Freemason links claim threatens PSA privatisation

THE privatisation of the Property Services Agency could be blown off course by irregularities, possibly involving masonic links, revealed last night in a series of Commons motions tabled by a frontbench Labour MP.

Doug Henderson, Labour's spokesman on local government, called on Michael Howard, the Secretary of State for the Environment, to suspend the sale of the PSA after an internal audit uncovered the irregularities, which have embarrassed the Government. They are believed to relate to the appointment of members of the same family in management and clerical positions.

Prospective buyers of the PSA are being warned this week of the irregularities, uncovered at the South East division for building management contracts, which covers the new MI5 and MI6 headquarters. Those alleged to have been involved were named last night under the cover of Commons privilege in a series of motions by Mr Henderson. In one motion, which referred to allegations of relationships between a PSA employee and her partner, the proprietor of a firm of interior decorators and a range of other companies, he said there had been 'freemasonic connections'.

Mr Henderson said there had been a failure to declare business interests by one named person, 'employing many family members in key financial and administrative positions within his organisation at inflated rates of pay, including his sister, sister-in-law, brother-in-law, niece and nephew'.

A second motion alleged 'bogus companies have been established with false addresses and have been used by temporary staff, possibly to avoid income tax, National Insurance and Value Added Tax . . .' and that there had been misuse of vehicles, telephones and computers.

Mr Henderson said one of those involved had been running a private business from within the PSA office.

The Department of the Environment yesterday denied a report that it was investigating a pounds 20m fraud involving the PSA and that the irregularities formed a part of that. A spokesman described the discoveries as 'minor'. However, Downing Street said the irregularities were 'of a serious nature'.

The Prime Minister's office said a manager, brought in to strengthen the administration, had taken overall charge of the division involved. In spite of the assurances by the DoE, the investigation will ask whether the 'control weaknesses' have put public funds at risk.

The Prime Minister's office confirmed that staff had left following the discovery. 'There is an investigation going on into this and, so far as we know, there is no evidence of corruption or loss to the public purse,' a source said.

The DoE was told about 'minor irregularities' after the internal audit. It was alleged that subcontracting staff had gained security passes for Ministry of Defence property, security services headquarters, royal palaces and Parliament without permission.

The DoE spokesman said there was no evidence of any breaches of security and the police were not involved, but the investigation was continuing.