Watchdog probes ILA programme

News of the investigation came as the government announced it was abruptly shutting down the scheme.

A spokesman for the NAO told AccountancyAge.com: 'Our investigation will be on the individual learning accounts. We're looking at the use of public money in these accounts.'

He declined to comment on whether the investigation included Capita.

The scandal erupted last November when a disk with the PIN numbers of one thousand ILA holders was handed to the government by a worried training provider. It is believed other PIN numbers were in circulation and may have been sold.

The design of the accounts offered a mechanism to pay for the courses. This gave dishonest trainers the opportunity to claim money without delivering services.

John Healey, minister for lifelong learning at the DfES told the Financial Times: 'There was evidence of serious potential theft and fraud of individual data and the potential for a huge loss to the public purse.'

He said the government was investigating the breach in the system run by Capita.

Capita said its investigations and those of the police had to date not revealed any breach of security in the ILA system. It also said no Capita employee was under investigation for the matter.

It added: 'Our investigations show that access to the system has only been made through the use of legitimate user IDs and passwords of the closed community of 8,000 learning providers.

'A limited number of these users may have abused their authorized access and acted in an inappropriate manner. Such behaviour could be viewed as a breach of trust, but not a breach of the system, its agreed specification, business processes or security.'

The company defended the ILA system saying it was 'discrete' and said it was 'confident of the security and robustness of the data centre infrastructure'.

Capita's shares, which are included in the Accountancy Age/ADVFN index plummeted on the news, dropping from yesterday's closing price of 457p to 436.5p at midday today.