POLICE have been handed the file of an investigation into allegations hundreds of thousands of pounds of public money - meant to help businesses and create jobs in Wirral - had been wasted.

The inquiry was commissioned last year by Wirral Council after whistleblowers raised the alarm.

Today sections of it have been handed over to Merseyside Police by town hall leader Cllr Phil Davies.

It is not clear at this point exactly why the leader has taken this extraordinary step.

The report is being kept under wraps for at least a fortnight while "fact-checking" is carried out.

Police say an allegation of fraud "invoving a company in Wirral" has been received.

Councillor Davies said the independent examination has cleared the council and its officers of any wrongdoing.

But he referred the report to both the Department of Business Innovation and Skills and police to investigate "other parties further."

The inquiry centres around the "BIG Fund" - Business Investment Grant - and another known as "ISUS" - Intensive Start-up Support.

The programmes were set up to help local firms through the recession and try to boost employment with grants of up to £20,000.

The BIG Fund was a council initiative to provide grants to small and medium sized business specifically for job creation.

The authority says that elements of the assessment for awarding these grants and the ISUS funding were contracted to an external supplier.

Concerns regarding grant applications were raised by two whistleblowers in 2010.

The whistleblowers said they had evidence some of the cash had been handed out to firms without proper checks being carried out.

One company was alleged to have received a £20,000 grant even though it was insolvent.

It is believed up to £800,000 of grants had been allocated.

The whistleblowers told the council there was “wide-scale systematic weaknesses” and “potential fraud” involving the applications.

A statement this morning from the council states that accountants Grant Thornton, now the authrority's external auditors, were contracted to review all the evidence, interview interested parties, and produce external and independent reports.

Those reports have now been received and the council says the section relating to the BIG Fund will not be commented on until a fact-checking exercise has been completed, which is likely to be within the next two weeks.

Councillor Phil Davies said: “I am pleased I am now in a position to state clearly that the ISUS report which has now been concluded does not criticise Wirral Council or its officers.

"I have referred the report to both the Department of Business Innovation and Skills and the police to investigate other parties further.

“However, we have been advised that due to action that may ensue we cannot comment any further at this time.”

A statement from Merseyside Police says they: "can confirm an allegation of fraud involving a company in Wirral has been received by the force.

"The matter has been referred to the force's Economic Crime Unit and enquiries are ongoing to establish if any criminal offence has been committed. However, it is too early to say if this is the case. 

"At this stage no formal police investigation has been launched."