HUNDREDS of thousands of pounds of public money is being spent on property owned by a company that has been at the centre of a police investigation for almost four years.

Brighton and Hove City Council continues to house tenants in K.E.M. Property Services’ homes despite the London-based firm being at the centre of a long-standing fraud probe.

A police investigation was launched into alleged corruption in the awarding of £25 million of council housing contracts to the firm in 2013.

More than two dozen individuals and families are currently being housed in K.E.M. properties in arrangements likely to continue into next year.

Council bosses said the authority had not been able to end its connection with K.E.M. because of a shortage in alternative housing.

An investigation was launched in October 2013 into the links between Brighton and Hove City Council head of housing Jugal Sharma and K.E.M. owned by his brother Ashley Parker, and possible irregularities in short-term leasing contracts.

Sussex Police told The Argus that the force was now in the process of submitting files to the Crown Prosecution Service for consideration on whether to bring the case to trial.

K.E.M. is paid to provide hostel and shared accommodation for young people.

The council currently uses 26 K.E.M. properties including 11 self-contained one-beds, five two-beds; nine three-beds and one four bed. Almost all of the agreements are due to expire in 2018.

Council officials indicated it was unlikely the authority would seek to recoup sums paid to the company if its directors are found guilty of fraud because tenants received the accommodation the council had paid for.

Housing campaigner Steve Parry said: “I find it quite amazing.

“I don’t accept their claim that they haven’t got sufficient accommodation to house these people elsewhere.”

Larissa Reed, who joined the council in September as executive director of housing, told Mr Parry that the council had begun a programme of “decanting people” from the K.E.M. properties but with the shortage of properties and a growing housing demand in the city it would take until 2018.

A council spokesman added: “The council has leases for properties which are good quality and are in the city. Properties are handed back when the leases come to an end. It is not in anyone’s interest to end leases prematurely due to the costs of obtaining alternative accommodation which increasingly is not in the city.

“The money is for providing accommodation which they have done. We could not recoup money when we have received the accommodation for which we were paying for. ”