A damning report into the state of Barnfield College has revealed governors were kept in the dark about the parlous state of its finances.
Former principal Sir Peter Birkett also comes under fire after staff told investigators the culture at the college meant he could not be challenged.
A letter from the Department for Education to the Barnfield Federation asks for a new interim CEO to be appointed and for all options for the future to be considered, including splitting the academies from the College before September 2014.
The letter from Lord Nash and Matthew Hancock MP said: “The investigations identified significant financial irregularity, together with breaches of the College’s Financial Memorandum, the Academies Financial Handbook, Academies’ Funding Agreements, Charity Commission regulation and the Companies Act 2006.
“These breaches are underpinned by substantial concerns on overall governance and accountability across the Federation.”
The SfA report had been referred to Hertfordshire Police who today decided it did not warrant a criminal investigation.
The Skills Funding Agency report reveals improper use of college funds, funding claims for students the college had no record of teaching, poor management and “lack of oversight” by Governors.
The report said that when Sir Peter, founder of the Federation, resigned, he was given two lump sums of money, an additional month’s holiday pay and a company car – an Audi Q5 – which was not part of his contractual entitlement.
The report says: “We do not believe that the Board properly and diligently negotiated the former Principal’s final payment on leaving the College, mistakenly allowing an expensive motor vehicle to be transferred to him and, in addition, paid him above that to which he was contractually entitled. This was not proper use of College funds.”
It is noted that “the culture of the College under the former Principal as described by many of the staff we have spoken to was one which, in our view, led to a lack of challenge, particularly to the former Principal.”
A Funding Assurance review was carried out following allegations made in September last year about “ghost” students against whom funding had been received. As a result of this the College was recommended to reduce their funding claims for 16 to 18 year olds and adults by nearly £1million because they could not prove enrolment of the students and the required learning hours did not reconcile with attendance registers.
The report also criticised “inadequate business planning” around certain projects such as the Harpenden Hair Academy, which was not successful and cost £450,000 to close.
Dame Jackie Fisher has now been appointed as interim CEO of the Federation and the DfE will “closely monitor and assess” progress.
If this is not adequate, the College could still be placed into Administered College status and academy funding agreements could be terminated.
A Barnfield Federation spokesperson said the Federation has been working for some months to address the issues raised by the SFA investigation, and are putting in place a set of actions which address those issues.
They said: “We are determined to put Barnfield Federation at the forefront of local education provision. We are proud of our education record and we are determined to maintain and exceed those standards for future generations of students and their parents.”
Dame Jackie said: “We are tackling the issues raised by the report with the single aim of ensuring that Barnfield is a strong, fit-for-purpose education provider that puts its students, parents and staff at the forefront of its thinking and actions. Our efforts over the next few months will be to identify and deliver the best possible shape and structure for the Federation, the college and our academies.”
In light of the issues, the Barnfield Federation does not have capacity to take on sponsorship of Sandy Upper School and this relationship was terminated when the letter was sent on February 14.