THE former chief executive of Butterwick Hospice has been arrested by officers from Cleveland Police on suspicion of fraud.

Graham Leggatt-Chidgey left the charity under a cloud last month when it was announced he had retired after almost 21 years as chief executive.

It is understood the 62-year-old was asked to leave the Stockton headquarters in the middle of March before standing down from his role in April.

A Cleveland Police spokeswoman said: “We received a concern of possible financial irregularity relating to Butterwick Hospice and officers are investigating the concerns.

“A 62-year-old man has been arrested today (Tuesday) on suspicion on fraud and he is currently undergoing questioning.”

Butterwick Hospice Care funds hospices for adults and young people in Stockton and Bishop Auckland and Butterwick House Children’s Hospice.

In a memo sent to staff following his departure, the trustees revealed Butterwick was “currently facing financial difficulties” and a long- term review had taken place to “ensure our continued sustainability”.

On Tuesday, the charity spoke publicly for the first time since Mr Leggatt-Chidgey left, last month, to reassure patients and donors that it is business as usual.

A spokesperson for the Hospice said: “We asked our former CEO to leave his role on April 10 and informed the Charity Commission of events leading to this decision.

“Our internal management team has been restructured and, for an interim period, Judith Hunter, chair of the trustees and a highly respected nursing professional and RCN Northern board member, will take a more active role in supporting the operational team.

“Our patients and their families are always our main priority and we will continue to deliver the high standards of care and compassion the Hospice is renowned for. Our finances are on a stable footing going forward and we know that the local community will continue to support us as it has always done.”

The problems come less than two years after the death of Mary Butterwick OBE the charity’s widely respected founder who sold her home to launch its first hospice in memory of her beloved husband John after he died of cancer.

Her tireless devotion saw the charity open purpose-built facilities in Bishop Auckland and Stockton where it continues to deliver care and a wide range of support free-of-charge to adults and children.

In its latest accounts Butterwick reported a £29,724 loss in the year ended March 31, 2016 which was a dramatic drop from a £473,492 profit the previous year.

Its 2016 gross income of £2,289,903 was down on the 2,398,027 made in 2015.