TWO senior officers from a council-owned agency have been suspended as part of a a police investigation into an alleged £100,000 fraud.

Police have confirmed they have interviewed a man and a woman who work at Lancashire County Enterprises Ltd.

Both have both been suspended on full pay.

The inquiry, headed by Lancashire's major crime unit, follows an audit at the agency.

Head of the unit Det Supt Colin Maloney said: "Following an audit at Lancashire County Enterprises Ltd a man and a woman were arrested.

"They were interviewed and bailed pending further investigations."

A police spokesman confirmed a major investigation is under way and likely to take several months.

The development agency is a limited company formed by Lancashire County Council five years ago. Its main task is to link the county council and the job creation agency Enterprise PLC.

The agency manages contracts worth millions of pounds across Lancashire each year.

It is run by a board of directors made up mainly of county councillors.

LCEL is believed to have an annual turnover of £5 million and is valued at £30 million.

Frank McKenna, deputy leader of the county council, was appointed chairman earlier this year and his first act was to launch an internal audit.

It is thought the audit revealed a £100,000 discrepancy.

He is said to have been shocked at the findings and called in the police.

Coun McKenna said: "Investigations are under way and we are obviously keen to see them completed as soon as possible.

"We hope the whole matter will be sorted out as soon as possible."

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