Wales

Online food firm Kukd.com in Welsh Government grant probe

Kukd.com office sign

A UK-wide online food ordering service which received a £1m Welsh Government grant to create 100 jobs but outsourced some posts abroad is being investigated, BBC Wales has learned.

Cwmbran-based takeaway ordering and restaurant booking service Kukd.com received government backing last year.

But the Welsh Government is now investigating whether conditions of awarding the grant aid have been met.

Boss Shelim Hussain said he had been "totally transparent" with officials.

The company, which was founded in January 2014 by the Newport businessman, received £1m of public money in 2015 after meeting its initial target of creating 100 new posts.

The Welsh Government has confirmed that further payments have been suspended pending the outcome of the investigation.

Adam Price AM, shadow economy secretary for Plaid Cymru, has called for the Wales Audit Office to look into the Welsh Government's business support grant system, following the failure of a number of companies which had been awarded public money and questions surrounding other recipients.

It is understood that Welsh Government officials are looking into allegations about the number of new posts Kukd.com created in order to qualify for a payment of £400,000 in March 2015 and two further payments of £300,000 in June and August 2015.

Mr Hussain has confirmed that some posts were subsequently outsourced to Bangladesh and India.

"I decided to reduce some of the jobs in Cwmbran and outsource them to India and Bangladesh at cheaper cost so the business can survive," he said in a statement provided to BBC Wales.

Image caption Shelim Hussain said he has agreed to repay the grant if the jobs do not meet the grant criteria

An investigation was launched by the Welsh Government's Counter Fraud and Internal Audit Unit after anonymous allegations were received by then economy minister Edwina Hart in mid-December 2015.

In response to a number of written questions from Welsh Conservative leader Andrew RT Davies, Ms Hart stated that Kukd.com was awarded support of £2.75m for the creation of 276 new jobs.

"To date, £1m has been paid against the creation of 100 jobs," she said.

"Officials met the company on 17 November 2015 to review progress and were advised that the project had experienced some difficulties and that job numbers had fallen since the last claim."

The company had advised that it was "taking steps to recover the position".

Ms Hart added: "On 18 December 2015, an email was received from an anonymous source making allegations surrounding the grant."

BBC Wales understands that the allegations include claims that employees were made redundant and their posts transferred to workers in Bangladesh and India despite it being a condition of the grant that new jobs should exist for three years.

There are further allegations that the firm's payroll included staff transferred from Mr Hussain's company, Euro Foods Group, whose posts had not been backfilled as per the grant conditions.

BBC Wales has spoken to several former employees who said they were laid off after working for Kukd.com for a period of weeks or months.

One former employee, who worked for the company for five months, said: "I left a very good job because they told me this company was going to take off… but a few months down the line we were laid off."

Image caption Andrew RT Davies: 'We want to see a successful company creating quality jobs'

Regarding the investigation, Mr Davies said: "I think it's very concerning because we're not talking about an inconsiderable amount of money.

"To date a million pounds has been made available to that company and the company has received that money on the basis of jobs supposed to have been created.

"Ultimately, we want to see a successful company creating quality jobs, but if that's not happening then really the Welsh Government needs to… ask, have they done all that we can to protect the public purse?"

In a statement, the Welsh Government said: "Our Counter Fraud and Internal Audit Unit are investigating the allegations against Kukd.com and are in touch with the company to gather additional information.

"Whilst no wrongdoing has been found to date, no further payments will be made until this matter is resolved."

Mr Hussain, who received an MBE in 2003 for services to business in Wales, has insisted all grant conditions have been met.

He said he was cooperating fully with the Welsh Government's investigation, including providing "full information of all the backfill posts".

He told BBC Wales he has invested £3m in Kukd.com from sister company Euro Foods to keep the firm afloat.

He said Kukd.com currently employed 65 people and that he anticipated being in a position to shut down the firm's "India office" by the end of September, following the recruitment of new IT staff.

He added: "I already agreed with [the Welsh Government] that in 2018, if the jobs do not meet the grant criteria, I will repay the grant.

"That is, if Kukd does not have at least 100 employees and still has 65 employees or less, I would have to pay back the balance… at around £10,000 per head."

Last week, it emerged that computer games company OysterWorld, based in Treforest, near Pontypridd, which was given more than £1.4m by the Welsh Government, has gone into administration with large debts.

In July it emerged Swansea steel-coating company Kancoat went bust after receiving more than £3m from Welsh ministers, despite them being advised it was a "high risk" venture.

Image caption Adam Price: 'A slew of cases which raise question marks at different levels'

Mr Price said: "I think it's important when you have a slew of cases which raise question marks at different levels - some operational, some policy - that's why we have the Wales Audit Office to say let's step back here and ask searching questions as to whether this is value for money.

"Is it delivering at the highest level the kind of policy goals that the Welsh Government has set for itself?"

In response, a Welsh Government spokesman said: "During the period 2011 to 2015 the Welsh Government has supported over 100,000 jobs in the Welsh economy and latest figures show the survival rates of the companies supported by us are actually above the UK average.

"We are currently working on refreshing our economic priorities so we can continue to build a fairer, more prosperous and more secure Wales.

"As part of this work the economy infrastructure secretary has called on people, businesses and organisations across Wales to feed in their views on what these new economic priorities should be."

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