More than 50 sub-contractors from the federal government's largest department are believed to be under investigation in a criminal fraud probe.
The sub-contractors, employed by the Department of Human Services for IT work, are accused of submitting false invoices as well as providing fake CVs and qualifications to secure contracts.
At least one public service employee is also under suspicion, with the department calling in the Australian Federal Police to help with the investigation.
The lawyer representing 10 of these sub-contractors said they had been inadvertently caught in a complex web of which they had no knowledge.
"A series of secondary subcontracting companies are at the middle of what has gone on," lawyer Rory Markham told The Canberra Times.
"These companies engaged between 50 to 100 employees as subcontractors for large IT projects at the Department of Human Services.
"This process illustrates how increasingly unreliable and murky these secondary subcontracting arrangements can be."
Do you know more? Get in touch at Steven.Trask@fairfaxmedia.com.au
The employees had their access passes confiscated late last week and have now been asked back to speak with the department's internal fraud team.
A spokeswoman for the Department of Human Services confirmed the investigation.
"The Department of Human Services is conducting an internal investigation into allegations of potential fraudulent behaviour involving a small number of former contractors and an APS employee," she said.
"The department is being provided support and assistance by the Australian Federal Police.
"As this investigation is ongoing, it would not be appropriate to provide any further comment at this time."
Mr Markham, the director of employment litigation at Chamberlains Law Firm, said many were surprised to learn of their alleged role in the breaches.
"Some of the employees involved in the claim now have reason to believe that, without their knowledge, they had CVs submitted on their behalf that were false," he said.
"These are mums and dads with mortgages to pay and kids to feed. And they are not getting paid while these claims are investigated."
Correspondence sent by department investigators to these employees outlined the allegedly criminal nature of their misconduct .
"As a result of our investigation, we suspect you may have presented false and or misleading information to the department in circumstances where you were required to tell the truth," investigators wrote to employees.
"In certain circumstances this type of conduct amounts to a criminal offence."
The Department of Human Services is currently considering whether to begin formal legal action.
"We have reached a view that there are reasonable grounds for believing you may have committed a criminal offence," employees were told.
"If we maintain this view, the matter may be referred to the Commonwealth Director of Public Prosecutions for consideration of prosecution action."
The department has asked employees accused of misconduct to voluntarily attend formal interviews with investigators.
"Before any further action is taken, we would like to provide you with the opportunity to respond to the allegation by participating in a formal record of interview," investigators wrote.
"If you are charged with a criminal offence, then what you say in your interview may be used as evidence."
Mr Markham said the department should instead focus on the companies at the centre of the allegations, not the employees.