Bank cancels debts of schools caught in computer scam

Clydesdale BankTim Ireland/PA Archive/Press Association Images

Clydesdale Bank has agreed to wipe out millions of pounds of debt, owed by British schools who were taken in by an equipment leasing rip off scheme.

A BBC investigation showed that the scam forced schools into debt, and led to the resignation or suspension of 10 head teachers.

The scam

The investigation, to be shown on tonight's Panorama, discovered that 169 British schools fell for the hoax. Slick salespeople from two companies called LTM and DTS, persuaded the head teachers to lease technology equipment - including computers and photocopiers. They told them they could lease as many as they liked, and because of corporate sponsorship they wouldn't have to pay for them. They said, however, that the head teacher would have to sign a leasing agreement to comply with the law.

There were some worrying signs immediately. There were examples of equipment that arrived damaged, was well below the spec that had been promised, and sometimes didn't show up at all.


However, that was the least of the schools' problems. In some instances the first few payments were covered by the companies. However, they then collapsed with debts of £30 million, leaving the schools to pick up the pieces. At this point they realised they had been taken in by a scam.

The leases they had signed had massively over-valued the equipment that was delivered, so they ended up having to pay back in some cases ten times more than the value of the equipment. At this point, 27 schools owed millions of pounds between them.

In the resulting chaos, ten head teachers have either been suspended, or resigned. In one school the council has taken steps to remove the entire board of governors.

Bank goodwill

Clydesdale Bank lent the money for the schemes. It said it was not involved in vetting the firms, or selecting any of the equipment. However, as the programme was being made, it said it would write-off those loans as an act of 'goodwill'.

It said: "As a gesture of goodwill, we will be writing to all 27 schools that financed their equipment with us to provide them with reassurance that the bank will support them by writing off the outstanding principal debt associated with these agreements."

"Those schools will also be able to retain the equipment. We hope this will provide the schools and their communities with a great deal of comfort."

This is at least some small comfort to schools that have spent the best part of a year battling with these debts.


However, it raises some questions about the role of a head teacher. There are those who would argue that they shouldn't have been signing these leases without reading them and understanding the debts they were taking on. They should at least have been asking searching questions about the huge values being ascribed to the equipment.

There are others who argue that head teachers should be in the business of teaching children, and that they should be specialists in education rather than in purchasing.

However, with the government pursuing an agenda of giving more control over spending to the schools, it begs the question of what kind of person should be at the helm in our schools today. Do we want someone to focus on education, the curriculum, and challenging and inspiring young people to achieve their potential? Or do we want someone well versed in purchasing and accounting procedures?

But what do you think? Let us know in the comments.

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Bank cancels debts of schools caught in computer scam

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