The government agency created to seize the assets of criminals is condemned today as a mess, having spent £65 million on collecting only £23 million.

The Assets Recovery Agency has received 700 files linked to £274 million. But it has seized money from only 52 of these cases, according to a report by the spending watchdog.

Millions of pounds paid in fees to receivers to manage criminal assets are expected in 12 cases to be more than the cash and assets being looked after.

The National Audit Office report also found that the agency, which is to be merged with the Serious Organised Crime Agency, has no effective case-management system and had experienced high turnover of staff. A third of the financial investigators trained by the agency either retired or left soon after qualifying.

The scale of the agency’s failure is highlighted by the estimated £20 billion annual cost of organised crime in Britain.

When David Blunkett, the former Home Secretary, created the agency in 2003 he said: “It is coming after the homes, yachts, mansions and luxury cars of crime barons.”

The reality has been rather different, with no yachts or mansions seized, and because the law restricted staff from chasing assets owned for more than 12 years, few of the “Mr Bigs” of the criminal underworld were targeted.

The agency has, however, seized four racehorses, including Latino Magic, which won the Galway Hurdle in the Irish Republic in 2005.

Edward Leigh, the chairman of the Commons Public Accounts Committee, said: “The criminal fraternity must be lying back on their sun loungers laughing into their champagne glasses at the mess those trying to catch up with them are in.”

The National Audit Office report said that the agency had not met its targets for the recovery of assets or for being self-financing by 2005-06, and that a similar self-financing target for 2009-10 was not supported by financial modelling. The report highlights a series of failings, but said that the agency had set important case law that should deter future challenges to its powers by criminals.

However, the report highlights the difficulties the agency has faced in targeting criminals. It takes an average of 490 days to achieve partial or full recovery of assets.

A total of £15.7 million had been spent on fees to receivers for managing crooks’ assets by December 2006, with some cases attracting huge fees. Fees totalling more than £3.5 million have already been paid to receivers managing £7 million of assets, the report found.

Today’s report also discloses that no feasibility study was conducted before the agency was created to assess its expected performance or appropriate targets. Four unnamed police forces have yet to refer a single case to the agency. Case management information at the agency, which is based in London and Northern Ireland, is poor, with no central database.

A statement from the Assets Recovery Agency said: “We fully recognise the serious criticisms of aspects of our performance in the NAO report. As an agency we have . . . set ourselves a number of key performance indicators which were deliberately challenging. As the report highlights, we have met some but failed to hit others.

“As the NAO recognises, we had already put in hand a number of improvements in these areas.”

Slim pickings

-70 items of jewellery valued at £10,000 seized from the home of the serial killer Harold Shipman

-£500,000 luxury home in Widnes, Lancashire, seized

-Ladies Tag Heuer wrist watch seized

-Raymond Weil wrist watch seized

-£500,000 villa in Marbella in the process of being sold

-Antique fishing equipment seized

-Helicopter seized

-Four race horses, including Latino Magic sold