Education bosses "failed" in their duties and put the sustainability of two colleges and its students at risk, a damning government report has claimed.

Staggering revelations have emerged in an investigation by the Further Education Commissioner into the scandal-hit Hadlow College, including claims senior leaders created private business partnerships which were losing huge sums of money and that members were asked to leave committee meetings so certain items could be discussed in secret.

The land-based college became the first in the country to enter education administration on Wednesday in what was the latest in a series of setbacks, since the commissioner - which recommends what actions college governing bodies could make to improve performance - first intervened earlier this year.

Administration came just days after the Hadlow Group, which also runs Ashford College and West Kent College, was told to improve its “inadequate financial health” by the government last week.

That came off the back of a decision in February to suspend both its chief executive Paul Hannan and deputy chief executive Mark Lumsdon-Taylor amid an investigation into its finances.

Now an investigation by the commissioner has been carried out, with a report concluding that governance at Hadlow is "complex, lacks transparency and is ineffective".

The probe raised concerns at the lack of a qualified accountant at the college and "insufficient financial and accountancy skills or expertise" across the board.

The investigation revealed the board accepted poor-quality management accounts, produced only quarterly and so without an appropriate level of financial oversight and scrutiny, and that too much trust was placed in a few senior post holders.

It was also claimed the board had only recently recognised that the situation had become "a complete crisis" and described a "systemic failure of governance" which took place over a significant period.

Furthermore, executive members told the commissioner they had been isolated from key financial management and cut out of much of the crucial decision making.

They spoke of business partnerships created by senior bosses which they had not been consulted on and which did not properly consider the implications on the curriculum and learners.

They also gathered that some of these partnerships were losing significant sums of money and said their concerns regarding inappropriate behaviours from one key individual were not followed

up or addressed.

Executive members also claimed they were not provided with papers for some board committee meetings and were asked to leave for various agenda items deemed confidential.

They said they didn't feel empowered to contribute to, or have an understanding of, issues, with the exception of the curriculum and quality committee.

Students spoken to by the commissioner's team were positive about their experiences at the college and were still receiving good careers and progression advice, the report notes.

However, it also became clear there had been some number drop out across the year and that some class sizes were small.

Some staff said they were "dismayed" they had not been kept abreast of the college's financial struggles, with others feeling they had been "misled", while union representatives outlined a number of serious allegations, which indicated the breakdown of trust in senior leaders.

"However, without exception there was a strong sense of purpose and determination that the staff would do what they could to minimise any adverse impact upon learners and learning," the report added.

A look at the books found a significant deficit is forecast for 2018/19 that, much like the previous year, was a major variance from the budgeted surplus.

In order to reduce this, new income streams and cost savings were included in the forecast, but the commissioner said such assumptions were "unlikely to be achieved and therefore the forecast deficit is likely to worsen".

The report notes Hadlow's financial plan for 2019/20 assumes producing a modest operating surplus, but given the forecast deficit for the two years prior, the forecast surplus is "totally unrealistic and the college needs to review its financial position going forward".

Furthermore, it was found Hadlow College and West Kent and Ashford College - two separate legal entities - had managed critical aspects of their finances as if they were a group, and inter-company loans between the colleges were not transparent.

"In the FEC’s opinion, the Hadlow College board has failed in its fiduciary duties and in so doing put the solvency and long-term financial sustainability of the college and its learners at risk," the report concluded.

It also said there were concerns over the college’s involvement in a number of projects and commercial ventures, including the Betteshanger Park scheme, near Deal.

Minister for Apprenticeships and Skills Anne Milton said: “We are extremely concerned by the findings from the FE Commissioner’s report.

"Hadlow College has been placed in Education Administration and our immediate focus is to make sure there is as little disruption as possible for staff and students so they can continue their studies.

“The Education, Skills and Funding Agency (ESFA) will continue to work closely with the FE Commissioner, the administrators and with Hadlow College so improvements are made and we can provide the best further education possible for the area.”

Among the changes recommended by the commissioner is recruitment of an interim chief financial officer and at least two governors with financial credentials.

It should also create a revised leadership team to ensure full financial transparency, including an "appropriate arm's length relationship with West Kent and Ashford College", and a need to thoroughly investigate any loans or financial arrangements between the colleges, while a full review of the Betteshanger project has also been proposed.

Finally, it was suggested it be placed in supervised college with immediate effect, with ESFA observers attending all future board and 'group' board meetings.

The commissioner's team have also been recommended to make monthly stock-take visits to the college until July, when the outcomes of a structure and prospects appraisal should be known.

Tonbridge and Malling MP Tom Tugendhat said: “The Further Education Commissioner’s conclusions about the state of Hadlow College’s governance are, sadly, no surprise considering the college has become the first in the country to go into Education Administration.

"It is becoming increasingly clear that mismanagement at the very highest levels has left students and staff in limbo about the future of the college.

“Public money was entrusted to the college to educate our young people and help them start careers. If it has been wasted, we need those responsible held to account.

“The Minister of State in her letter has made it quite clear that improvements need to be made within three weeks.

"I support this approach and am keen to hear about the steps they are taking now to protect courses for local students.”

A spokesman for the colleges said: "Hadlow College and West Kent and Ashford College have implemented a number of recommendations made by the FE Commissioner in his reports and will continue to work to address others.

"We are determined, with the support of government agencies and administrators, to ensure that disruption for teaching staff and students is minimised so that college life and high-quality provision continues normally.

I"t is pleasing that the dedication and commitment of our staff, in what continues to be a challenging time for them, has been duly recognised by the commissioner.

"New chairs of governors have been appointed and the boards of Hadlow College and West Kent and Ashford College separated. Issues of governance, clerking and audit raised in the report are being addressed.

"An interim CFO has been appointed and a review into the finances of the organisation is underway.

"The financial expertise on the Board of Governors has been increased and a new owner for the Betteshanger site is being sought.

"The colleges have conducted and co-operated with investigations into the circumstances which led to the financial challenges.

"We await the outcome of the Structure and Prospects Appraisal and intend to work productively with all stakeholders to secure a sustainable future for the organisations, including the continuation of specialist land-based provision within Kent."

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