Four former employees have been arrested at welfare-to-work company A4e, whose chair is adviser to David Cameron

This article is more than 8 years old

This article is more than 8 years old

A welfare-to-work company at the centre of a criminal investigation has previously had to repay public funds on five separate occasions after government investigations into fraud allegations found evidence of "irregularities", the Guardian can disclose.

On Monday it was revealed that four former employees of A4e had been arrested as part of an ongoing police inquiry at the company's offices in Slough.

But it has now emerged that the company, whose chair is an adviser to David Cameron, has been investigated nine times by the Department for Work and Pensions since 2005.

In one case, fraud was proven following a criminal trial; in four inquiries, there was evidence of irregularities but it was not pursued further through the courts after money was returned; in three cases there was found to be no case to answer; and one inquiry, in Slough, is still on-going.

The disclosures are an escalation in the crisis over A4e, which is paid by the government to help the long-term unemployed find jobs, and has renewed calls for a suspension of its contracts.

Margaret Hodge, the chair of parliament's public accounts committee, said the figures released by the government suggest there may be a structural problem within A4e.

"This suggests there may be systemic problems within the organisation. I believe the government should suspend all contractual obligations until the investigations are complete," she said.

Hodge called for the DWP to explain why the police were not brought in on all occasions when evidence of irregularities was found, when public money is involved.

"I find it astonishing that the DWP does not call in the police to investigate all of these incidents. This is no longer a one-off," she said.

The company is chaired by Emma Harrison, who was appointed by the prime minister in 2010 to help get troubled families into work.

Its five shareholders were paid £11m in dividends last year, of which Harrison received £8.6m.

The DWP investigations were launched at A4e offices across Britain. A DWP spokeswoman said that since 2005, the department has investigated nine fraud inquiries. "Of those, five were found to have a case to answer and have been dealt with and one is ongoing.

"In those five cases, the money was paid back in full. A4e would take any appropriate disciplinary action, not DWP," the spokeswoman said.

The cases are believed to include an investigation into a former A4e employee in Hull that was launched after discrepancies emerged in "confirmation of employment" forms submitted by the company. Forms meant for employers agreeing to take on workers had been fraudulently filled in. In some cases, employers' signatures were falsified. A former employee was prosecuted and pleaded guilty to eight counts of forgery.

Thames Valley police visited the firm's offices in Slough over claims of fraud on Friday, and the force has confirmed it arrested four people in connection with the investigation.

A police spokesman said that the case was referred to the force by the Department for Work and Pensions.

As part of the investigation, two women, aged 28 and 49, and two men, aged 35 and 41, were arrested on suspicion of fraud on 18 January from addresses across the Thames valley and are on police bail until mid-March.

The controversy will reignite a simmering debate over whether so much of the welfare-to-work industry should have been contracted out to private companies. Hodge has raised the question of why this government and its Labour predecessors took the decision to outsource this sector to private companies, when some evidence suggests that the state's Jobcentre Plus has greater success in helping people into work.

A4e's chief executive, Andrew Dutton, repeated assurances on Monday that the company has zero tolerance towards fraud.

He said: "I will not sit by and let these accusations discredit the hard work that our staff do to support thousands of people into work.

"A4e has zero tolerance towards fraud, and any instance of fraudulent or otherwise illegal activity is completely unacceptable.

"We take our responsibility very seriously, and we are committed to using taxpayer's money effectively and efficiently to deliver the best services to the public."

A company spokeswoman was contacted by the Guardian on Wednesday morning, but has not yet responded to the DWP's new figures.