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Governance and financial management at Moray ... - Audit Scotland

Governance and financial management at Moray ... - Audit Scotland

Investigation into allegationsof misconduct3.1 In May 1998 the Scottish Office Minister of State for Education receivedanonymous correspondence containing allegations about misconduct at MorayCollege. The allegations were also sent to the National Audit Office (NAO) inScotland. Subsequent discussions between SOEID and the NAO concluded thatthe allegations were sufficiently serious to require independent investigation.3.2 An initial investigation by the Department and the NAO into the allegations,undertaken in August and September 1998, concluded that further investigationinto aspects of the allegations was warranted. In October 1998 theDepartmental accounting officer wrote to the chairman of the college’s board ofmanagement informing him that a second phase of the investigation would beundertaken by the Department in full consultation with the NAO. Over the nextsix months a further series of visits was therefore made to the college toexamine documentary evidence and undertake confidential interviews withrelevant staff and board members of the college to ascertain the factsconcerning the matters under consideration.3.3 On 1 July 1999, the date on which SFEFC took on its full responsibilities,responsibility for processing this matter transferred from the Departmentalaccounting officer to the SFEFC accounting officer. In August 1999 ProfessorSizer, as the SFEFC accounting officer, drew together the results of theinvestigation into a single document which was delivered to the board ofmanagement of the college and to the (then) college principal, Dr Chalmers.Both parties were provided with an opportunity to comment on the factualaccuracy of the investigations findings and on the balance of its conclusions.Both the college board and Dr Chalmers provided their own detailed responsesto the investigation findings and while the college accepted the thrust of thefindings, Dr Chalmers did not. The chief executive of SFEFC considered bothresponses in producing a final report on the investigation to the SFEFCCouncil.3.4 Professor Sizer’s report, which was endorsed by SFEFC’s Audit Committee, waspresented to the SFEFC Council in February 2000 and sent to the Department’saccountable officer and to the Auditor General. The report containedconclusions on four areas covered in the allegations: remuneration and otherpayments to the principal and other senior staff; expenses of the principal andthose of other senior staff; employment matters; and issues relating to theboard of management.3.5 The report highlighted significant weaknesses in Dr Chalmers’ performance asan accounting officer and made 24 recommendations for improvement incollege procedures. These are set out in an action plan that records progressmade in implementing the report’s recommendations, the latest version ofwhich is in Appendix 3. The recommendations included action by the board torecover sums paid to Dr Chalmers for the retrospective increase in mileageallowances and in relation to monies paid to the college for the principal’sinvolvement in the UHI project that were subsequently paid to Dr Chalmers, toreview the contractual relationship between the college and a company ownedby a member of the college board, and to improve financial and management14 Governance and financial management at Moray College

control and governance arrangements within the college. The report alsorecommended that SFEFC should seek formal reports from the college’s boardof management on progress to recover the sums in question and to considerrecovering equivalent amounts from the college.3.6 Decisions on the case for disciplinary action against any member of staffemployed by a college rest with the college board of management. Following itsown internal investigation the college suspended Dr Chalmers from his dutiesas principal and accounting officer with effect from 6 January 2000. On10 January 2000, Dr Chalmers provided the college with a medical certificateindicating that he had become unfit for work on 5 January 2000. ThereafterDr Chalmers commenced a period of extended sick leave which culminated inDr Chalmers retiring on ill-health grounds. The principal’s solicitor advised thecollege that because of the nature and seriousness of the illness, Dr Chalmerswould not be able to undergo the college’s disciplinary process.3.7 In December 2000 the college informed SFEFC that a decision not to proceedfurther with disciplinary procedures had been taken in the light of advice fromthe college’s solicitor. The college and Dr Chalmers signed a CompromiseAgreement to formalise the termination of the principal’s employment with thecollege. A condition of the agreement was that Dr Chalmers would, on receiptof the lump sum element of his pension, repay to the college monies receivedfrom UHI and in respect of retrospective increases in car expenses.3.8 Throughout the year, while Dr Chalmers was on sick leave, SFEFC soughtinformation on progress with disciplinary procedures. SFEFC reminded thecollege of its ‘Guidance on Severance Arrangements to Senior Staff in ScottishFurther Education Colleges’ and in particular the fundamental principle includedin the guidance that early retirement was not an alternative to disciplinaryaction. SFEFC also sought advice from the Scottish Public Pensions Agency(SPPA) on the propriety of the process leading to the award of Dr Chalmers’pension and the roles and responsibilities of the parties involved. SPPA areresponsible for the payment of pension benefits to an individual in accordancewith the regulations of the relevant pension scheme on the termination of his/her contract of employment. SFEFC found, inter alia, that in providing factualinformation in support of the Dr Chalmers’ application for ill-healthretirement, the college did not inform SPPA of the SFEFC report on theinvestigation of misconduct or that the Principal was suspended pendingdisciplinary action. While there was no formal requirement for the college to doso, SFEFC considered that the fact that it did not, was a material omission.3.9 The college appointed a new principal, Dr J Logan, in April 2001.Governance and financial management at Moray College 15

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