Failed property consultant Erinaceous could face a police investigation into fraud on a framework deal for Kent Medway council

The council has since January been conducting its own investigation into Erinaceous Property Management’s five-year housing maintenance contract.

It is understood that the council is looking into allegations that Erinaceous overcharged for work or failed to complete it. It is thought that the disputed valuations amount to £1.8m out of a contract worth £3m a year.

The Conservative-controlled council is now believed to be withholding some payments in anticipation of a claim. It is also understood that some councillors are pressing for the police to be called in after Labour members expressed concern over delays in releasing the council auditor’s report into the allegations, which has still not been fully disclosed.

A source said: “At the moment, councillors haven’t requested formal police involvement but some members are pushing for it.”

This situation has been hanging around for months, and we’re therefore very concerned

Paul Godwin, Labour Councillor

Paul Godwin, the opposition Labour leader, said: “This situation has been hanging around for months, and we’re therefore very concerned.”

A council spokesperson said: “We have been told by police that this is purely a civil matter between ourselves and Erinaceous and there is no case to investigate.”

Erinaceous Property Management was bought by its banks after its parent collapsed on 14 April, after the period under review. It is still carrying out the contract for Medway council under the banner of 3C Asset Management.

The Medway case is the second time financial irregularities have been alleged against Erinaceous. A Serious Fraud Office probe connected to valuations given by subsidiary Dunlop Haywards, is continuing.