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The UK government’s Insolvency Service has fired three staff over allegations they tipped off two private sector bankruptcy practitioners about potential work.
The agency, which is responsible for administering bankruptcies and investigating the affairs of companies in liquidation, frequently uses private sector specialists to carry out work on its behalf.
The Insolvency Service said it had reported the matter to the Information Commissioner’s Office, which has powers to prosecute alleged breaches of UK data regulations.
Public sector bodies are required to follow strict rules when procuring the services of private businesses to ensure transparency and reduce the risk of corruption.
The Insolvency Service initially launched an investigation last year following allegations that one employee had been sharing information with private sector practitioners, said one person familiar with the matter.
The probe, which lasted several months, subsequently identified two other employees who had allegedly shared information with private sector contacts, the person said.
“We can confirm that three people were dismissed following an investigation into case data being improperly shared with two insolvency practitioners,” said the Insolvency Service in a statement.
It added that it “takes the security of data extremely seriously, which is why immediate action was taken in this case and these people were dismissed last year”. The dismissals were first reported by The Times.
The Insolvency Service declined to comment on whether the three people dismissed had received any payments or other benefits in exchange for information.
The ICO said it was “aware of an incident at the Insolvency Service and was assessing the information provided”.
The Insolvency Service also confirmed that it had reported the two insolvency practitioners to the ICAEW, the professional body responsible for regulating them.
The ICAEW said it could not comment on whether any matter was being considered by its professional conduct department. It has powers to impose sanctions, including fines and the suspension of practitioners’ licences.
Ministers last year dropped plans to create a new, independent watchdog for the insolvency sector despite concerns that the ICAEW and the three other professional bodies with supervisory powers over the industry had not been robust enough in their oversight.
The insolvency sector has earned an unwanted reputation as a “wild west” after high-profile cases in which practitioners were found to have had conflicts of interest. The ICAEW and other professional bodies have disputed this characterisation of their industry.
Additional reporting by Simon Foy
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