The college is to establish an independent investigation into the running of Pencoed college in Bridgend by John Thomas, principal for 10 years.
The suspension, at an emergency meeting of the governing body, followed an inquiry by the college's internal auditors. Earlier, a report by the Welsh FE Funding Council's audit service had been critical of the way the college had purchased farmland.
The inquiry is likely to examine this purchase, and the principal's role in it, and the employment of members of his family. Derek Hanks, the chairman of governors, confirmed that Mr Thomas's suspension and the inquiry were as a result of the internal audit and "observations passed to us. I cannot comment any further as this might prejudice the inquiry". The investigation would begin as soon as possible. Trevor Wilmore has been appointed acting principal during the investigation.
A spokeswoman for the Welsh FE Funding Council said officials were keeping up to date with developments, and keeping the Welsh Office informed. "But essentially it is a college disciplinary matter," she added.
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