firm A4e, has resigned as chair of the company she created, blaming the media furore over her multimillion pound reward package and allegations of fraud.

Her announcement came just 24 hours after she quit her unpaid advisory role as David Cameron's "family champion".

In the wake of her departure from A4e the company announced it had called in a firm of lawyers to undertake an "independent audit" of its controls and procedures.

In a brief statement on Friday evening, Harrison said: "I am today stepping down from my position as A4e chairman.

"This has been a very tough decision for me, as I have spent my entire 25-year career building up this business and I believe so strongly in the importance of the work it does.

"But it is precisely because this work is so important that I do not want the continuing media focus on me to be any distraction for A4e, for its more than 3,500 employees, and for the tens of thousands of people across the UK and globally that look to this company to give them hope of finding employment.

"I have absolute confidence in the business and all it stands for, and I hope that my decision will help A4e's first-class management team and exceptional employees focus all their energy on doing their much-needed work in improving people's lives."

Harrison has struggled to combat the claims of fraud, as well as questions about the size of the dividends she has been handing herself, largely funded by government contracts to help the unemployed find work through the Work Programme.

She is the majority shareholder in A4e, which has won more than £200m worth of contracts to run welfare-to-work schemes since May 2010. The company has five shareholders who were paid £11m in dividends last year, of which Harrison received £8.6m.

Harrison has been under pressure since details emerged last week of her dividend package. The political heat was turned up over the weekend after it emerged that Thames Valley police had visited the firm's offices in Slough over claims of fraud last Friday. The force has confirmed it arrested four people in connection with its investigation.

The chief executive of A4e, Andrew Dutton, paid tribute to Harrison, saying that she was "devastated" to be leaving the firm.

"A4e would not exist but for the passion and ambition of Emma Harrison, who has helped improve the lives of thousands of people, and has been an inspiration to all our staff and customers for more than 25 years," he said.

Dutton said that in order to reduce "speculation and uncertainty" he had appointed the international law firm White & Case LLP to conduct an independent audit of A4e's controls and procedures.

The review will be carried out in collaboration with A4e's funders, including the Department for Work and Pensions. "I have asked White & Case to carry out their review as quickly as possible," he said.

"It is of paramount importance to myself and the A4e board that the ongoing press speculation is laid to rest as quickly as possible, and I believe this independent review will answer the concerns raised over recent weeks."

One Work Programme industry insider told the Guardian that A4e's current Work Programme contracts would be safe, unless the company failed to meet performance targets, or evidence of more widespread fraud emerged. The key issue for A4e was whether the political controversy surrounding Harrison would hamper the firm in its pursuit of future contracts.

A Department for Work and Pensions spokesperson said: "The running of A4e is a decision for them. We welcome their decision to have a full independent audit. Anything that ensures increased transparency in relation to their government contracts is to be welcomed."

Downing Street said it had nothing to add to the statement it made on Thursday when Harrison left her family champion role. It said then it respected her decision and thanked her for her work.