AN investigation into alleged fraud at a charity with close ties to Waltham Forest Council has been dropped by police.

The Met launched the probe into the O-Regen group, also known as Orient Regeneration, in May 2011 following "specific" allegations made by concerned officials at Hackney Council.

O-Regen owned a number of community facilities such as the Epicentre in Leytonstone and had been awarded contracts worth over £1million by Waltham Forest Council for unemployment schemes in recent years.

It was then plunged into financial difficulties and the council stepped in to try and help, but the charity went into administration just before police launched their probe.

But, in a statement today (Thursday December 27), the Met said evidence of fraud could not be established due to the "content of a contract". The Guardian is awaiting clarification from police about what this means.

A Met spokeswoman revealed that three former O-Regen employees had been interviewed by fraud officers during the year-and-a-half long investigation but none were ever charged.

Figures reported by the Guardian earlier this year revealed the charity was handed contracts worth £400,000 by Waltham Forest Council between 2008 and 2010 for schemes to help the long-term unemployed.

Despite evidence that the Leytonstone-based charity had failed to fulfil its obligations, it was then handed another similar contract worth more than £1.1m in July 2010.

Further concerns were then raised and the council sent an auditor to investigate.

He found problems "across the board”, including flawed accounting and pre-signed employee time sheets.

Then in January 2011 the cabinet member responsible for contracts with the charity, Cllr Afzal Akram, accused O-Regen bosses of providing “fictional" financial figures during a finance meeting.

But according to the minutes its management appeared to brush off the concerns by saying the figures were registered the previous year.

A subsequent report by the administrator found bailiffs regularly turned up at the charity’s offices and suppliers refused to deal with the organisation in the months before its collapse.

A Met spokeswoman said: "Waltham Forest Borough CID have conducted an investigation, in partnership with Hackney Council Fraud Department, into specific allegations of fraud at Orient Regeneration (O-Regen).

"Three former employees of O-Regen have been interviewed at a police station having attended voluntarily by appointment.

"No persons have been charged and the investigation is now complete.

"The offence of fraud could not be made out due to the content of the contract between Hackney and O-Regen."

More to follow.