IT recruiter InterQuest Group has announced that due to “apparent impropriety and alleged fraud” within a major client of recent acquisition Contract Connections Limited, the client has terminated its contract with CCL, according to a company statement.

InterQuest Group acquired the technology staffing business Contract Connections (CCL) for a total consideration of up to £4.6m.

CCL’s client has withheld £600,000  pending an ongoing investigation. InterQuest’s board and its legal advisers, say this termination represents a breach of the contract between CCL and its client. InterQuest adds it believes that the group could seek restitution and potentially damages, which could total up to £2.6m.

The statement adds: “While the group as a whole continues to trade well and the board continues to explore expansion opportunities, the group’s results for the year ending 31 December 2011 will be adversely affected.

InterQuest will announce results for the half year ended 30 June on 13 September.