A fraud probe is underway involving the allocation of St Albans district council building contracts and the misuse of public sector funds.

Three people have been arrested as part of a National Investigation Service (NATIS) investigation into fraud, bribery and money laundering totalling £2.5m of public sector funds.

The arrests of three men aged 47, 51 and 55 took place at various locations in Harpenden and Ruislip on July 9.

One of the men was arrested for fraud by abuse of position, bribery and money laundering, and the other suspects for bribery and money laundering. Following property searches and interviews, all three have been released under investigation while inquiries continue.

Amanda Foley, chief executive at St Albans and district council said: “We called the police in to investigate when our internal processes picked up a potential issue of concern to our internal audit team that they felt merited further investigation.

"We then worked closely with the National Investigation Service, giving them our full cooperation. As there is an ongoing police investigation in progress, we are unable to provide more information at this time.”

The Herts Ad believes the investigation follows work carried out by SADC's internal audit team that resulted in a referral to the police in their January 2020 anti-fraud report.

The NATIS probe did not reveal evidence that there had been direct theft of public sector monies, it did reveal a pattern of conflicts of interest, one-sided contracts, and negligent reporting that resulted in a council employee having unfettered discretion to award four companies substantial sums of public sector funds for services.

Public sector employees cannot make, participate in making or in any way attempt to use their official position to influence a governmental decision in which they knowingly have a financial interest.

Michael Dineen, deputy director head of crime operations at the NATIS, said: "Those employed in the public sector owe a duty to act with transparency and diligently in exercising oversight over the operations to the public authority they serve.

"The procurement process exists to economically benefit local communities, not the civil servants managing them."