Asylum firm in huge fraud probe

Jul 8 2007

A MIDLAND company is being investigated over allegations that it cheated the Home Office out of millions of pounds by claiming grants for thousands of asylum seekers who don't exist.

The firm, which provides homes for refugees across Britain, is run by former asylum seekers who now live in Birmingham.

It is believed to have received £1 million a month from the Home Office and Birmingham City Council - and last year won a major contract to provide homes for the next five years.

The Sunday Mercury knows the name of the firm but is prevented from identifying it because of ongoing police inquiries.

The alarm was raised by the Home Office and Birmingham City Council after checks were carried out to verify the existence of asylum seekers.

Early inquiries raised doubts on 2,000 names on the company's books for the last year alone.

A source said: "They think they've rumbled one of the biggest frauds of its type ever. It's hugely embarrassing because asylum and immigration is such a hot potato as far as the public is concerned."

The lion's share of the funding comes from the National Asylum Support Service (NASS), a Home Office body set up to provide asylum seekers with homes while they claim refugee status.

The remainder comes from Birmingham City Council - the official body with responsibility for overseeing the firm's spending and ensuring the accountability of public funds.

NASS, which has an annual budget of £1.5 billion, started in April 2000.

The Midland firm is one of several private companies run as not-for-profit organisations contracted to supply properties.

After three years of operations, NASS admitted it had had a chaotic start with a lack of financial discipline and management control.

News that one of its biggest contracts is the subject of a major police investigation is another embarrassing blow for the troubled Home Office and new Home Secretary, Redditch MP Jacqui Smith.

Last year the beleaguered department was declared "unfit for purpose" by previous Home Secretary John Reid.

The cost of housing refugees has long courted controversy. Accommodation for each asylum seeker cost an average of £703 a month in 2003-4, a National Audit Office inquiry found.

In one instance, the cost of emergency housing for some 9,500 asylum seekers in the same year was £10,150 each, the study reported.

In June last year, Birmingham, as part of the West Midlands Consortium, signed a new £2.5 million contract with NASS. Other councils in the consortium are Dudley, Wolverhampton and Coventry.

According to the Home Office, the contract Birmingham and the other West Midlands councils had signed was to provide "accommodation and related services" for asylum seekers.

The councils involved agreed to take in refugees who arrive at Dover and are then dispersed around the UK.

Birmingham is the lead authority in the consortium and is handling the contract on behalf of the others.

There are currently around 2,000 asylum seekers in Birmingham. Most are in shared accommodation in the private sector, although there are about 260 council properties containing 650 beds.

The refugees are not council tenants and are placed in the unpopular, hard to rent properties.

The company being investigated has charitable status and is currently paid more than one million pounds every month in grants and has received a total of £15 million.

Awarding of the status, which entitles recipients to lobby for public funds not available to entirely private companies, requires organisations to provide the Charity Commission with annual accounts, detailing figures for profit and loss, turnover and salaries.

The company has never supplied the Commission with accounts. As a result the Commission has launched its own probe and is thought to be part of a multi-agency inquiry team closing in on the firm's suspected criminal activities.

Inquiries by the Mercury have found that despite receiving such huge sums in public money, the company in question is apparently experiencing financial problems. It was served this year with several County Court judgements for non-payment of debts.

A source close to the probe said there would undoubtedly have been legitimate business activity conducted at the firm's several offices.

"It's what makes it harder to ascertain what's legitimate and what's made-up," they said.

"The reality is that there will have been and will currently be some genuine clients on this firm's books and investigators don't want these people to be affected by the inquiry.

"There have been decisions taken at the highest level not to withdraw the organisation's funding while inquiries continue.

"We don't want destitute asylum seekers with young children wandering the streets in the Midlands and elsewhere with no one to help them."

Detectives from West Midlands Police's Economic Crime Team, which specialises in financial crime, have been probing the suspected fraud.