The secret £470k pay-off to bosses at college

Two men paid £100k in ‘gardening leave’ as cost of merging colleges tops £5m.

College bosses in one of the most deprived areas of Scotland banked a £470,000 payoff in a secret deal approved by some of their closest colleagues.

The taxpayer paid out more than twice what was contractually obliged in severance packages for Ronnie Knox, former principal of the now defunct North Glasgow College, and John Gray, his vice-principal.

The haul includes more than £100,000 in wages for six months “gardening leave” after they left their posts, even though their services were never called upon.

The revelations come in a confidential Auditor’s Report obtained by The Sunday Post that shows no business case or paperwork was produced to support the lavish payoff, which came as a result of merging three Glasgow colleges.

The confidential report by top auditors Scott Moncrieff revealed:

A “pension enhancement” worth £124,000 was paid to Mr Knox’s pension pot to persuade him to retire three years early but the offer was not extended to other college employees.

The pay-outs were approved by a three-man remuneration committee which had not met for years and kept no minutes.

Board chairman John Russell oversaw the meeting and later authorised the payments but decided against telling fellow members of the deal or even that the meeting had taken place.

Other members had received assurances the college’s voluntary severance scheme would be applied across the college.

Human Resources director Jean Sturgeon had her pension pot topped up by £165,000 before leaving the college.

The report on North Glasgow College’s finances will be discussed by MSPs on Holyrood’s Audit Committee this week.

However, it is understood a version of the report being published by the committee will have some key financial details blacked out for “data protection” reasons.

Scottish Conservative leader Ruth Davidson said: “The Sunday Post investigation raises important questions. Students deserve answers hiding responsibility behind a secret committee will not wash. For the sake of students who’ve had to bear the brunt of SNP cuts, every penny has to be accounted for.”

Earlier this year, public spending watchdog Audit Scotland raised concerns over the payoffs, concluding there was no evidence they were subjected to “appropriate approval” or assessed as providing value for money.

This prompted Holyrood’s Audit Committee to ask Glasgow Kelvin College to instruct auditors to review the deals which came as a result of the merger of North Glasgow, Stow and John Wheatley colleges last year.

Ahead of the merger, the former principal of Stow College was close to 65-years-old and simply retired.

The principal of John Wheatley got the top job at the newly formed Glasgow Kelvin College and this left Mr Knox, at 62, with three years left to go until retirement.

After legal advice it was decided to offer him a £124,000 “pension enhancement” as an inducement for him to retire as if he stayed until he reached 65, as he was legally entitled to do, it would have cost the taxpayer £450,000 in salary and pension payments.

The report shows Mr Knox, who was on around £120,000-a-year, received a cash and pension package worth £325,338. His deputy Gray got a deal worth £145,508.

The deals were approved by a three-man remuneration committee in May last year comprised of John Russell, former North Glasgow chairman, and former board members Irving Hodgson and Alan Robertson. The latter two now sit on the board of the newly-formed Glasgow Kelvin College where Mr Hodgson is chairman and sits on the merged college’s remuneration committee.

The meeting or its conclusion was not communicated to the college’s board in direct contravention of the Scottish Funding Council’s guidelines.

Scott Moncrieff conclude one reason for what it describes as “inadequate” governance is the remuneration committee had not met for years or sought guidance on the deals.

On Mr Russell’s role, the auditors conclude: “It is important for the chair of the board and principal to have a strong working relationship. The existence of such a relationship is likely to preclude the chair of the board having sufficient independence to chair the committee that determines the salary and severance arrangements of the principal.”

The former secretary to the board, Bill Govan, also attended the remuneration meeting and Scott Moncrieff said it would have expected him to “support the committee chairman in ensuring the committee carried out its remit effectively”.

The auditor’s report says Mr Govan declined an invitation to be interviewed.

With regards to the six months gardening leave, the committee reached this decision after concluding it was risky for the new college to lose knowledge of how the old college used to work. A clause was inserted into the severance deal which required the two senior college staff to be available for six months if required from November last year. The auditors reveal the new principal did not call on them once.

The report also reveals former North Glasgow College’s Human Resources director Jean Sturgeon was given a £53,314 voluntary severance deal but also had a “mandatory strain” payment of £165,217 to her pension pot.

Pension strain payments make up shortfall in the assumed level of funding needed to provide a particular pension benefit, but Glasgow Kelvin College was unable to explain the payment other than to say the “payments made to Strathclyde Pension fund will have been done so in line with the requirements of the scheme.”

This took the payoff total for the three senior employees to £689,376.

The auditor’s report reveals that around £424,000 of this cost fell on the college as bosses mistakenly thought all costs would be taken care of by the Scottish Funding Council.

Mr Knox said: “I would make clear I had no input into what the independent remuneration committee decided. With regards to the so-called gardening leave, I made myself available for six months but it was the college which decided not to call upon my services. ”

Mr Gray could not be reached for comment.

A spokeswoman for Glasgow Kelvin College said: “The report relates to North Glasgow College’s standards of governance and financial stewardship during the academic session 2012/13 prior to merger and the establishment of Glasgow Kelvin College, a new board and new management team. As such, Glasgow Kelvin College is not in a position to comment on actions taken by the previous senior management of North Glasgow College.

“Glasgow Kelvin College is committed to the highest standards of governance, transparency, social responsibility and accountability in its use of public monies.”

Cost of merging colleges tops £5m

The controversial mergers between Scotland’s colleges has cost the taxpayer more than £5 million in payoffs to senior bosses.

The consolidation programme left scores of principals, deputy principals and college directors out of a job with the guarantee of no compulsory redundancies meaning the payoffs have been substantial.

Figures published in July showed £4m had been paid out in severance packages to senior college staff across Scotland in 2012/13.

The previous year’s tally was £1.2m but the actual haul is likely to be much higher as the figures only related to eight of the 14 mergers where financial accounts were available.

A total of £850,000 was spent on packages for seven members of the senior management teams who lost their jobs as a result of the merger to form the new Glasgow Kelvin College.

Elsewhere, £1.2m was spent over two years on payments for senior staff at the three colleges that merged to form Edinburgh College – Telford, Jewel & Esk and Stevenson.

And more than £1m was paid to senior staff at the former James Watt College in Greenock between 2011 and 2013, with total severance payouts for bosses at the newly merged West College Glasgow amounting to £1.5m.