A damning report on an investigation into claims of historic fraudulent activity at Bournville College between 2011 and 2015 has been released today.
The report concerns issues at the college BEFORE it became part of South and City College Birmingham.
Despite many concerns raised, no further legal or regulatory action is to be taken by police or charity regulators at this stage.
The investigation – carried out by KPMG on behalf of the government’s Education and Skills Funding Agency (ESFA) – began after the Further Education (FE) Commissioner raised concerns in 2015 about potential misuse of public funds and potentially fraudulent activity by the former Principal, Norman Cave.
The probe examined management practices at the college between 2011 (when the new Bournville college opened at Longbridge) and 2015 (when Norman Cave left the role he had held since 2002).
The document identifies a number of concerns where the college’s own rules – including their Financial Regulations and Anti-Bribery Policy – were breached.
It was found that between 2011 and 2015, Mr Cave claimed over £208,000 in expenses while his wife and former assistant principal, Anjum Cave spent more than £100,000 on credit card expenses in the same period.
With a plan for the college to expand overseas, the KPMG report raised questions surrounding spending on one particular overseas trip – made by Mr Cave and four other staff members – in October 2014.
The principal’s credit card spending for the trip was £17,000 – massively above the budget of £10,000 which had been authorised. The report also found this to be: “disproportionately higher than the budgeted cost of £15,000 in total for all four other members of staff”.
As with other credit card expenses, KPMG found little evidence of controls, permissions for and questioning of the spending on the principal’s card by the chair of governors. It was also found that the only person responsible for approving payments on the assistant principal’s card was her husband, Mr Cave.
Concerns were also identified over the apparent lack of any procurement process – despite the college’s own rules – when tendering out services.
In particular, KPMG could find no evidence “of tender or procurement framework processes or signed contracts” in the almost £900,000 worth of spending with Smartphone Media and related companies which provided the college with hospitality and other services.
Other payments – amounting to around £280,000 – were found to have had no approval from the corporation or committees.
KPMG also found “a persistent absence of evidence of goods or services supplied to support payment of [marketing] invoices, or indications that the requirement of the college’s Financial Regulations for a minimum of three quotations had been applied.”
A number of other invoices from Smartphone Media and related companies “exceeded the £50,000 band and should have been the subject of tenders”.
Events breached college’s Financial Regulations
In October 2011, the opening event of the new campus at Longbridge was found to have cost around £132,000. KPMG found no evidence that the budget for the event was agreed and approved and no evidence of a tender process.
The college’s centenary celebration in 2013 saw almost £150,000 spent – exceeding the £90,000 budget agreed. Yet again, KPMG found no evidence that the budget, the contract award or the final expenditure were recorded in the Corporation minutes as having been reported or approved.
Both were found to be a “significant breach of the college’s Financial Regulations”.
Promotion & pay rises
The investigation also raised questions on the promotion of Mrs Cave to the executive management position with a 22% pay rise in 2014, finding “no evidence of changes to responsibilities or rationale for the increase”.
As finances descended into further difficulties, Bournville College applied to the government for exceptional financial support and support funds began in December 2013.
Overall, Bournville College received £26.5 million in support from the government until it was dissolved in 2017, becoming part of South and City College Birmingham.
Despite the need to ask for these special payments, Mr Cave continued to apply pay rises for staff – with extra pay rises for senior staff in particular.
The report has been examined by West Midlands Police, with no legal action to be taken. It has further been forwarded to the Charities Commission who also intend to take no further action.
ESFA says it is: “now reviewing procedures for referrals to other agencies to ensure that findings from investigations can be made public as soon as possible without putting at risk any further action that might be taken against individuals or organisations”.
As a result of the issues at Bournville College that this report has identified, ESFA has recommended an improved framework and guidelines to enable governors to better audit the finances of the institutions they oversee.