'Sophisticated fraud' after £1.1m goes missing from Luton Borough Council coffers

BBC Look East broke the story yesterday that Mark Rutherford School in Bedford was allocated the money by SEMLEP (South East Midlands Local Enterprise Partnership), which issues government grants for projects across the region.

Luton Borough Council acts as a banker for SEMLEP - receiving the government funding before passing it on it to the other projects.

Mark Rutherford School was due to receive its funding in February or March, but it is understood the money had already disappeared by this time.

In April, Luton Borough Council discovered the money for the school had been misappropriated and paid to "persons unknown" - leading them to contact police.

Hilary Chipping, SEMLEP's chief executive, told the BBC: "I'm shocked, it's unprecedented. We understand from police that they are treating this as some sort of sophisticated fraud.

"You don't expect this to happen in a well-run public organisation."

SEMLEP has found an alternative source of income to pay for Mark Rutherford School's redevelopment. The school has carried on with building work but has suffered financial problems in the interim.

A Luton Borough Council spokesman said: “We believe there has been a sophisticated external criminal operation and the matter has been referred to the National Investigation Service who are investigating.

"We have not been told that any member of staff at Luton Council is under investigation. It would be inappropriate to comment further at this time."