Police are investigating a major fraud allegedly committed by a civil servant at a Government quango, The Argus can reveal.

Documents seen by The Argus detail serious allegations against an employee of the South East England Development Agency (Seeda), responsible for economic development in Sussex.

The Argus understands Andrew Smith, who left the organisation in December, is accused of persuading a developer to hand over a series of blank cheques worth £100,000.

It is alleged Mr Smith was acting as a middle man for the developer, who wrote the cheques to pay for fees relating to planning applications.

The businessman is not implicated in the investigation.

The cheques were left blank, it is alleged, because Mr Smith said he needed to check which account the funds should be debited to.

The developer blew the whistle on the Seeda employee, who lives in Woking, Surrey, after becoming suspicious about the slow progress of the plans.

The Argus understands the businessman s concerns were heightened when he drove past one of the sites lined up for development and spotted other builders beginning work.

Negotiations had taken place on a series of plots across Surrey, including Virginia Water and Windlesham, it is believed.

The alleged fraud was uncovered in November, after which the member of staff left Seeda.

He was arrested by Surrey Police on January 8 and has been bailed while police carry out investigations.

A Seeda spokesman said: "Andrew Smith has not been employed by Seeda since December 2008.

"After an internal investigation into the allegations against Mr Smith, we are fully cooperating with police inquiries.

"It would be inappropriate for us to comment further pending the outcome of the police investigation."

A spokeswoman for Surrey Police said: "A Woking man was arrested by Surrey Police on January 8, 2009, in connection with an allegation of fraud against a businessman.

"The man was questioned and released on bail, pending further inquiries."