Neil Preston, chief executive of the 21,000-student Stoke-on-Trent College, and Helen Chandler, an assistant director, have been on sick leave since late September.

The Dymock Arms in Penley, Clwyd, has been owned by Pub Doctor Ltd since August this year. Papers from Companies House show that Mr Preston and Mrs Chandler are joint directors of the company, set up in 1995.

Governors have been put on the spot by the revelation. It comes as a committee of three at the trouble-hit college is looking at allegations that the two have been working in the pub. Both the work in the pub and the running of a separate company would have required the permission of the corporation under an exclusivity clause in the contracts of the most senior staff.

But George Mardle, chair of governors during that period, told The TES: “I did not know anything about that. Technically, it is an issue that needs taking up. ” Mr Preston and Mrs Chandler were due to appear before the special committee last week, but it is understood that they did not do so. Both are off work with stress-related illnesses.

The committee was set up as required under the constitution where governors may consider dismissing or taking similar actin against senior staff. They did so following allegations by some staff that a “climate of fear” had been created at the college.

A survey by the lecturers’ union NATFHE last July revealed claims of “a dictatorial and bullying” management regime.

The college looks set to face further turmoil next week when accountants Price Waterhouse are due to publish a report on its finances. Senior sources in the college suggest that a deficit could be running as high as Pounds 1.8 million.

The full report is due to go to the governors next Tuesday and to the corporation at the end of next week. Officials of the lecturers’ union NATFHE insist that Stoke-on-Trent should appeal to the Further Education Funding Council to reschedule the debts.