Fraud inquiry over nuclear-arms depot

CHRIS BLACKHURST

Westminster Correspondent

The Government has launched a fraud inquiry into a pounds 50m overspend during the building of the nuclear-weapons depot for Trident submarines at Coulport, on the Clyde.

Ministry of Defence police officers have seized documents from Tarmac, the main contractor on the project to build a jetty access road and handling area, which saw its cost spiral from pounds 61m to pounds 115m. A report from the National Audit Office, the public-spending watchdog, was heavily critical of the MoD and the Property Services Agency for its administration of the contract.

Tarmac was subsequently handed the PSA free of charge in a controversial privatisation in 1992.

The NAO report commented that the PSA and Ministry of Defence were unable to obtain "proper assurance" about the validity of Tarmac's claimed costs. "An independent audit commissioned by PSA found that the nominated quantity surveyor had spot-checked labour costs on only some 3 per cent of the contractor's submissions." The audit office added that the MoD "strengthened their presence on site with more delegated authority to take decisions locally and challenge potential changes and cost increases".

Officials at the MoD were last year hauled over the coals by the Commons Public Accounts Committee for allowing the combined cost of building work at Coulport and its neighbouring Trident base at Faslane to soar out of control by pounds 800m.

Last Thursday the MoD police raided Tarmac offices. The offices of Matthew Hall, Tarmac's sub-contractor, were also visited. "Lots of papers were taken away," a ministry source said yesterday. The inquiry is being co-ordinated by the Procurator Fiscal in Dumbarton, Scotland, who is leading the MoD police teams in Essex and Scotland.

"We would not have entered into the investigation unless there was a suspicion that a considerable sum was involved," the ministry source said. He added, though, that it was "very early days" in what was likely to be a lengthy operation.

Tarmac said it was "extremely surprised" by the raids but promised to co-operate with any investigation. An MoD police spokesman said: "Ministry of Defence police fraud squad entered the premises of Tarmac and sub-contractors at Wolverhampton, Glasgow and London and seized documentation under a search warrant in connection with allegations of financial irregularities to do with contracts for the ministry in Scotland."

The Procurator Fiscal at Dumbarton could not be contacted for comment.