Weak control led to extravagance;FE Focus
WEAK financial controls at Halton College allowed the principal and his deputy to fund extravagant spending and foreign trips, according to an investigation into financial irregularities at the Cheshire college.
The year-long National Audit Office and Further Education Funding Council inquiry reveals how college coffers funded overseas trips and excessive spending by the principal and his deputy.
Only six of the original 14 allegations were upheld, but the reports highlight concerns over the use of public funds to refurbish the principal's offices, "away days" for senior staff and governors and extensive foreign travel.
The FEFC report says it was "unacceptable" that the principal and deputy spent so much time out of college together, despite their argument that they were "an indivisible team".
In the five years up to their suspension in May 1998, college principal Martin Jenkins and deputy, Jenny Dolphin, who deny the allegations, spent more than 350 days out of the college on business, mostly in each other's company, spending pound;210,000 on travel and subsistence during that time.
In October 1997 they went on a pound;15,688 round-the-world trip to Hong Kong, Australia and Toronto. It took 19 days, but no more than seven were spent on business.
In July 1994, they travelled to Paris to look at the Pompidou centre to get ideas for a new college building project. The report dismissed their explanation that they went on the recommendation of the project manager as "absurd".
On a three-day trip to France in March 1995, which included a pound;1,016 bill for car hire, the principal, deputy and then chair of governors Jim Thomas ran up restaurant bills of pound;141, pound;138 and pound;240, all at college expense.
The report says facilities enjoyed on these and other trips were "excessive". A pound;290 bill each for one night's stay in a Mayfair hotel was an "isolated case", the principal claims. But the FEFC report says that "a series of 'isolated cases' can begin to look like a pattern of behaviour".
"The evidence shows the principalship, (Jenkins and Dolphin) accompanied on occasions by the then chair of the board, staying in expensive hotels, eating in restaurants with costly food and wine, and incurring excessive or unnecessary expense. None of this expense has been properly related to the benefit of the college."
But they were not the only beneficiaries of foreign trips. Twenty three staff went on a trip to the League of Innovation conference in Kansas in 1995 and a further 13 representatives of the college attended the same organisation's conference last year in Miami.
The report concludes: "The number, duration, expense and geographical range of these trips is out of all proportion to any of the benefits the college claims to have derived from them."
The FEFC report criticises the principal's role in buying computers. The principal only sought the board of governors' approval for one of five contracts for purchase and rental of computers, signed between July 1996 and July 1997, with a total cost of more than pound;2 million.
It says that Mr Jenkins accepted hospitality from the same rental company at the British Open Golf Championship at Lytham St Anne's in July 1996, signing a second agreement with the company the following month while the college's directors of finance and IT were on annual leave.
The report says that "several hundreds of thousands of pounds were spent without the necessary board approval". Although the report says the acceptance of hospitality was "inappropriate" and an "error of judgment" there was no evidence that it affected the award of the contract.
The pound;260,000 refurbishment of the principal and deputy's offices also comes under scrutiny. The report says the purchase of pound;25,600 worth of furniture was made without the requisite five tenders being sought but was "within the college's normal operational remit".
In February 1998, pound;31,019 was spent on 18 etchings for the corporate offices, after advice from the deputy principal's husband - an art lecturer - and the gallery from which they were bought. The report calls the advice "exceptionally naive at best" adding that it did not constitute a "proper basis for approving such purchases" which were a "questionable" use of public funds.
College spending on away days amounted to pound;100,400 over the five years and was made "without formal evaluation of the cost and benefit" and investigators were not satisfied that public funds used for bar bills had been reimbursed.
The FEFC report says that Halton College can demonstrate quality courses and good practice, for which the board and principals deserve credit. But it says there has been a "significant shortfall" in the "standards required for the proper stewardship of public funds" and in the overall supervision of the college's activities. The deputy principal was "directly implicated in some of the inappropriate activities and failed to stop or attempt to stop others".
It concludes: "The findings of these investigations indicate that the principal has not properly discharged his duties as accounting officer of the college, and therefore raise sufficient doubt for the board to consider his future as principal of the college."
ALLEGATIONS AND CONCLUSIONS OF THE NATIONAL AUDIT OFFICE REPORT
1 In 1994-95 the college claimed funding for students who lived in Scotland, knowing them to be ineligible.
Partly substantiated. Principal's request to delete students from claim not carried out. College to repay pound;254,000.
2 In 1994, the college claimed funding for 1,200-1,300 students on a 60-hour "Introduction to further education" course. The course lasted only three to four hours.
Substantiated. College to repay pound;146,000.
3 In 1994-95, the college claimed for 8,000 catering students at loadband 6, when 1,000 should have been loadband 1 and 7,000 should have been loadband 4.
Partly substantiated. There were only 3,243 students, none of them at loadband 6. Insufficient evidence to support loadbands claimed.
4 The college and its auditors relied on returns from franchised providers and failed to check that students were registered on the courses.
Partly substantiated. College checks were insufficient, some incorrect recording of data but no impact on funding.
5 Ineligible Scottish students were registered on franchised courses. Substantiated - see allegation 1.
6 The college increased "loadband" of courses year on year to meet targets for student numbers and income.
Not substantiated. But evidence of changes in claims under consideration by college's external auditors.
7 The college bought Apple MacIntosh computers from a local firm when alternative computers were cheaper. A college governor was education marketing manager of Apple Computers UK at the time.
Not substantiated. No impropriety by named governor or evidence that alternative computers were cheaper.
However, college incurred significant expenditure without due process and in breach of financial regulations. Board neglected supervisory duties.
8 In conjunction with a large private company, the college set up private companies in China using public funds and members of the college's senior management team were on the board.
Not substantiated, but college board should have prepared business plan and risk analysis.
9 College established a multimedia company using public funds which was wound up with losses of pound;500,000.
Not substantiated. Establishment of company authorised by the board. Company has not been wound up, but concerns about level of risk and adequacy of business planning.
10 Public funds misused during refurbishment of principalship's offices.
Not substantiated. No misuse of public funds, but financial regulations not followed properly.
11 Public funds were misused on "away days" for management, staff and governors at hotels. College used hotel owned by group which employs one of the governors.
Not substantiated. No evidence of impropriety by named governor. Some concerns about level of expenditure and absence of controls to ensure value for money.
12 College funds misused for overseas trips.
Partly substantiated. Trips were of benefit to the college but the duration, expense and range of trips were out of proportion to the benefits derived. No prior approval from board.
Unacceptable that so many trips involved principal and deputy. Some evidence of extravagant expenditure.
13 Public funds were misused to purchase presents with college credit cards.
Not substantiated, but some evidence of poor procedures and inadequate controls.
14 Staff were given opportunity to shred confidential documents. Not substantiated. No evidence that this was other than a routine operation.