Documents seized in a raid on an employment agency with a large government contract are being examined by police and immigration officers investigating what they said could be a £3m fraud involving illegal immigrants.
Reed in Partnership, whose Liverpool offices were searched on Saturday, is run by Alec Reed, a Labour Party supporter who has donated a total of £120,000 since 1995.
The inquiry, by Merseyside police, the Department of Work and Pensions and the Immigration Service, is investigating claims of forged papers involving several workers placed last summer with a poultry-processing company in Flintshire, north Wales, through another employment agency called Monarch Recruitment Services.
The poultry company had needed Reed, which has a £30m government contract to find work for the long-term unemployed, because it had been unable to recruit regular British employees willing to earn £5.50 an hour.
For every employee who remains in the job longer than 13 weeks, Reed also receives a grant of an extra £2,000. Only immigrants granted leave to stay in Britain are eligible to seek work and only those who have been out of work for six months can apply for the Reed scheme.
Police inquiries began after Monarch was told by immigration officials that papers it had received were forgeries; the investigation will also focus on whether any Reed staff had knowledge or suspicions of the fraud. Most of those given employment were said to be Iraqi Kurds.
A police spokesman said: "The searches were in relation to a £3m alleged fraud and the alleged employing of illegal workers. Officers received documents and files while at the premises, which they will look at over the next few days."
Chris Melvin, managing director of Reed Employment, said yesterday: "We have never, ever, knowingly put an illegal immigrant into work. We are aware asylum-seekers and illegal immigrants do use false passports and false papers which are increasingly sophisticated and very difficult to detect. We go to every effort to ensure we help only those people with a right to work in this country. Last summer, there were immigrants in Liverpool who had fraudulent paperwork, which we were unable to detect. Neither was it detected by the agency they registered with or the company that employed them."
Mr Melvin denied the alleged fraud could cost £3m, pointing out that the Liverpool central Action Team contract was worth less than £800,000 a year. The case could embarrass the Government and Mr Reed. Lord Sawyer, a former general secretary of the Labour Party, is a former non-executive director of Reed and a former chairman of Reed Healthcare, which provides nursing staff.
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