Failed property consultant Erinaceous was systematically overpaid for work carried out on a four-year housing maintenance contract in Kent, an investigation into alleged fraud has found.
An internal report by Medway council concludes that there was “no evidence of fraud or dishonesty” by the council or Erinaceous Property Management. However, it reveals that Erinaceous was overpaid for work including repairs and capital works during 2007/08.
The report says the council will withhold payments to redress some of the sums lost on the £4.4m a year contract, including an estimated £168,930 relating to the installation of kitchens. However, it concludes that it will not be able to claimback £155,000 lost on roofs and boilers.
The report says the overpayments occurred owing to a lack of management controls. However, it is understood that some opposition councillors are pressing for a police investigation into the allegations.
Erinaceous Property Management was bought out of administration by an HBOS-backed vehicle after the collapse of its parent firm in April.