A college has called in the lawyers to recover a long-running £1.4 million debt held up in Nigeria, after a secretive technical education project in the country went pear-shaped.
Highbury College, which recently sold one of its prime learning centres in Portsmouth for a hugely reduced price to balance the books, has launched a number of ventures in Nigeria since 2012.
Millions of pounds of the college’s funding was pumped into the projects in an effort to upskill the country’s young people, but it appears the schemes were short-lived and one in particular came at a huge expense.
Institutions really do need to think twice before taking on the extra risks that overseas ventures entail
Numerous minutes from meetings dating back to 2016 discuss Highbury College’s troubles in retrieving a £1.4 million debt that is owed to it by the Cross River State Government – a coastal state in southern Nigeria.
In 2013, the college partnered with the state to design a “demand-driven curriculum” and run a polytechnic training provider, called the Institute of Technology and Management (pictured).
But Highbury, which has remained tight-lipped about the project, pulled out of the partnership following a change in political parties in Nigeria in 2015.
It isn’t clear exactly what the college’s funds were spent on.
Since then, the college has managed to recoup £400,000 owed to it, but hasn’t managed to get hold of the remaining £1.4 million.
Legal action has now been launched to recover the funds.
“The college accountant confirmed there been no progress with the CRSG [Cross River State Government] debt (c£1.4 million) and that the college had begun legal proceedings to recover the funds,” said recently published minutes from a July 2018 audit committee meeting at Highbury.
“He confirmed that work was underway to transfer the money in the college’s Nigerian bank account (c£400k) as the official and black-market exchange rates were now aligned.”
The college has been evasive about the project, the debt owed to it and the legal challenge.
“Due to the commercially sensitive nature of your enquiry, the college is not in a position to comment,” a spokesperson said.
FE Week contacted the Cross River State Government, the British High Commission for Nigeria, and the Institute of Technology and Management in Ugep, which appears to still be operational, but did not receive a response at the time of going to press.
Mick Fletcher, an FE expert at the Policy Consortium, said it is “sad but perhaps not surprising” that Highbury College’s operation in Nigeria has run into difficulties.
“I have worked with Nigerian polytechnics and know first-hand the difficulties of doing business in that country,” he told FE Week.
“Given the great pressures on college managers in England at the moment institutions really do need to think twice before taking on the extra risks and increased demands on senior staff attention that overseas ventures entail.”
Colleges were warned off of overseas ventures in 2016 following the collapse of AoC India, which fell just four years after launching when 25 UK college members quit.
While Highbury has not been forthcoming about its debt in Nigeria, minutes from various college board meetings have shed some light on the fiasco.
“The 2015 general election in Nigeria, resulting in a new political party taking over the government, and the drop in oil prices had slowed down the economy in Nigeria and these developments had affected the college’s Cross River State Government contract,” according to corporation minutes from July 2016.
“The college was being supported by the UKTI [UK Trade & Investment] and the British High Commissioner to Nigeria to recover the outstanding invoices and the principal assured members that all diplomatic channels were being explored.”
November 2016 audit committee minutes then said: “The main [financial] issue was the recovery of a significant Nigerian debt which was long overdue with no clear timeframe for being cleared.”
Highbury, which dropped two Ofsted grades from ‘outstanding’ last year, stopped work in Nigeria in 2015/16, according to its accounts.
The £1.4 million debt isn’t the college’s only financial woe.
Its accounts for 2017/18 were published this week and show a deficit of £2.48 million, a quick sale in August of their City of Portsmouth Centre for £4 million less than it had been valued at, a £200,000 ESFA clawback for under-delivery and a £400,000 battle with the tax office over VAT.
Meanwhile, one of its subsidiaries which it invested in less than three years ago has had to cease trading and write off £300,000 debts (see box outs).
On top of this, the college has failed to release its corporate expense claims for the past five years, which should have been shared with FE Week under the Freedom of Information act.
From a previous FOI, it was revealed that Highbury’s principal, Stella Mbubaegbu, used college cash to pay for a first-class return flight from London to Dallas at a cost of £4,132.
What was Highbury’s project in Nigeria?
The Cross River State Government entered into a partnership with Highbury College to design a “demand-driven curriculum” and run a new polytechnic training provider in October 2013.
According to a press release frowm the state at the time, Highbury’s principal Stella Mbubaegbu described the project as a “new dawn that will make the difference in the education sector”.
The college has refused to reveal any details about the project, but from what FE Week has been able to gather through its own research, it essentially headed up the Institute of Technology and Management.
This included supplying a rector (a principal). William Pedley held this role at the institute from July 2014 to August 2016, according to his LinkedIn page.
He then returned to the UK to work as Highbury’s sector lead for university access and A-levels when the Nigeria project stopped.
According to the Institute of Technology and Management’s own LinkedIn page, the centre was designed to be an “entrepreneurial Polytechnic Institute, the first of its kind in Nigeria”.
Ms Mbubaegbu said the curriculum of the polytechnic was designed to “intertwine technical and vocational education training to boast entrepreneurship development”.
The aim was to enable young people to set up their own businesses.
The college’s board minutes suggest they pulled out of the project in 2015, citing a change in Nigerian government and a drop in oil prices which slowed down the country’s economy as the reason.
It is unclear exactly what the college was being paid for, but to date £400,000 has been paid and the college has launched legal action to recoup the remaining £1.4 million.
Highbury has signed up to other projects in Nigeria in the past.
In 2012, the college was selected to partner the federal government of Nigeria to establish ten new vocational skills centres that were expected to provide training and employment opportunities to out-of-work Nigerian youths, according to a news story by About My Area at the time.
Principal Stella Mbubaegbu said the centres would be a “beacon of aspiration and excellence throughout the country”.
The college declined to comment on whether it continued as a partner for the project when it launched.
Apprenticeship promotion company closes
A subsidiary company of Highbury College that was supposed to deliver an apprenticeship jobs board platform has ceased trading due to “difficult conditions”.
The college bought 70 per cent of the shares in New Work Training Limited, a company established by Tom Bewick in 2015, for £200,000 in April 2016.
Its business was meant to create the “world’s first premium jobs board service, exclusively for promoting high-quality apprenticeships” called www.loveapprenticeship.com, according to a press release written by Mr Bewick in 2017.
But Highbury’s 2017/18 accounts revealed that “difficult trading conditions and the need for investment have led to the company ceasing operations at this current time”.
The www.loveapprenticeship.com website is no longer operational.
The accounts also reveal that the college has “impaired” £300,000 of debt owing to the college from NWT, and a “corresponding and equal sum has been written off-the debt from NWT”.
Mr Bewick continued as a minority shareholder and director of the company from April 2016 to August 2018 and worked on the jobs board following the Highbury takeover, but stood down as managing director in September 2017.
In May 2018 he took up the post of chief executive at the Federation of Awarding Bodies.
Mr Bewick told FE Week: “For legal reasons I’m not in a position to comment on the detail about the business relationship between New Work Training Limited and Highbury College.
“However, I think it is in the public interest to state that as a minority shareholder and director of the firm my role was unpaid and nor did I receive any dividends or make money out of the venture once it became apparent the college was in financial difficulties elsewhere. In fact I lost money.”
This isn’t the first start-up company that Highbury has invested in.
It was one of five founding members of the Gazelle College Group. An FE Week investigation in 2014 revealed the founding members each invested £500,000 to establish the company.
In January 2017, FE Week reported that the group was on its last legs following a precipitous drop in membership, months of inactivity and the departure of its executive director.
College building sold for cut price
A prime Portsmouth city centre building (pictured below) was sold by Highbury College in August for £5.7 million, which was more than £4 million less than it was previously valued.
From reports at the time it appears it was a quick sale, and the college’s accounts reveal the cash was used to pay off an outstanding bank loan.
The premises cost the college £12.5 million to build in 2006, according to reports at the time.
The college previously recognised the value of the property to at around £10 million, according to its 2017/18 accounts.
However, at the point of sale in August 2018, the building was sold for £5.7 million, which was “market value”, according to a college spokesperson.
“The disposal of the asset was identified as an action arising from the college’s strategic review of college property,” she added.
“From September 2018, courses in travel, tourism, EFL and culinary arts were relocated to Highbury Campus on Tudor Crescent.
“The move, which was welcomed by students, has enhanced the student experience and provided easier access to the extensive cross-college opportunities for enrichment.”
The University of Portsmouth was the buyer.
Highbury’s financial position
Highbury College’s recently published accounts for 2017/18 state that its financial position has “deteriorated over the three years”.
But despite recording a deficit of £2.48 million, they also say that performance in 2017/18 and the projected performance for this financial year “shows a much improved position with the expectation that the college will be graded as ‘outstanding’ using the ESFA criteria by the end of 2018/19”.
The improvements are due to “significant cost reduction including the disposal of surplus buildings and growth from international and ESFA-funded provision,” according to the accounts.
As at July 31, 2018, the college had £5.4 million of loans outstanding with bankers on terms negotiated in 2008, which cost £293,000 in interest payments in the year to July 2017. But this was fully repaid in August 2018 from the proceeds of the sale of its City of Portsmouth Centre.
Despite the claims of a “good” financial health, the financial statements show that cash flow for the college during the next year will “at times be tight, particularly around the February to March period”.
But, they add, the college has “£0.4 million of funds held in Nigeria that could be repatriated and is planning to acquire a short term loan facility with a bank for around £0.25 million”.
The accounts also reveal that the college did not make use of all of its ESFA adult education budget allocation and will be required to pay back around £200,000 of unspent funds to the agency.
Highbury also has a “£0.4 million liability due to HM Revenue and Customs for VAT claimed back against capital expenditure under the Lennartz ruling”.
The college “continues to dispute the validity of this liability and remains in discussions with the HMRC to achieve an agreed position”.
Meanwhile, a new loan of £1 million repayable over three years and “secured against the existing assets of the college” was arranged in August 2018.