The scandal, involving the training wing of the Road Transport Industry, has again thrown into doubt the way such qualifications are regulated. Some Training and Enterprise Council (TEC) leaders admit it exposes weaknesses in the payment-by-results schemes that many operate.

William Eastland, a contracts manager with the Centrex training organisation, and Kevin Smith, an NVQ assessor sub-contracted to Centrex, were arrested last week and released on bail. Police inquiries have centred on the company’s Leeds office. Detective Inspector John Parkinson of West Mercia Police Fraud Squad told the TES: “Investigations are likely for several months, but it is expected that charges will be brought at some point.”

The alleged fraud concerns the awarding of NVQs without sufficient documentation. Centrex’s national training ranges from motor repairs to customer care. It works through the National Training Partnership (NTP), a body which handles TEC contracts for the industry.

The NTP is understood to have called in the police when discrepancies were found in Centrex’s documentation. Ian Anderton, the NTP’s chief executive, said: “Had the procedures laid out in Centrex’s own manual been followed there would not have been a problem. Our own quality checks seem to show an attempt to short-cut the system.”

Ian Benzie, a spokesman for Centrex, said Mr Eastland, its Leeds contracts manager, had been the subject of an internal investigation relating to “inadequate paperwork” since February. Further action, including the suspension of a senior Centrex manager, was expected as the TES went to press. Individuals who received NVQs in the period under investigation will have their work revalidated and may have to take the awards again.

The National Council for Vocational Qualifications has demanded assurances that Centrex can act properly as the awarding body. Bob Evans, chief executive of Barnsley TEC, said he wanted a “credible robust system to ensure that qualification standards are met”.