A college has called in the lawyers to recover a long-running £1.4 million debt held up in Nigeria, after a secretive technical education project in the country went pear-shaped.

Highbury College, which recently sold one of its prime learning centres in Portsmouth for a hugely reduced price to balance the books, has launched a number of ventures in Nigeria since 2012.

Millions of pounds of the college’s funding was pumped into the projects in an effort to upskill the country’s young people, but it appears the schemes were short-lived and one in particular came at a huge expense.

Institutions really do need to think twice before taking on the extra risks that overseas ventures entail

Numerous minutes from meetings dating back to 2016 discuss Highbury College’s troubles in retrieving a £1.4 million debt that is owed to it by the Cross River State Government – a coastal state in southern Nigeria.

In 2013, the college partnered with the state to design a “demand-driven curriculum” and run a polytechnic training provider, called the Institute of Technology and Management (pictured).

But Highbury, which has remained tight-lipped about the project, pulled out of the partnership following a change in political parties in Nigeria in 2015.

It isn’t clear exactly what the college’s funds were spent on.

Since then, the college has managed to recoup £400,000 owed to it, but hasn’t managed to get hold of the remaining £1.4 million.

Legal action has now been launched to recover the funds.

“The college accountant confirmed there been no progress with the CRSG [Cross River State Government] debt (c£1.4 million) and that the college had begun legal proceedings to recover the funds,” said recently published minutes from a July 2018 audit committee meeting at Highbury.

“He confirmed that work was underway to transfer the money in the college’s Nigerian bank account (c£400k) as the official and black-market exchange rates were now aligned.”

The college has been evasive about the project, the debt owed to it and the legal challenge.

“Due to the commercially sensitive nature of your enquiry, the college is not in a position to comment,” a spokesperson said.

FE Week contacted the Cross River State Government, the British High Commission for Nigeria, and the Institute of Technology and Management in Ugep, which appears to still be operational, but did not receive a response at the time of going to press.

Mick Fletcher, an FE expert at the Policy Consortium, said it is “sad but perhaps not surprising” that Highbury College’s operation in Nigeria has run into difficulties.

“I have worked with Nigerian polytechnics and know first-hand the difficulties of doing business in that country,” he told FE Week.

“Given the great pressures on college managers in England at the moment institutions really do need to think twice before taking on the extra risks and increased demands on senior staff attention that overseas ventures entail.”

Colleges were warned off overseas ventures in 2016 following the collapse of AoC India, which fell just four years after launching when 25 UK college members quit.

While Highbury has not been forthcoming about its debt in Nigeria, minutes from various college board meetings have shed some light on the fiasco.

“The 2015 general election in Nigeria, resulting in a new political party taking over the government, and the drop in oil prices had slowed down the economy in Nigeria and these developments had affected the college’s Cross River State Government contract,” according to corporation minutes from July 2016.

“The college was being supported by the UKTI [UK Trade & Investment] and the British High Commissioner to Nigeria to recover the outstanding invoices and the principal assured members that all diplomatic channels were being explored.”

November 2016 audit committee minutes then said: “The main [financial] issue was the recovery of a significant Nigerian debt which was long overdue with no clear timeframe for being cleared.”

Highbury, which dropped two Ofsted grades from ‘outstanding’ last year, stopped work in Nigeria in 2015/16, according to its accounts.

The £1.4 million debt isn’t the college’s only financial woe.

Its accounts for 2017/18 were published this week and show a deficit of £2.48 million, a quick sale in August of their City of Portsmouth Centre for £4 million less than it had been valued at, a £200,000 ESFA clawback for under-delivery and a £400,000 battle with the tax office over VAT.

Meanwhile, one of its subsidiaries which it invested in less than three years ago has had to cease trading and write off £300,000 debts (see box outs).

On top of this, the college has failed to release its corporate expense claims for the past five years, which should have been shared with FE Week under the Freedom of Information act.

From a previous FOI, it was revealed that Highbury’s principal, Stella Mbubaegbu, used college cash to pay for a first-class return flight from London to Dallas at a cost of £4,132.

 

What was Highbury’s project in Nigeria?

The Cross River State Government entered into a partnership with Highbury College to design a “demand-driven curriculum” and run a new polytechnic training provider in October 2013.

According to a press release frow the state at the time, Highbury’s principal Stella Mbubaegbu described the project as a “new dawn that will make the difference in the education sector”.

The college has refused to reveal any details about the project, but from what FE Week has been able to gather through its own research, it essentially headed up the Institute of Technology and Management.

This included supplying a rector (a principal). William Pedley held this role at the institute from July 2014 to August 2016, according to his LinkedIn page.

He then returned to the UK to work as Highbury’s sector lead for university access and A-levels when the Nigeria project stopped.

According to the Institute of Technology and Management’s own LinkedIn page, the centre was designed to be an “entrepreneurial Polytechnic Institute, the first of its kind in Nigeria”.

Ms Mbubaegbu said the curriculum of the polytechnic was designed to “intertwine technical and vocational education training to boast entrepreneurship development”.

The aim was to enable young people to set up their own businesses.

The college’s board minutes suggest they pulled out of the project in 2015, citing a change in Nigerian government and a drop in oil prices which slowed down the country’s economy as the reason.

It is unclear exactly what the college was being paid for, but to date £400,000 has been paid and the college has launched legal action to recoup the remaining £1.4 million.

Highbury has signed up to other projects in Nigeria in the past.

In 2012, the college was selected to partner the federal government of Nigeria to establish ten new vocational skills centres that were expected to provide training and employment opportunities to out-of-work Nigerian youths, according to a news story by About My Area at the time.

Principal Stella Mbubaegbu said the centres would be a “beacon of aspiration and excellence throughout the country”.

The college declined to comment on whether it continued as a partner for the project when it launched.

 

Apprenticeship promotion company closes

A subsidiary company of Highbury College that was supposed to deliver an apprenticeship jobs board platform has ceased trading due to “difficult conditions”.

The college bought 70 per cent of the shares in New Work Training Limited, a company established by Tom Bewick in 2015, for £200,000 in April 2016.

Its business was meant to create the “world’s first premium jobs board service, exclusively for promoting high-quality apprenticeships” called www.loveapprenticeship.com, according to a press release written by Mr Bewick in 2017.

But Highbury’s 2017/18 accounts revealed that “difficult trading conditions and the need for investment have led to the company ceasing operations at this current time”.

The www.loveapprenticeship.com website is no longer operational.

The accounts also reveal that the college has “impaired” £300,000 of debt owing to the college from NWT, and a “corresponding and equal sum has been written off-the debt from NWT”.

Mr Bewick continued as a minority shareholder and director of the company from April 2016 to August 2018 and worked on the jobs board following the Highbury takeover, but stood down as managing director in September 2017.

In May 2018 he took up the post of chief executive at the Federation of Awarding Bodies.

Mr Bewick told FE Week: “For legal reasons I’m not in a position to comment on the detail about the business relationship between New Work Training Limited and Highbury College.

“However, I think it is in the public interest to state that as a minority shareholder and director of the firm my role was unpaid and nor did I receive any dividends or make money out of the venture once it became apparent the college was in financial difficulties elsewhere. In fact I lost money.”

This isn’t the first start-up company that Highbury has invested in.

It was one of five founding members of the Gazelle College Group. An FE Week investigation in 2014 revealed the founding members each invested £500,000 to establish the company.

In January 2017, FE Week reported that the group was on its last legs following a precipitous drop in membership, months of inactivity and the departure of its executive director.

 

College building sold for cut price

A prime Portsmouth city centre building (pictured below) was sold by Highbury College in August for £5.7 million, which was more than £4 million less than it was previously valued.

From reports at the time it appears it was a quick sale, and the college’s accounts reveal the cash was used to pay off an outstanding bank loan.

The premises cost the college £12.5 million to build in 2006, according to reports at the time.

The college previously recognised the value of the property to be at around £10 million, according to its 2017/18 accounts.

However, at the point of sale in August 2018, the building was sold for £5.7 million, which was “market value”, according to a college spokesperson.

“The disposal of the asset was identified as an action arising from the college’s strategic review of college property,” she added.

“From September 2018, courses in travel, tourism, EFL and culinary arts were relocated to Highbury Campus on Tudor Crescent.

“The move, which was welcomed by students, has enhanced the student experience and provided easier access to the extensive cross-college opportunities for enrichment.”

The University of Portsmouth was the buyer.

 

Highbury’s financial position

Highbury College’s recently published accounts for 2017/18 state that its financial position has “deteriorated over the three years”.

But despite recording a deficit of £2.48 million, they also say that performance in 2017/18 and the projected performance for this financial year “shows a much improved position with the expectation that the college will be graded as ‘outstanding’ using the ESFA criteria by the end of 2018/19”.

The improvements are due to “significant cost reduction including the disposal of surplus buildings and growth from international and ESFA-funded provision,” according to the accounts.

As at July 31, 2018, the college had £5.4 million of loans outstanding with bankers on terms negotiated in 2008, which cost £293,000 in interest payments in the year to July 2017. But this was fully repaid in August 2018 from the proceeds of the sale of its City of Portsmouth Centre.

Despite the claims of a “good” financial health, the financial statements show that cash flow for the college during the next year will “at times be tight, particularly around the February to March period”.

But, they add, the college has “£0.4 million of funds held in Nigeria that could be repatriated and is planning to acquire a short term loan facility with a bank for around £0.25 million”.

The accounts also reveal that the college did not make use of all of its ESFA adult education budget allocation and will be required to pay back around £200,000 of unspent funds to the agency.

Highbury also has a “£0.4 million liability due to HM Revenue and Customs for VAT claimed back against capital expenditure under the Lennartz ruling”.

The college “continues to dispute the validity of this liability and remains in discussions with the HMRC to achieve an agreed position”.

Meanwhile, a new loan of £1 million repayable over three years and “secured against the existing assets of the college” was arranged in August 2018.

 

A London college group has chosen to give up on a 17-year appeal against HM Revenue and Customs and will have to cough up more than £3 million.

The payment, listed in Capital City College Group’s recently published 2017/18 accounts, relates to an appeal begun by one of its members, the College of Haringey, Enfield and North East London (CONEL), in 2001.

According to the financial statements, HMRC “raised assessments” against the college “in respect of certain lease and lease-back arrangements”.

“Having taken professional advice” the college appealed against the assessment, but after “years of litigation” its professional advisers “finally concluded any further appeal would have less than a 50 per cent chance of success”.

“The college has therefore withdrawn its appeal.”

The money owed to HMRC, totalling £3,172,000, is listed in the 2017/18 accounts as a payment falling due within one year.

A spokesperson for CCCG said the case related to a decision made by the CONEL board in 1996 “to lease, and then lease-back, one of the buildings at its Tottenham site to a third-party company, to take advantage of favourable VAT arrangements”.

The case had taken so long because the college needed to wait for other appeals to be heard by the tax tribunal, “the outcome of which would have a bearing on the likely success” of its own appeal.

“These cases have now been decided and as a result of legal advice following those judgments, we have decided to withdraw our appeal,” he said.

The decision to abandon the appeal was taken in late 2017, under the leadership of former CCCG boss Andy Wilson.

The appeal cost £65,000 in legal fees, which the spokesperson said were paid by CONEL before it joined CCCG in November 2017.

It had also budgeted in the event that the appeal failed, “and had made a provision in its accounts for many years,” he said.

HMRC declined to comment on the case, as it related to an identifiable taxpayer.

CCCG was formed through the merger of City and Islington College and Westminster Kingsway College in August 2016, with CONEL joining them the following year.

The group, which was led by Mr Wilson until his retirement in the summer, when Roy O’Shaughnessy took over, has a combined income of almost £112 million, which is likely to make it the third-largest college group in the country in terms of turnover.

It also has net assets of just over £300 million – the vast majority of which are its buildings – and long-term debt of £600,000.

But it recorded an operating deficit of over £6 million for the year – an increase of £385,000 on the previous year’s restated deficit of almost £5.7 million.

Despite this, the accounts show the group has retained its ‘outstanding’ financial health rating from the Education and Skills Funding Agency.

In November the group agreed a pay award, described as “landmark” by the University and College Union, which will see staff receive up to a five per cent pay rise.

The union claimed that Mr O’Shaughnessy had waived his right to a bonus as part of the deal, but a group spokesperson said he gave up this right – which would have been worth up to 15 per cent of his £220,000 salary – when he was appointed earlier in the year.

However, FE Week reported that the deal would cost £3 million, and would turn a projected break-even budget for 2018/19 into a £2.3 million deficit.

A spokesperson said at the time that CCCG would look at “ways to develop new sources of income” and at reducing its costs, including the potential for “not replacing certain jobs as they become vacant” in order to make up for the loss.

The Department for Education has been criticised for spending tens of thousands of pounds on apprenticeship advisers, as a government-created careers guidance organisation says its own consultants are not “experts” on the subject. 

A contract worth between £60,000 and £78,000 is on offer from the DfE for a supplier who can provide apprenticeship advisers to attend higher education exhibitions run by UCAS around the country.

The advisers, who will need to “provide expert apprenticeship advice and support to potential apprentices, parents and influencers on apprenticeships and traineeships”, will have to attend a minimum of 35 events, and no more than 50. 

The higher education exhibitions currently listed online begin in Surrey on February 25, and finish almost seven months later in Edinburgh on September 17. According to the UCAS website, the events “help students explore a wide range of academic and career opportunities and discover a future that’s right for them”. 

However, concerns have been raised over why this does not fall under the remit of the Careers and Enterprise Company, which was created in 2015 to “transform the provision and advice for young people and inspire them about the opportunities offered by the world of work”.

Robert Halfon, former skills minister and chair of the Commons education select committee, said it was “not clear why more duplication and expense are necessary”. 

“This decision means that less money will be available on the front line where it is needed most,” he said. 

“The Careers and Enterprise Company already have millions of pounds of  taxpayers’ money. Why are they not using their existing coordinators to do this work?”

But a spokesperson for the Careers and Enterprise Company, which is thought to have been backed by more than £70 million of government funding, said its 125 enterprise coordinators and 2,000 enterprise advisers were not “experts” on apprenticeships. 

Geoff Barton, general secretary of the Association of School and College Leaders, said it would be “logical” for apprenticeship advice to fall under the remit of the Careers and Enterprise Company.

“It is a concern that additional money is being spent on providing this service at a time when there are such acute funding pressures in the education system,” he said.

“The provision of apprenticeship advice is important and we support any efforts to give young people information and guidance. But it is also important that this provision is delivered in the most cost-effective manner possible.”

The Careers and Enterprise Company spokesperson said enterprise coordinators “are not experts on apprenticeships as they have a wider focus on supporting clusters of 20 schools to achieve Gatsby Benchmarks” which she said leaves them “limited capacity”. 

She added that enterprise advisers are volunteers who are “already delivering a minimum of one day per month to schools”, and said they are “also not experts in apprenticeships specifically”. 

The company’s funding agreement with the DfE says its core objectives are to roll out employer engagement, support best practice and test and evaluate new approaches to careers provision, but does not specifically mention apprenticeships.

The Careers and Enterprise Company, which is led by chief executive Claudia Harris, pictured, has attracted controversy over the past year. In December, Mr Halfon accused it of believing it has a “magic money tree” and being “ludicrously wasteful” after it emerged that the company spent more than £200,000 on two conferences using public money rather than private sponsorship.

In May it was revealed that the company had spent almost £900,000 on research in the three years since it was created. 

The Department for Education was contacted for comment. 

A college in financial difficulty has ended the use of corporate cards for senior staff after its former high-profile principal claimed more than £40,000 in expenses over the last five years.

The “lavish” spending by Dame Asha Khemka at West Nottinghamshire College included numerous visits to fine-dining restaurants, five-star hotels and a private members’ club.

It has been branded as “deeply disappointing” by the University and Colleges Union, especially as this was “at a time when college finances were being squeezed”.

It is encouraging that the college has now tightened its policy on the use of expenses

The college has promised that it is clamping down on expenditure in light of the findings and its financial situation.

“The college has undergone wholesale regime-change both at governing body and senior management level in recent weeks, so this is very much a new era for West Notts,” a spokesperson said.

“In light of the financial challenges we face, the new board of governors and management team have imposed strict controls on all expenditure including expense claims. The college’s expenses policy has been reviewed and strengthened, and senior post-holders do not have use of a corporate credit card.

“We are absolutely committed to ensuring we make the best possible use of public money and to exercising the necessary rigour at all times when making spending decisions.”

Dame Asha stood down as principal of West Notts in October, shortly after FE Week revealed the college had received a £2.1 million emergency government bailout in July, just 48 hours before it would have run out of cash.

An FE Commissioner report, which had been written back in August but was published after her resignation, warned that the leader and the college’s board had “overseen a serious business failure which will impact on the whole college” and called for an “urgent review that ensures that those with ultimate responsibilities are held to account”.

According to documents obtained by FE Week, Dame Asha spent £41,666.96 between 2013/14 and 2017/18 on her corporate card, despite earning an annual pay package which reached £262,000 in 2016/17.

Among the claims was over £11,000 on food and drink, including visits to a Michelin-starred restaurant called Jamavar in Mayfair, London, and numerous sit downs at Anoki, a fine-dining restaurant.

The largest spend was on accommodation, which was largely attributed to frequent visits to India and stays at the “prestigious” Taj Hotel Chandigarh.

The college launched two ventures in the country in 2015, with one involving its subsidiary company bksb, which claims to be the UK’s “most popular eLearning solution for functional skills and GCSE”, moving its headquarters to Chandigarh.

Dame Asha didn’t visit India using her corporate card in 2016/17 or 2017/18, but did use it to stay at the five-star Beaumont Hotel in Mayfair, London.

Other spending included over £500 at a private members’ club called The Arts Club, and a one-off £340 visit to a Boots store.

On top of this, West Notts spent £15,000 on a reception at a lavish London hotel in 2014, just hours after Dame Asha (pictured) was awarded her damehood, which was reported by Chad, a local newspaper covering Mansfield and Ashfield, at the time.

We are absolutely committed to ensuring we make the best possible use of public money

The college, however, defended itself and said it was simply a stakeholder event which was already pencilled into its budget.

West Notts College told FE Week that none of the expenses in question were paid back to the college.

A spokesperson added: “The individual to whom these expenses relate to is no longer an employee of the college and, as such, it would not be appropriate to comment further on the detail.”

There is nothing to suggest Dame Asha’s expenses were not in line with the college’s policies or that they were wrongly claimed.

University and College Union regional official, Sue Davis, said: “It is deeply disappointing to see how the former principal was lavishing corporate funds at a time when college finances were being squeezed and staff pay held down.

“It is important that all senior spending is fully accountable, so it is encouraging that the college has now tightened its policy on the use of expenses.”

FE Week revealed in November that Dame Asha resigned from her post without accepting any financial payout, walking away from at least £130,000.

Dame Asha declined to comment.

Ofsted will launch its consultation on the new education inspection framework at the Sixth Form Colleges’ Association winter conference next week.

Amanda Spielman, the education watchdog’s chief inspector, will use her speech at the event in London on Wednesday to open the consultation on the new framework, which will be introduced from September.

She previously outlined the changes providers can expect to see in inspections and reports during her speech at the Association of Colleges annual conference in November.

These included scrapping outcomes as a standalone judgement, introducing a new quality of education judgement to cover curriculum alongside teaching, learning and assessment, and a reduction in the number of types of provision from six to three.

SFCA chief executive Bill Watkin said he was “delighted” that Ofsted had chosen to launch the consultation at its winter conference.

“Ofsted’s recent annual report showed that 81 per cent of sixth form colleges and over three quarters of 16-19 academies are rated by Ofsted as good or outstanding.

“There is a lot of interest in the sector about the new framework and our members are looking forward to hearing the chief inspector’s plans in more detail.” 

The skills minister Anne Milton will also address the winter conference, which is being held at Friends House in Euston, London from 9am on Wednesday, January 16.