Investigation details 'dubious' payments at Scottish college
Neither report has currently been made public. Speaking anonymously to The Herald, one member of staff at the college said that they had been 'suppressed'.
The Henderson Loggie review was instigated during a meeting between the firm and college leadership in February 2023. The investigation was initially to focus on four specific areas: part-time pension contribution rates, processing of leavers, pensions, and long-term absences final calculations.
However, the scope was subsequently extended following a request by the college's Head of HR to also investigate the use of 'salary advances' in order to 'artificially adjust payroll figures following identification of payroll errors.'
A separate report into the issues around part-time pension contribution rates has already been submitted.
Staff from Henderson Loggie were asked to determine whether salary advance transactions related to three ex-employees were 'genuine and appropriate' and to evaluate how they had 'impacted upon the College, the ex-employees concerned, and HMRC".
Their report reveals that staff were overpaid after administrative failures led to them being kept on the payroll system after their leaving dates. Instead of seeking to recover the money, administrators used 'salary advance' processes to 'net off' the overpayments, but 'these transactions were purely artificial, and did not represent any actual monies being repaid by the ex-employees.'
One consequence of this approach was that the college underpaid HMRC for PAYE contributions.
Investigators found that a note from a meeting on 3 October 2023 stated that 'these transactions were created in order to trigger refund payments from HMRC, which is currently held by the College and not refunded to the respective employees' and that 'as the transactions are erroneous, concern was raised on the grounds of legality and appropriateness of this.' It was agreed in the meeting that the payments must be reversed and the college should liaise with HMRC.
Henderson Loggie also uncovered an earlier email from the college's previous Head of Finance. On 27 September 2023 they told Finance, Payroll and HR team members: 'I have to repeat, for what will be the last time, that we cannot make phantom payments to people through the payroll to correct an error or whatever, as was discussed. We have a few of these that we will have to tidy up before the auditors come in. If they find them, we will be roasted."
The report also explains further erroneous uses of salary advance facilities, including a 'reduction in salary to recover the equivalent value of goods stolen' by an employee who subsequently left the college.
Although the use of salary advances for these purposes has now stopped, investigators recommended that the college 'should consider undertaking a detailed exercise to determine how the historical overpayments to employees and pension schemes, as well as underpayments to HMRC, should be addressed and communicated to staff and other relevant stakeholders, including HMRC".
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The report also confirmed that South Lanarkshire College has been making pension payments to a number of individuals despite a lack of any written records explaining the terms of this agreement.
College payroll systems were found to include a number of former staff members classed as 'pensioners' after taking early retirement. There are 'no copies of any agreements for these former colleague to receive the money' and in some cases the recipients are actually next of kin.
The report states that the 'only available evidence' explaining these payments 'are copies of letter sent to the Scottish Office Education & Industry Department in October 1995".
In the absence of further clarity, investigators state that there are 'insufficient grounds to stop payments and that payments should continue until the death of the 'pensioners' or their spouses, as evidenced by regular verification checks".
In addition to the financial irregularities, the report also details internal failures to properly process and submit pensions data for staff, leading to legal breaches.
The college is expected to 'supply timely and accurate information' to the Strathclyde Pension Fund Office (SPFO), but has experienced 'systemic and long-standing issues' complying with this requirement. Weekly payroll submissions were found to be 'several months out of date' when examined in April 2024.
Similar problems were found regarding the submission of information to the Scottish Public Pensions Agency (SPPA). The report found that 'for a number of years, including in 2020/21 and 2021/22, the College has failed to submit annual data to the SPPA by the deadline of 31 May.'
It also notes that the Chief Executive of the SPPA reported the college to the Pensions Regulator in September 2021, and that the following year a letter was issued 'informing the Acting Principal of a serious delay in submitting member data to the SPPA. It was stated that despite repeated efforts to engage with College staff, the College had failed to provide SPPA with accurate and timely data by the deadline of 31 May 2022' – this matter was also reported to the regulator.
In some cases, the submission of information of staff leaving the college was delayed for several years – the report found that 'the longest delay was 1,932 days, which relates to an ex-employee who left the college on 20 November 2017 who had their leaver form submitted on 6 March 2023. The use of salary advances to 'net off' overpayments also played a part in problems with submitting pension data.
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The Herald has also been made aware of another report that has been instigated by South Lanarkshire College but not released to the public. In October 2024, legal firm Anderson Strathern submitted an 'investigation report' dealing with allegations including bullying, harassment, violence and corruption in the colleges construction department.
Their investigation found that there 'may be a culture which may have fostered' aggressive behaviour and this may not have been 'appropriately addressed by management'.
It also said that the college may wish to 'consider investigations into the allegation' that a member of staff passed assessment answers to students, and recommended training 'all staff within construction' and perhaps beyond. Specific training for management was also suggested.
The construction department at South Lanarkshire College was the subject of scrutiny in 2022 when The Herald reported that staff had been accused of using college time and materials to 'build, model and repair' their own homes and other properties. An earlier Audit Scotland report had also found that the college had failed to comply with governance standards.
The Herald approached the college and asked neither of the reports in question have been released to the public, and included the allegation that they are being 'suppressed'. We also asked how the failures detailed within were able to take place at a major public institution, and who has been held accountable for the long-standing issues outlined during the investigations.
In response, a spokesperson for the college said: 'This was a regrettable historic operational failure during a previous administration, which was picked up and was addressed with the utmost urgency. The College has taken this matter extremely seriously and has followed governance processes and ensured the Auditors, the Board of Management, the Trade Unions, and staff have been kept informed throughout. This is public knowledge as per the Annual Audit Report 2023-24. Everything that can be published is already in the public domain.
'South Lanarkshire College is committed to fostering a culture of openness, inclusion, and shared responsibility. Both the College and the EIS-FELA South Lanarkshire College branch are committed to working collaboratively to ensure a positive working environment - one where staff feel respected, supported, and empowered to deliver the best for our students.'
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