Allegations of fraud at the Army Recruit Training Centre at Kapooka are being investigated by the army's own fraud branch.
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The investigation's focus is on a sub-unit of the Kapooka training centre, Adventurous Training Wing (ATW).
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An internal report detailed complaints of financial irregularities over payments made to the Wagga-based private training provider Group 314 worth hundreds of thousands of dollars, the ABC reported.
Group 314's chief executive Kit Marshall however, has slammed the allegations of fraud and corruption as "baseless, malicious, and most likely from disgruntled junior members of the army".
"We have been advised by the ADF that Group 314 does not have a case to answer in these matters," he said.
"Some members of the army have found it difficult adjusting to contractors performing a role that would historically be performed by them.
"Throughout the term of the Adventurous Training contract ... payments have only been made where services have been rendered, and all work has been duly authorised by the ADF."
A spokesperson for the Department of Defence confirmed that the army's ATW was the subject of an investigation by the Fraud Control and Investigations Branch from May to September this year.
"The army is undertaking a further review of ATW matters, therefore it would be premature to comment at this time," they said.
"The Inspector General of the ADF is not currently examining this matter."