The founder of a scandal-hit apprenticeship provider has been disqualified from acting as a director for six years after investigators found he paid himself nearly £1 million while his firm slid into administration.
Elmfield Training – one of the country’s largest providers of apprenticeships that received more than £100m in public money – was wound up in 2013 owing 180 companies more than £11m.
It followed extensive investigations from FE Week that revealed alleged malpractices at the firm – founded by Gerard Syddall – leading to a Skills Funding Agency (SFA) investigation.
But Mr Syddall finds himself embroiled in a fresh controversy this week after insolvency investigators found he personally benefited from the company to the tune of nearly £1 million – just months before it went into administration.
Mr Syddall clearly put his own interests ahead of those of the company
The Insolvency Service found the firm was experiencing cashflow difficulties at the time in March 2013 and Mr Syddall had given an undertaking to the board of directors he would not use company funds for his own benefit.
But investigators found that Mr Syddall, and people and companies connected to him, went on to receive nearly £954,000 from Elmfield.
By the time it went into administration in October that year, Mr Syddall owed the company £2.6 million.
In a scathing investigation report, released yesterday, investigator Robert Clarke said: “Mr Syddall clearly put his own interests ahead of those of the company.
“To make matters worse, this was after he had vowed to the company’s board that he would not do this.
“Directors of companies should know that this type of conduct is not acceptable and, in such circumstances, the Insolvency Service will take action against them.”
Mr Syddall has been disqualified from acting as a director until February 2022. He was adjudged as bankrupt in April 2015.
Mr Syddall was hauled infront of a Business, Innovation and Skills (BIS) select committee in 2012 and accused of a “rip off” over high profits.
He was questioned about the £12m profit made by his company in 2010, all from government funding – first revealed by FE Week. A total of £3m of that went directly to Mr Syddall as a dividend.
After FE Week revealed the firm’s “appalling” pass rate, it was given a grade four rating from Ofsted leading to Mr Syddall’s resignation as chief executive.
A BBC investigation – supported by information from FE Week – then revealed employees were “routinely asked to alter forms to claim funding for staff who never wanted to do an apprenticeship”.
The firm went into liquidation. A later SFA investigation cleared the company of falsely claiming for learners, but found “weakness in their controls that were not good practice”.
HOW FE WEEK EXPOSED IT ALL – A FULL TIMELINE OF THE SAGA:
June 2011: FE Week’s first pilot edition reveals Elmfield’s “eye-watering” pre-tax profit of £12.3 million.
June 2011: Our newspaper’s second pilot edition reveals details of Elmfield’s 18,000 six-month adult apprenticeships in level 2 retail with Morrisons.
March 2012: Ged Sydall faces select committee grilling – where he is accused by an MP of a “rip off” over the firm’s high profit margins generated from the public purse.
April 2012: Elmfield features as part of a Panorama investigation titled “The Great Apprentice Scandal”.
November 2012: Interim FE Week editor Nick Linford – editor of FE Week at the time – spoke about Elmfield’s profits as a witness to the BIS Select Committee. (Par 210 here.)
February 2013: Morrisons announces its three-year contract with Elmfield will end this year. It had an overall success rate of 58.5 per cent for the previous year.
May 2013: FE Week reveals Elmfield’s “appalling” pass rate – with just 47.5 per cent of leavers in 2011/12 walking away with an apprenticeship certificate.
July 2013: Mr Syddall resigns after 10 years as chief executive after Ofsted inspectors gave Elmfield a grade four inspection result having come across “unacceptably low” results.
Ofsted found the number of learners who completed their qualification in the expected time “continues to decline” and reached an “unacceptable low” 23 per cent in retail apprenticeships, which make up the majority of Elmfield’s provision.
Skills Minister Matt Hancock promised to take “tough and urgent action on failings providers”.
October 2013: Former chief executive Ged Syddall quits as director during Newsnight probe into alleged malpractice – supported with information uncovered by FE Week. However he still remained the majority shareholder.
The investigation found staff were “routinely asked to alter forms to claim funding for staff who never wanted to do an apprenticeship”.
October 2013: Elmfield bosses confirms they are taking steps to put the company into administration owing £11m to more than 180 firms.
November, 2013: 300 jobs are saved after EQL Solutions agreed a £1.5m to buy the majority of Elmfield’s assets.
April, 2014: A Skills Funding Agency clears Elmfield of falsely claiming for learners on the Morrisons apprentice scheme after a six-month investigation.
However it did find “some of the actions taken by Elmfield indicate weaknesses in their controls and were not good practice”.
People have been jailed for far less.
The push for 3 million apprenticeships gives reason for everyone to be vigilant in case history repeats itself.
Well what can I say many said nothing would happen but happen it did. FE week did a good job on this one
It’s encouraging to know some justice has been served, there is still much work to do though elsewhere, in particular on some direct grant holders ( some very large UK and global employers) that feel they are an entity unto their own rules and rights, and that don’t necessarily need the public funds as they are extremely lucrative businesses. Personally I feel that the NHS would use the money for far more needy causes!!