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Formal criminal and civil investigations have been launched following the mass sacking of 800 P&O workers.
The chief executive of the Insolvency Service today confirmed it is looking into the actions of the ferry firm and whether it broke the law when it fired hundreds of seafarers without prior warning and no consultation.
The request for the government body to look into the shock move came from Kwasi Kwarteng, the Secretary of State for Business and Energy.
In a letter, Dean Beale, the inspector general and chief executive of the Insolvency Service wrote to Mr Kwarteng: "In your letter you asked the Insolvency Service to undertake an urgent and throughout enquiry into the circumstances surrounding the redundancies made by P&O Ferries, to determine whether the law had been complied with and consider prompt and appropriate action where it had not.
"Following its enquiries I can confirm that the Insolvency Service has initiated both formal criminal and civil investigations into the circumstances surrounding the recent redundancies."
Mr Beale said he couldn't comment further, but would 'provide further updates in due course."
Reacting to the news, Mr Kwarteng tweeted: "Following my letter to the Insolvency Service last week, formal criminal and civil investigations into P&O Ferries have now commenced.
"Transport Secretary @GrantShapps and I will continue to follow this matter closely as the investigations progress."
P&O Ferries sacked 800 workers - 600 of which were based in Dover - in a shock move on Thursday, March 17 - some over a pre-recorded, online video call.
Staff on board the ships were ordered to disembark, with security officers standing by.
The firm said the move was necessary, as it was losing hundreds of millions of pounds a year.
Foreign agency staff, being paid cheaper wages, were brought in to replace the workforce.
But since then, the Pride of Kent, and a second P&O ship, have failed safety inspections and been detained by the MCA.
No P&O services are currently running from Dover, with DFDS and Irish Ferries picking up the extra capacity.
P&O chief executive Peter Hebblethwaite - who admitting breaking the law with the move - says he will not reverse the decision, despite threats by the government and calls from trade unions to boycott the company.
Earlier this week, the government announced nine new commitments to protect seafarers.
The list includes changing the law so workers receive 'at least the minimum wage', fining firms which use fire and rehire tactics, and taking action against company leaders who break the law.
The promises were revealed by Mr Shapps, who said: "P&O are acting like pirates of the high sea and its CEO not only admitted in Parliament about deliberately breaking the law, but had the audacity to confirm it in a letter to me too.
"We are sending a clear message to everyone that if you want to operate in the UK then you have to conduct yourself just like any other boardroom."
A statement from the Insolvency Service reads: "Following its enquiries, the Insolvency Service has commenced formal criminal and civil investigations into the circumstances surrounding the recent redundancies made by P&O Ferries.
"As these are ongoing investigations, no further comment or information can be provided at this time."
P&O declined to comment.