Whistleblowers: Bilston chaos continues

November 16, 2001

The recent publication of Bilston Community College's final accounts has left many unanswered questions about the former Further Education Funding Council's handling of the college's closure and its investigations into the college's management.

After many delays, the accounts were produced late last month - two years after the college was shut down amid allegations of mismanagement and fraud showing an accumulated deficit of £33.7 million.

The Learning and Skills Council, which took over responsibility for further education and post-16 education and training in April, says it is now seeking legal advice in an effort to recover funds through the civil courts from "a variety of parties and individuals".

But former heads and finance chiefs of the college deny mismanagement and claim the accounts are not a fair representation of the college's final financial position. Neither are they truly independent, they argue, because they were compiled in collaboration with the FEFC and the LSC.

Paul Goddard-Patel, former Bilston assistant principal and finance director, claims that £21.5 million of the deficit has been "engineered" through "retrospective reinterpretations of funding rules" for work carried out as long ago as 1995, despite previous auditors passing the work as eligible for funding.

He has pointed out that the accounts state that the figures are "based on estimates" that are largely unsupported by documentation, drawing attention to a statement by auditors HLB Kidsons that "the evidence available to us was limited".

Their audit report says: "The books and records of the college had been placed in storage locations; most items that would normally have formed audit evidence could not be located. Consequently, the figures for trade debtors, trade creditors and accruals contain significant amounts based on estimates."

As a result, the auditors state: "We are unable to form an opinion as to whether the financial statements show a true and fair position of the state of affairs of the college at 31st September 1999."

Mr Goddard-Patel wants to know why the auditors did not have access to 1,400 bankers' boxes of college records that were removed by the FEFC and why former college senior staff who were willing to meet the auditors were not contacted.

He has also been unable to find out from the FEFC or the LSC whether HLB Kidsons consulted the previous auditors Deloitte and Touche, whose 18-page audit report in 1998 was rejected by the FEFC. Deloitte and Touche had been asked to review 44 questions over the eligibility for funding of ten groups of courses, but found only one small course to be ineligible.

In their covering letter to the FEFC, Deloitte and Touche observed that the FEFC had "clarified" funding rules in a way that "had such an impact as to be more in the nature of a change in the rules".

Geoff Hall, then the FEFC's director of funding and strategy and now the LSC's director of learning programmes, replied in a letter that the FEFC did not accept this statement, adding "you may care to withdraw it". He questioned the independence of the audit because some work had been delegated to the college.

When former FEFC chief executive David Melville, now vice-chancellor of Kent University, was questioned last year by the Commons' public accounts committee over the issue, he said civil proceedings would be taken against Deloitte and Touche by March 2001. So far there has been no legal action, but a decision on whether to proceed is imminent.

Former Bilston heads and several MPs have called for an inquiry into the affair and have urged the PAC to consider it. But as Mr Goddard-Patel pointed out, the cost to the public purse of eight audits and inquiries so far - including a police fraud squad investigation that drew a blank - must run into millions.

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