A day after resigning as David Cameron's jobs adviser, Emma Harrison last night also stepped down as chairman of the Government contractor A4e amid investigations into accusations of fraud at the company she founded.
Ms Harrison, who took home a dividend of £8.6m last year despite concerns that her company had not met government standards, said she did not want the "continuing media focus" on her to be a "distraction" for A4e.
The firm and a subcontractor are currently at the heart of police investigations into fraud and four former A4e employees have been arrested and bailed.
Ms Harrison's decision will be a further embarrassment for David Cameron, who appointed her as the Government's adviser on how to help 120,000 "problem families" into work – a role from which she stepped down on Wednesday.
Her departure from A4e may raise questions about the Prime Minister's judgement in championing her. He was criticised for appointing Andy Coulson, who had resigned as News of the World editor over phone hacking, as his director of communications in both opposition and government. Mr Coulson resigned from Downing Street last year.
Yesterday, No 10 again insisted that there was no need for A4e to be suspended from its welfare-to-work contracts, saying it would not pre-judge the police investigation. The controversy surrounding the company may also raise questions about the role of private firms in delivering the Work Programme and the use of payments-by-results contracts, which have been expanded since the Coalition took office.
In a statement, Ms Harrison said: "I am today stepping down from my position as A4e chairman.
"This has been a very tough decision for me as I have spent my entire 25-year career building up this business and I believe so strongly in the importance of the work it does.
"But it is precisely because this work is so important that I do not want the continuing media focus on me to be any distraction for A4e, for its more than 3,500 employees, and for the tens of thousands of people across the UK and globally that look to this company to give them hope of finding employment.
"I have absolute confidence in the business and all it stands for, and I hope that my decision will help A4e's first-class management team and exceptional employees focus all their energy on doing their much needed work in improving people's lives."
There was an outcry yesterday over suggestions that a £15m contract to rehabilitate prisoners would still be handed to Ms Harrison's firm, which made £190m in 2010. Public Accounts Committee chairman Margaret Hodge demanded A4e be removed from the bidding and its government contracts be suspended.
Reports suggest that Ms Harrison has amassed a personal fortune of around £70m. She was made a CBE in 2010 and owns a 20-bedroom mansion in the Peak District, a £3m mews house in central London and a £75,000 holiday home near Skegness. The A4e chief executive, Andrew Dutton, said: "A4e would not exist but for the passion and ambition of Emma Harrison."Reuse content