The pub and night club empire run by entertainment tycoon Stefan King has been removed from a government training scheme after the discovery of major financial irregularities.
The Scottish Government provides millions of pounds each year to companies keen to develop their workers' skills.
Mr King's G1 Group, which runs some of Scotland's trendiest clubs and bars, made use of its share of £75 million of public cash to train up staff at Tennents Wellpark Brewery in Glasgow.
But a major investigation by funder Skills Development Scotland discovered huge sums of money which had been incorrectly paid to G1's training company.
Confronted by the evidence, the firm agreed to repay £411,834 and was immediately suspended from the scheme.
The company was also told it was getting no more public cash for Modern Apprenticeship training schemes during the current financial year at least.
Police were brought in to probe the cash claims but a force spokesman said there is no current investigation.
Alex Johnstone, Scottish Conservative MSP said:"This is a shocking revelation which begs more questions than it answers.
"How was this company able to make ineligible claims for public funding for so long?
"And, more worryingly, is this happening elsewhere? The Scottish Government and Skills Development Scotland need to assure the public that this outrageous episode is a one-off, and not something more endemic."
A spokesman for Skills Development Scotland (SDS) said:"A recent investigation into the G1 Group identified that they had made a total of £411,834 of incorrect claims. Following the investigation, during which time all contracts were suspended, SDS secured repayment of the entire £411,834.
"In line with SDS protocols, in the current financial year no contracts for new activity were awarded to the G1 Group.
"SDS has a robust compliance system in place to monitor training providers to ensure value for money for the public purse."
Venues run by the G1 Group are hugely popular with night lovers of Scotland's major cities.
It runs The Corinthian, Kushion and Polo Lounge in Glasgow and Cabaret Voltaire in Edinburgh.
The firm hit the headlines 18 months ago, when its Shimmy Club was found to be operating a two-way mirror in its ladies' toilet.
Members of Glasgow's Licensing Board shut the venue down for a week as punishment.
And last year, a gay couple won a discrimination case against the firm after they claimed they were denied entry to the Polo Lounge due to the lack of disabled facilities.
A spokesman for G1 said: "In early 2013, G1 fully co-operated with an investigation carried out by Skills Development Scotland.
"The outcome of this investigation showed that our training company, Host plc, had trained candidates in 2012 across Scotland and claimed funding from SDS when some of these candidates did not meet the criteria and therefore were ineligible for funding.
"The investigation highlighted some areas in which our business didn't have full operational oversight which could allow for an environment for a rogue employee to operate without knowledge of senior management.
"As part of the conclusion of the investigation G1 Group Plc agreed to fully repay all monies wrongly claimed and have since continued to operate our training business in accordance to the recommended changes."
It is understood G1 has been allowed to finish the training courses which were suspended pending the SDS financial investigation.
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