NAO faces two-year battle to unravel ILA fraud

Link: NAO to assign blame for ILA collapse

The NAO’s investigation into the sudden closure of the scheme last year – after spending soared £74m above its 1999 budget amidst reports of widespread abuse – confirmed police advice required its abrupt halt last November, with severe financial consequences for legitimate training providers.

The shutdown happened two weeks before the scheme’s planned closure, because of its rapidly escalating cost and reports of problems, when one provider supplied evidence that unused account numbers, illegally accessed thorough poor computer security, were being sold to other suppliers.

The decision to close down the computer system and freeze funding was taken to protect public funds and prevent accounts being drawn on fraudulently.

The NAO said that by August this year £7m was still withheld from providers and a compliance unit was investigating 560 learning providers.

A special investigations unit was examining 133 providers’ cases involving a total of £68m and there had been one successful prosecution.

Nearly 100 cases have been passed to ten police forces, two thirds involving ‘misuse’ of accounts, one third ‘ghost learners’ and one ‘inappropriate access to the ILA database’.

Twenty of the largest providers still had claims outstanding ranging from £500,000 to £6m, ten of them under investigation by the special unit.

Nine of the suspect providers have claims in respect of courses supposedly designed to give trainees the European Computer Driving Licence – and a total of £21m.

And the department is taking legal advice over civil actions to recover funding lost through fraud or actions which, if not illegal, were in breach of the Learning Provider Agreement.

The report criticises the way the scheme was run by the department, with slack controls allowing courses such as transcendental meditation, creative writing, ‘Summer Glastonbury’ and even ‘Chronic Cats’.

The NAO said the department failed to implement basic security measures and criticised their relationship with computer services supplier Capita, who is working with them in designing a successor scheme, subject to ‘satisfactory progress’.

The report said the department was wrong to treat Capita, supposedly a PFI partner, as a contractor and exclude them from the board running the scheme.

There was also inadequate planning, risk assessment and monitoring

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