Former director of Sick Kids appeal at centre of police fraud inquiry

Ms McGonigle was hired to run the New Pyjamas campaign, which aimed to raise 15m for equipment at the Royal Hospital for Sick Children in Edinburgh that is not already provided by the NHS.

She was suspended in February last year after it emerged the appeal had raised just 60,000 but had spent 500,000. In September, she launched an unfair dismissal claim, which was due to be heard at an employment tribunal next week.

However, that hearing has now been put off until May to give police time to investigate the allegations.

A police spokesman said: "We can confirm that we have received a complaint regarding alleged fraudulent activity related to fundraising activity for the Royal Hospital for Sick Children, and an investigation is under way."

It has previously been alleged that auditors found Ms McGonigle used the campaign credit card on three occasions for "personal expenses" or items which had a "personal benefit".

Ms McGonigle was brought in on a reported annual salary of 70,000 to drive the fundraising efforts, seeking support from, among others, author JK Rowling and former First Minister Jack McConnell.

The campaign target of 15m would have funded a school at the new hospital when it opens in Little France in 2015, a family hotel and an upgraded drop-in centre.

But her relationship with the charity broke down following allegations of in-fighting, squandered cash and alleged incompetence.

However, she has maintained that had the SKFF kept faith the 15m would have been raised.

Her supporters say she had secured 2m in pledges for the appeal, even though the coffers appeared to be empty.

They say the fall-out owed more to a personality clash, with health chiefs not taking to her brusque style. The charity has already been investigated by the Office of the Scottish Charity Regulator and cleared of any wrongdoing.

The OSCR said the SKFF should establish clear lines of authority, review its constitution and structure, and introduce a "robust written feedback mechanism for staff".It said the shortfall had been due to unrealistic expectations and the economic downturn.

"With hindsight, further exploration of the underlying issues should have resulted in the charity trustees having a better understanding of the true position," the OSCR added.

The SKFF welcomed a report exonerating its trustees of wrongdoing over the ill-fated campaign, and urged fundraisers to look to the future.

Ms McGonigle has not spoken to police officers about the allegations and maintains her innocence.

Robert Holland, Ms McGonigle's lawyer, said yesterday: "She has had no contact whatsoever from Lothian and Borders Police since these allegations were made and absolutely denies any wrongdoing."

An SKFF spokesman said: "It would be inappropriate for us to comment at this point."