It has been nearly a year now since, in November 2018, FE Week first reported that Brooklands College had paid a mysterious Andrew Merritt and his company SCL Security Ltd close to £20m as an apprenticeship subcontractor.
There is no evidence that SCL Security Ltd advertised their courses and the college was even unable (or unwilling) to say where the courses were delivered – and questions remain over exactly who Andrew Merritt is.
Around the same time as first exposing this scandal, FE Week also shared evidence with the Education and Skills Funding Agency, the body responsible for financial assurance over public funds.
We never received a response, but understand an ESFA investigation using three external audit firms was finally launched in March and in the same month the principal, Gail Walker, resigned.
The college has never once published or provided a statement to FE Week about the scandal and claimed the principal was “leaving the education sector in the summer as part of her long-term personal plan”.
The chair of governors, Terry Lazenby, in a press release (still on the college website) spoke of her “great work”.
And as reported today, we now know the investigation concluded that funding was being used to pay apprentice wages and the ESFA want their money back.
This could put the future of the college in doubt and it seems likely the police will investigate.
The wider questions this scandal raises are: what went wrong; how can it be avoided in future and what responsibility is being taken by those who, unknowingly, allowed this to happen?
The principal did (after clinging on for several months) quit – but what about the governors?
The chair of the college for most of the period was Jerry Tapp, who stood down as planned after two terms of four years in September 2018, two months before FE Week first reported on the subcontracting arrangement with SCL Security Ltd.
It is worth noting, although not unusual, the chair was not a member of the audit committee.
However, prior to taking over as chair, Terry Lazenby had been vice chair since 2014, a member of three committees including audit and attended an impressive 32 out of 33 board and committee meetings in the past three years, according to the published college accounts.
It seems clear from audit committee meeting minutes that Lazenby was fully aware of the scale of subcontracting, noting in the September 2017 meeting it was “a significantly higher proportion of income at Brooklands than many FE Colleges”.
Surely this scandal would never have reached the scale it had if the governors at the time had been doing their jobs, and Lazenby needs to make way for new leadership.
Questions also need to be asked about how SCL Security Ltd was paid close to £20 million despite the ESFA introducing new subcontracting controls, like the relatively new “annual report from an external auditor that provides assurance on their arrangements to manage and control their delivery subcontractors.”
Clearly there was a major failure of due diligence and contract management, something perhaps the ESFA account manager and or financial assurance team should take some responsibility for.
Then there are the audit firms.
It is shocking to me that colleges have to spend tens of thousands each year on an internal and a different external audit firm, but for what in return?
Is it time that some of the audit firms get investigated themselves, named and shamed and ultimately fined for failing at basic assurance work in the FE sector?
The chief executive of the ESFA, Eileen Milner, announced in June 2018 that her audit team was to be strengthened, and it is now in a Provider Market Oversight department led by Matthew Atkinson.
The ESFA approach to provider subcontracting and general financial assurance has for a long time needed far more investment and to be more interventionist – so watch this space.
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