The report by PricewaterhouseCoopers, marked strictly private and confidential, investigates alleged financial irregularities. The consultants were called in by the college to investigate projects run with Extras Ltd, an IT private training provider in Wales.

The report looks at projects which were part-funded by the European Social Fund. Under the rules the fund supplies 45 per cent of the cash. The rest had to be supplied by the college.

But the report claims that the college tried to run the courses without matching the funding.

The report says the college had signed certificates “declaring an intention to provide funding to projects which it clearly had no intention of actually providing”.

The report criticises senior managers for failing to keep other managers, or governors, informed of substantial financial commitments. Governors received “scant and biased” information.

One chair of governors who resigned said the function of the board was increasingly to “rubber stamp” managers’ decisions. Once the principal signed forms relating to pound;800,000 projects before governors ratified the policy.

The report says the key personnel involved with Extras Ltd were the principal, director of enterprise and director of finance. “It is clear that these three executives had the most knowledge and should have been fully aware of the implications of the relationship and dealings with Extras Ltd.”

The director of finance was required to investigate any instances of irregularity brought to his attention,but did not. When the college prepared a tender that faced no competition, as with the franchise with Extras Ltd, governors’ approval must be sought, but this didn’t happen.

Allegations of financial irregularities were first brought to light by Andrew Murray, then a business studies lecturer and senior official of the lecturers’ union NATFHE. He was later made redundant, though the college denies any link. Mr Murray, and his union, allege political victimisation and his case has become something of a cause celebre.

The South Wales Fraud Squad undertook an investigation but no charges were brought.

In April 1998 the Further Education Funding Council said the college’s governance was “weak” and its finances “endangered” its solvency. Between July 1995 and July 1997, the reserves declined from a surplus of pound;700,000 to a loss of pound;1 million.

In March 1998 principal Richard Evans was suspended on full pay, and he was dismissed in July 1999. The director of finance and the director of enterprise took early retirement on enhanced terms.

The college has always refused to publish the PricewaterhousCoopers report, giving no reasons.

In August 1999 Education Secretary David Blunkett ordered an inquiry by the FEFC. He wanted a “quick and thorough” investigation. He said the inquiry should examine claims of trade union victimisation, possible irregularities over European funding, the delay over the dismissal of the principal, and concerns over quality and standards.

The funding council subsequently appointed Sir Pat Lowry, former chairman of ACAS, the conciliation service, to lead the inquiry. His report is due out next month.

FE Focus III