Mike Sykes, director of operations and performance management of Oxford Regional Health Authority, was said to have used his position to promote a private sector company bidding for privatistion contracts before leaving to join the same company.
The accusation was made in an Early Day Motion in the House of Commons tabled by Ian McCartney, one of Labour's front bench health service team. He demanded an immediate investigation by Virginia Bottomley, Secretary of State for Health, and the Thames Valley Police 'into the prima facie case of corruption and sharp practice involving Mr Sykes and others'.
Mr Sykes, is alleged to have promoted the work of Unilabs, a private sector company involved in pathology services, to other executives of the Oxfordshire RHA only weeks before resigning to become managing director of JS Pathology Services, a subsidiary of Unilabs.
Before joining Oxford RHA in August 1992, Mr Sykes, 44, worked at BUPA Health Management as executive director following a career in the Ministry of Defence. He is due to leave the authority at the end of next week and is said to be on holiday.
Last month, Robert Sheldon, Labour chairman of the Commons Public Accounts Committee, warned that the time-honoured values of integrity, impartiality and incorruptiblity were being severely tested by an influx of people from the private sector. A report from the committee warned that millions of pounds had been wasted and that the Government was not doing enough to prevent corruption.
Unilabs, a Swiss-based company, won a pounds 2m tender for pathology services at North Hertfordshire Health Trust in the face of opposition from consultants and pathologists.
Objections over the tendering process were made by the British Medical Association to the District Auditor late last year. A report from the Distict Auditor has yet to be made public.
The contract, based at the Lister Hospital, Stevenage, is the first major privatisation of pathology in the NHS and the trust was condemned by the British Medical Association for displaying a 'cynical preference for cash over public health'.
Barbara Stocking, chief executive of Oxfordshire RHA, confirmed that Mr Sykes had met with officials of Unilabs but said the meeting had been at the request of the authority and was to examine its bid for work at the North Hertfordshire NHS Trust.
He later sent a letter to Oxfordshire's four district chief executives on 20 October. Ms Stocking said the letter was to 'encourage them to begin exploring the ground for possible market testing of pathology services in the future'. However, some senior staff were concerned at the tone of the three- paragraph letter which said: 'I recently met Dr R G Alexander and Mr A Howard of Unilabs UK, who briefed me on their UK operations.
'Enclosed is a brochure and press statement about their initiative with the North Herts NHS Trust which I found interesting and you may find it also. . .
'Unilabs is a very significant company in the independent pathology sector, underlined by their recent acquisition of J S Pathology Services. I have personally had dealings with JSPS in the past and can vouch for their high quality of service and business ethics.'
Ms Stocking said that she was aware of 'understandable concern' about the potential conflict of interest.
She said: 'I received the assurance that his initial discussion and subsequent appointment were quite independent and immediately took action to ensure that Mike Sykes did not have access to any data that might be considered to prejudice any future market testing of services.'
Unilabs said that it completely rejected the allegations 'made under the cloak of parliamentary privilege'.