Failed property consultant Erinaceous could face a police investigation into fraud on a framework deal for Kent Medway council, writes Sarah Richardson.

The council has since January been conducting its own investigation into Erinaceous Property Management鈥檚 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 拢1.8m out of a contract worth 拢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鈥檚 report into the allegations, which has still not been fully disclosed.

A source said: 鈥淎t the moment, councillors haven鈥檛 requested formal police involvement but some members are pushing for it.鈥�

This situation has been hanging around for months, and we鈥檙e therefore very concerned

Paul Godwin, Labour Councillor

Paul Godwin, the opposition Labour leader, said: 鈥淭his situation has been hanging around for months, and we鈥檙e therefore very concerned.鈥�

A council spokesperson said: 鈥淲e have been told by police that this is purely a civil matter between ourselves and Erinaceous and there is no case to investigate.鈥�

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.

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