Whistleblowers: President to stand down after fees probe

Gillian Payne has been asked to stand down as president of Regent's College and the European Business School, six months after an investigation by The Times Higher highlighted concerns about millions of pounds in payments made by the two institutions to her companies.

The trustees of the two higher education charities, which share a campus in London's Regent's Park, confirmed in a statement this week that they had "set aside" management agreements with Ms Payne's company, Mergeprime.

"As a consequence of this, the trustees believe that now is an appropriate time for Gillian Payne to end her association with the charities and we have, therefore, invited her to step down as president... with immediate effect," the trustees said.

The Times Higher reported in February that the Charity Commission was investigating the two colleges. The probe, which has not yet concluded, has focused on the degree of personal control Ms Payne exercised over the charities and the accountability, appropriateness and value for money of payments made to her companies.

In the 1980s, Ms Payne, with her late husband, John, led an action group to save the European Business School (EBS) from bankruptcy when their daughter was a student there. They provided a loan to save the charity and its sister charity, Regent's College, and in effect took over the governance and management of both.

The couple overcame financial crises at both charities turning losses into profits and have been credited with bringing stability and success.

In 1994, Ms Payne formed two management companies and signed two separate seven-year contracts with the charities to provide management services. One company charged £5.2 million for its services over the period, the other charged £2 million - sums criticised in a 2000 audit report as "exceedingly high".

In 2001, the two charities signed new management contracts with another company, Mergeprime - of which Ms Payne is director and majority shareholder - which are understood to have cost the two charities £800,000 a year and 15 per cent of profits.

This week, the trustees confirmed that the Mergeprime contracts had been "set aside". David Morgan, who has been with Regent's College since 1989, has been appointed interim chief executive.

Lawyers for the trustees of the charities have stressed that the trustees first brought their concerns to the attention of Charity Commission. In August 2002, a number of new trustees joined the charity and "raised issues concerning the extent of Ms Payne's degree of control over the operations of the charities". They commissioned an internal investigation, which led to the Charity Commission's intervention.

This week, despite confirming that it had been working with the trustees since early 2003, the commission said that it was not yet in a position to publish its findings.

Want to blow the whistle?

Contact Phil Baty on 020 7782 3298 or email him at phil.baty@thes.co.uk