Blue Star Taxis chairman Brent Webber says any driver found to be acting dishonestly will be removed from the fleet immediately.

Environment Canterbury (ECan) says it may have lost over $400,000 to taxi drivers who charged for trips they cannot prove took place.

The regional council has reported the alleged fraud to the Office of the Auditor General, and met with police and the Serious Fraud Office.

Drivers from three of Christchurch's largest taxi companies are understood to be involved.

STUFF Drivers from Christchurch's First Direct taxi firm are suspected to be involved.

The allegations concern an apparent rort of the Total Mobility Scheme, a nation-wide programme offering half price taxi fares for people with limited mobility.

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ECan administers the scheme in Canterbury, where it has about 7000 active users. It pays 20 per cent of each fare, while the NZ Transport Agency (NZTA) pay 30 per cent.

FAIRFAX NZ Drivers from Christchurch's Gold Band Taxis are suspected to be involved.

Four transport providers are signed-on to the scheme.

It is understood the companies involved are Blue Star Taxis, Gold Band Taxis, and First Direct Taxis.

The fourth provider in the scheme, Driving Miss Daisy, was not involved, co-owner Jack Harper confirmed.

Electronic smart cards were introduced in 2014, replacing a voucher system. It is understood some drivers kept regular users' cards in their vehicles.

Suspicions were raised within ECan late last year concerning invoiced taxi trips that could not be matched with GPS data.

It commissioned forensic accountants at Deloitte to investigate fare data from 2015.

The investigation found suspicious fares from drivers at three taxi companies.

It estimated the potential loss to the council was around $420,000, with no estimate of losses prior to 2015.

The three companies involved have until the end of the year to explain the suspicious fares before potentially facing further action.

"We are taking this very seriously and have alerted the police so they can decide if any further action needs to be taken," ECan chief executive Bill Bayfield said.

"We'd like to stress that no individual user of the scheme has paid more than they should have.

"However, this is not a victimless act as Environment Canterbury may have paid money it shouldn't have. Likewise, it's also unfair to those taxi drivers who are doing their job properly – as the majority are."

He said changes had been made to the system to ensure it would not happen again.

All trips were now matched with GPS data before drivers were paid, and both scheme providers and users would be made aware of the correct procedures to follow, Bayfield said.

An NZTA spokeswoman said the agency was working with ECan. The Wellington regional council uses the same total mobility system, and has been alerted to the issue.

Blue Star Taxis chairman Brent Webber said he became aware of the issue last week.

He said his company had checks in place to prevent fraud, and an initial analysis had not found discrepancies.

"If we did find any driver or shareholder was acting dishonestly, they'd be out of our fleet straight away," he said.

Managers from Gold Band Taxis and First Direct Taxis did not respond to request for comment on Sunday.