Agency sell-off delay refused: Commons motion urges inquiry over fraud allegation

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The Government rejected a demand yesterday for privatisation of its Property Services Agency to be suspended, pending the outcome of an inquiry into allegations of fraud and nepotism in a subsidiary.

PSA investigators are already looking into allegations about the Building Management South East division but Robin Squire, Under-Secretary for the Environment, told MPs that, to date, no evidence of fraud had been discovered.

A Commons motion tabled by Doug Henderson, a Labour environment spokesman and MP for Newcastle upon Tyne North, detailed claims that three bank drafts made with the signature of an employee, Vic Auger, were made payable to High Rise Properties, a Liberian-registered partnership, for a total of pounds 191,000.

The motion asked for the inquiry to include whether Mr Auger was a director of the partnership. According to the Department of the Environment, he was employed on an agency basis and dropped for 'departures from good practice' in management and personnel controls.

Raising the issue at Question Time, Mr Henderson said that the alleged fraud and malpractice included 'false payments, bogus companies, misuse of government resources, tax fiddles and nepotism'.

He called for suspension of the PSA sale and a public inquiry. 'Anything less will only serve to confirm suspicions of a ministerial cover-up and double standards.'

Mr Squire said all that had been discovered by the PSA inquiry had been 'a small piece of undercharged work'. He promised the further allegations would be taken on board, but added: 'With the absence so far of any allegations being substantiated, there is no reason on earth why there should be a delay in the sale of the PSA businesses. We are confident that the sale of the five businesses will not be significantly affected.'