An internal report compiled for the Prison Service Board and seen by The Independent, states that many of the clubs have been run without valid liquor or gaming licences and have been improperly using public money.
Six clubs have already been closed after running up debts of between pounds 3,000 and pounds 21,000.
The report said that audit investigations had revealed that prison clubs were misusing public money to pay for excessive refurbishments, charity donations and interest-free loans for jail staff.
A Prison Service source said: "It has been known for a long time that there has been incompetent accounting and corrupt practices in these clubs which have been a headache for prison governors for years."
Out of 72 clubs - which are run by jail staff and usually located just outside the prison walls - 24 are already facing insolvency. The investigation revealed that 11 clubs did not have valid gaming licences and 35 could not confirm they had valid liquor licences. Many clubs had not produced financial accounts for years.
The Prison Service report states: "Public bodies such as the Gaming Board of Great Britain, HM Customs and Excise, Inland Revenue and the Liquor, Gambling and Data Protection Unit, have and continue to raise concerns over compliance by the Prison Service with various Acts of Parliament and Rulings."
It reveals that public money from overstretched prison budgets has been used to pay off debts resulting from the mismanagement of the clubs.
"Through failure to follow model rules and as a result of poor management, the Prison Service has been forced to pay debts owed to trade creditors and penalties and fines to the Revenue Department from the public purse," the report states.
The audit investigation also found major problems with the running of the independently run canteens where prison officers go for their meals. The report found that 15 of the independently run canteens were facing insolvency and 24 had no valid licences for their gaming machines. There was much food wastage and hygiene levels gave cause for concern.
The report calls for all the 88 canteens to become management-run from April and claims that the move would save pounds 120,000 a year in public money.
It states that all clubs which are unviable or do not comply with new Prison Service rules will be closed. "It is recommended that clubs are permitted to continue in operation only where financially viable and under adequate management control. Further, the club complies fully with revised rules which will include committee members taking full liability for their actions and prompt submission of financial information to the Prison Service."
The Prison Officers' Association said it was very angry at the proposals. Bev Lord, of the national executive, said: "These clubs have proved invaluable during riots and disturbances when officers can be on duty for days at a time. Prisoners are being given more pool tables and televisions in cells and yet they are closing our clubs."Reuse content