A TROUBLESHOOTER has been called in to rescue the Workers’ Educational Association from a mounting financial crisis which has led to seven-figure losses.

The charity, in its centenary year, is expected to have made a loss of more than pound;3 million over two years by the end of July.

It has abruptly suspended the recruitment process to replace its general secretary, Robert Lochrie, who had always been due to retire in May. Six candidates had been shortlisted.

WEA, based in the east end of London, has built up an international reputation for providing education for the masses with around 110,000 student enrolments in England and Scotland.

Andrew Malaolu, its senior accountant, was convicted of stealing pound;475,000 from the charity last year. The cash was recovered but the fraud, combined with the charity’s rapidly-increasing turnover, are thought to have contributed to the management pressures which led to the current crisis. Its income has grown from pound;15m in 1996 to a projected pound;30m this year.

The Learning and Skills Council, which provides around half the WEA’s income, has designated the charity as “causing serious concerns” - triggering the release of funding to help turn it around.

The LSC’s east London office will appoint a “change manager” to oversee recovery of the charity. The WEA itself will appoint two new directors responsible for finance and administration.

Mel Doyle, deputy general secretary, has been asked by the trustees to take over as acting general secretary during the recovery period. Working closely with the LSC, he will have the task of balancing the books by July 2004.

Mr Doyle says the fraud case damaged staff morale. “This organisation, like so many charities, is based on an atmosphere of trust, and people felt violated,” he said.

“But we have also suffered from poor financial management.

“I believe we must take a serious look at the financial management systems and practices. We are going to get over this. These are major problems but we are going to turn the situation around.”

He said the charity’s expenditure exceeded its income by pound;1.4m in the last financial year. He anticipates a figure of at least pound;1.5m this year, and possibly more than pound;2m.

The WEA employs 4,000 tutors, has 17,000 members and around 600 staff, with 13 offices around England and Scotland.

An LSC spokesman said: “The reason for their problems is weak financial management. The east London LSC will work closely with them to work out a plan of action. They will need considerable help and that is why we will appoint a change manager.

“We believe the situation is recoverable. The WEA is one of the largest organisations of its kind. We believe the work it has carried out over the last century can be moved forward.”

Alan Tuckett, director of the National Institute of Adult Continuing Education, said the LSC should re-think its approach to organisations like the WEA, which comes under the remit of the quango’s local offices but whose delivery is national.

He said: “However well the local LSC deals with this problem, and I’ve no reason to think it won’t do a good job, these types of providers are national and should not come under a local LSC.

“The LSC needs to have a national unit to deal with these organisations.”