THE Further Education Funding Council will inherit Bilston Community College's legal powers when it is wound up, fuelling speculation that the council will take legal action over the college's collapse.
Orders handing over Bilston's assets to neighbouring Wulfrun College and enabling the creation of the new Wolverhampton college, were laid before Parliament last week.
They include a five-point schedule giving the FEFC "all rights of action" against a range of individuals and organisations, including "any present or former officer, employee or agent of the corporation".
More than 30 colleges have been wound up since incorporation as part of the merger process, when an order transfers assets and liabilities to the partner college or both corporations are dissolved before re-emerging under a new name. But because of the special circumstances surrounding Bilston's closure, the FEFC has insisted on retaining its legal powers, indicating the determination of ministers and funding chiefs to get to the bottom of the college's demise.
The order allows the FEFC to take action "for the recovery of the corporation's property including money removed or disposed of otherwise than regularly and with full propriety" a clear reference to possible criminal activity at Bilston.
West Midlands police, called in to the college in April, said that although investigations were at an early stage deception, conspiracy, fraud, false accounting or theft could not be ruled out. A police source said: "There's obviously something there to be looked at."
The order also gives the FEFC the right to act "in connection with the provision ... of professional audit, accounting, investigating or reporting services". This would pave the way for the FEFC to seek compensation from Bilston's auditors, Deloitte Touche, for allegedly failing to alert governors earlier to the college's financial predicament.
FEFC inspectors, who gave the college the worst report in the sector's history, including grade 5s for both governance and management, listed "acceptance of inadequate and inaccurate financial information" and "failure of audit process" among its many weaknesses.
Last month, Deloitte Touche was reprimanded by MPs over Halton College. MPs said the the firm had "let down" the college and that it was "deplorable" that they had denied the National Audit Office access to information.
Halton decided against taking legal action after being told that it would cost a minimum of pound;150,000 to launch a claim.
But ministers are said to be "hopping mad" that Deloitte Touche have apparently been involved in two such high-profile college failures.