The Department for Work and Pensions (DWP) has admitted that it failed to interview two whistleblowers who made serious allegations of fraud by a private sector provider within the government’s specialist work programme for disabled people.

DWP supposedly launched an investigation last autumn into the claims made against Seetec by two of its former employees.

Both of the women, Perveen Sud and Reena Gour, had sent brief emails alerting DWP that the Work Choice provider had been artificially inflating the number of jobs it said it was finding for disabled people.

But despite the serious allegations outlined in their emails last July and August, neither of the women has been interviewed by the DWP’s fraud investigators, and they only discovered that the government had cleared Seetec of fraud when informed last month by Disability News Service (DNS).

This week, DWP finally admitted that neither woman had been interviewed about the allegations they had made about Seetec, which is the worst-performing of the eight Work Choice contractors, according to the latest government figures.

A DWP spokesman claimed there was no reason to interview them because all the information the investigators needed was in their emails.

But DNS has seen the email sent by Sud last August and it includes only a 100-word summary of her allegations, over just four sentences.

None of the details that she passed to DNS were included in the email, and both Sud and Gour have told DNS that they had detailed information that they had been ready to share with DWP.

Sud and Gour have told DNS this week that they have been waiting for months for DWP to contact them about their claims.

Gour said: “It’s ridiculous. If someone makes allegations, you call them and you speak to them.”

Sud added: “They need to talk to us. It’s outrageous. There is no way you should have those kind of accusations made and not be interviewed about them.”

This week, DWP insisted that it had acted correctly and had not attempted to cover up their fraud claims.

The DWP spokesman said: “As far as I can work out, they [the whistleblowers] emailed the information to us and then they were written to a few months later to say it was still being investigated.

“As I understand it, the information they provided was investigated. They raise the issue and we look into it.

“[Our investigators] investigated it and found there was not fraud. If you wish to say it is a cover-up, that is your prerogative. I would say it is not a cover-up.”

Asked whether ministers were aware of the “investigation”, he said: “I really don’t know.”

Sud and Gour told DNS last year how Seetec offered Work Choice clients as free labour to charities and other host organisations, and then paid their wages for the next six months, while allegedly pretending to DWP that the salaries were instead being paid by the host organisations.

Three organisations told DNS how they had accepted disabled job-seekers for six-month placements, even though it was made clear to Seetec that they were just volunteer roles, they would not be paid, and there would be no jobs available at the end of the six months.

Despite this, Seetec – which provides Work Choice services in west and north London and has more than 800 employees – is alleged to have logged the placements as “job outcomes”, claiming payments from the government both at the beginning and end of the six months.

Seetec was able to make a profit because the amount it received from DWP – thousands of pounds for every client who completed six months in a job – was hundreds of pounds a month more than it paid the clients, who only had to work 20 hours a week at minimum wage to qualify for a job outcome.

15 May 2014