Decision-makers at a college which made severance payments totalling almost £700,000 to its three most senior staff members showed “concerning levels of ignorance”, the convener of Holyrood’s Audit Committee said.
Paul Martin made the criticism as the Public Audit Committee published a report which claimed levels of governance at North Glasgow College were “unacceptable”.
It was one of three institutions which came together to form Glasgow Kelvin College in November 2013.
A total of 24 members of staff left North Glasgow College during the year 2012/13, with the principal, vice principal and HR director among those who departed.
Payments totalling £689,376 were made to these three, according to an audit that was carried out.
But MSPs on the Public Audit Committee said they had been told the college’s remuneration committee was “unaware” of Scottish Funding Council (SFC) guidance requirements on documentation, decision-making and record-keeping.
Their report said: “The college had no severance policy and the remuneration committee was unaware of the SFC guidance on severance arrangements, but despite this a voluntary severance scheme (VS scheme) was approved by the college.
“It was noted that the college’s VS scheme did not provide specific guidelines on the process to be followed for the severance of senior management.”
Total restructuring and severance costs at North Glasgow College amounted to £1.29 million, the report stated, adding there had been an “initial assumption” at the college that all voluntary severance costs would be paid by the SFC.
It provided £866,000, resulting in a shortfall of £424,000 - with about £240,000 of the shortfall arising from the severance payments made to the principal, the vice-principal and HR director.
The SFC told the college its funding would be “restricted” and would not meet the entire costs on October 24 2013, but by this time the report said the chair of the board had already approved the payments and these were made just four days later on October 28.
The chair of the college board was also the chair of its remuneration committee, the report added, with MSPs recommending “no chair of a college board should also chair that college’s remuneration committee” in future.
It added the decisions made by North Glasgow College’s remuneration committee were “not detailed anywhere in minutes or papers and were not formally reported to the board” of the college.
The report continued: “This governance shortfall meant that neither the auditors nor this committee could be satisfied that the decisions taken were made appropriately and with due consideration.”
While MSPs noted there was “no finding of fraud or illegality” in the case, they added: “The evident poor governance and the lack of openness and transparency in the decision-making process are serious concerns.
“As a result of these failings there was a lack of accountability in respect of the use of public funds and further public funds were used to investigate fully how decisions were reached.”
Mr Martin said: “It was clear to the committee that there were concerning levels of ignorance amongst those in decision-making roles about the proper process for agreeing severance deals.
“We find it unacceptable that there was no audit trail of the remuneration committee’s decision-making being reported to the college board.
“While we note that there was no finding of fraud or illegality, the evident poor governance and the lack of openness and transparency in the decision-making process are serious concerns.”
Mr Martin said the college had “seemed to be unaware of its responsibilities in respect of governance around severance” and added the committee was now seeking an urgent explanation from the SFC about why it did not reissue its guidance to colleges on this matter at the time of the mergers.
He commented: “Had that guidance - which was nearly ten years old - been actively brought to the attention of colleges, those in charge of stewardship of public funds could not have claimed to be unaware of what was expected of them.”
Scottish Labour’s Iain Gray said: “Coming hot on the heels of the farce at Coatbridge College, this report suggests that one of the few public-service reforms actually taken by the SNP government in Edinburgh has been a shambles.
“Serious questions have to be asked as to why the Scottish Funding Council didn’t reissue guidance around remuneration when the mergers were in full swing.
“With our colleges bearing the brunt of SNP government cuts, and with more than 140,000 fewer college students since the SNP came to power, it’s vital that decision-making around colleges is transparent and public money is being spent reasonably.”
A Scottish Government spokesman said: “We acknowledge the Public Audit Committee’s report into the governance failings at North Glasgow College. As ministers have already made clear, we expect that high standards are met when decisions are taken involving public money.
“As the report highlights, these events took place prior to stronger financial controls coming into effect across the sector. Today, colleges are required to comply with processes set out in the Scottish Public Finance Manual and must seek approval of settlement and severance arrangements from the Scottish Funding Council.
“We will, in partnership with the Scottish Funding Council, consider carefully the findings of this report.”