The trustees of City & Guilds London Institute have been accused of attempting to evade accountability for a "catastrophic failure of governance" by delaying the launch of an independent inquiry into the £166 million sale of the vocational charity's training and accreditation business last October.
Members of the 148-year-old institution voted overwhelmingly last month for the trustee board to initiate what would be the third investigation into how the foundation sold its operations to the private operator PeopleCert in October. However, members have complained that the process appears to have stalled.
The vote followed the Charity Commission opening a statutory inquiry in January, which was mirrored a day later by PeopleCert commissioning its own internal investigation into the deal.
Neil Bates, an elected member of the City & Guilds council, which appoints and advises the trustees, stated: "Why would they not be accountable for decisions made if everything was above board? It is shocking there has been such a catastrophic failure of governance – and subsequently a failure of accountability."
While the council has the power to appoint City & Guilds trustees, it cannot dismiss them unless misconduct has been proven. "There is £166 million – that is what is left of the City & Guilds legacy," Bates added. "We want to remove this trustee board from having responsibility for those funds and replace them with people properly equipped to restore good governance to the City & Guilds organisation."
A spokesperson for the charity said: "The trustees remain committed to working constructively with members to find a clear and proportionate way forward in the best interests of the charity. We are reviewing options to shape this approach, ensuring we address members' concerns while avoiding unnecessary duplication with the Charity Commission's investigation. Our priority is to safeguard the integrity and future of the Institute."
The City & Guilds business, originally founded in 1878 by the City of London and a group of 16 livery companies to develop a national system of technical education, charges fees for its accreditations to private training businesses and has about 60% of its income "underpinned by stable government funding schemes."
Having maintained a fairly modest profile for much of its history, the current row represents the latest episode in what has been a torrid six months for the charity. It began with the then chair, Ann Limb, and chief executive, Kirstie Donnelly, openly congratulating themselves on a "landmark deal" in October.
The sale created a new private company called City & Guilds Ltd, owned by PeopleCert, as well as a rebranded charity, City & Guilds London Institute (CGLI), which planned to use its financial windfall to continue its charitable works, such as providing funding to people in need of vocational training.
However, in December, a presentation prepared for PeopleCert investors revealed plans for the now-private City & Guilds to shrink its UK workforce as part of a £22 million cost-cutting drive. PeopleCert informed its backers of £13 million in "personnel cost synergies" that would largely be achieved by replacing departing UK staff with cheaper overseas hires.
Then, a week later, the Guardian reported that Donnelly, who had by then switched from being the charity's chief executive to the same role in the newly privatised City & Guilds, was one of the directors awarded massive bonuses after the sale by the new company. The rationale for the payouts – £1.7 million for Donnelly plus £1.2 million to finance director Abid Ismail – has never been convincingly explained. These came alongside sizeable salary increases for the pair, with Donnelly granted an extra £100,000 per year, lifting her salary to about £430,000. Ismail's base pay also increased by 30%, rising by about £70,000 to £300,000. In total, the pay of the top six executives more than tripled after the deal.
Donnelly and Ismail have since left City & Guilds without "any financial settlement." Lawyers acting for Donnelly and Ismail added: "As we will shortly be commencing litigation against City & Guilds Limited … neither we nor [Donnelly or Ismail] will be making any further comment."
