from The Guardian, 30 May 1994
Opposition MPs are demanding an inquiry into the running of the government’s Student Loans Company after allegations that its senior executives incurred excessive expenses.
Leaked documents show that expenses have been submitted without receipts, petty cash books inadequately completed, and thousands of pounds spent on entertainment. One accounting ledger shows that in the year up to August 1992 over £900 was spent on boardroom whisky and cigars, £470 on a cricket match and over £1000 on meals, concerts, outings and gifts.’
The loan company’s chief executive, Ronald Harrison, has claimed lavish dinners as business expenses. In one instance - a £149.95 dinner for five on New Year’s Day 1992 - the date on the bill submitted by Harrison was changed from the 1st to the 11th January.
The loan company, which is funded entirely by the public purse, paid a mailroom worker up to £330 overtime a month to act as Harrison’s personal chauffeur. The company also employed and promoted his son despite reservations about his ability.
These allegations and others were brought to the attention of the Department of Education and the House of Commons Public Accounts Committee by a series of anonymous letters in 1992. As a result both bodies launched secret investigations, the results of which were only revealed by the newspaper, Scotland on Sunday, yesterday.
The Department of Education’s internal audit criticised senior managers’ expenses and asked the company to tighten up its procedures. It dismissed suggestions of corruption, but concluded: “There have in the past been a very limited number of minor weaknesses in the company’s financial and managerial controls.”
The Public Accounts Committee, despite asking the loan company a series of questions about the allegations, has never referred to them in public. In a letter written to the committee’s chairman, Robert Sheldon MP, four days before a public hearing on the loan company on 19 April last year, the then permanent secretary at the Department of Education, Sir Geoffrey Holland, warned that publicity would be damaging.
He stressed the “commercial sensitivity” of questions about “the standing and integrity of its board and senior managers”. He wrote: “It would do the company, and the loans scheme in general, no good if allegations which have been found to be unsubstantiated nevertheless found their way into the public arena.”
The loan company was set up in Glasgow four years ago as part of the government’s plans to make students increasingly dependent on loans instead of grants. It has now paid out £690 million in loans to about half of Britain students.
John McFall MP, Labour’s Scottish education spokesman, said he will be demanding re-examination of the company’s finances. Company chief executive, Ronald Harrison, admitted that the date on the New Year’s dinner bill had been changed, but said he had no idea how it had happened. He declined to comment further.