At least six colleges in the south-east were targeted by a sophisticated fraud operation over the summer vacation, it emerged this week.
The Further Education Funding Council swung into action on Tuesday and contacted 80 colleges in the region, asking accountants to scrutinise bank accounts for unauthorised transactions. The council said it had uncovered three colleges which had lost "tens of thousands" of pounds each and a further three who averted theft attempts.
The fraud involved what police described as a sophisticated operation to obtain signatures of principals or other authorised individuals and then divert college funds via telegraphic transfer to overseas bank accounts. In each of the three "successful" thefts the bank concerned accepted liability and refunded the lost money.
Bracknell College in Berkshire was one victim. Principal Robert Lewin said he had realised immediately when the bank statement arrived in mid-August that an unexplained transfer of Pounds 26,000 to Fuji Bank in Japan was a theft. Barclays Bank immediately returned the money. Mr Lewin said a really big college might miss such a sum on its statement but "few could afford to whistle goodbye to Pounds 26,000 - more than a lecturer's salary."
A funding council spokeswoman denied rumours that as many as 40 colleges had been hit. "This does not appear to be widespread but if there are other instances we will find them."
Peter Hill, a partner at accountants Morrison Stoneham, wrote to 247 colleges last month to warn them of the danger when one of his clients in Essex foiled a fraud attempt. "It doesn't need much for a college to be floored by this," he said. "Colleges should review their checking procedures."
Adrian Russell, a spokesman for Barclays Bank, said the fraud operation was "very professional". The bank conducted 3,000 telegraphic transfers every day and refunded an average one per month he said.
"This is a common means of fraud and our systems pick up the vast majority," he said.
Colleges should check their statements carefully he added as "no system is foolproof".