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 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.
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.
The top 10 scams of 2011
Bank cancels debts of schools caught in computer scam
Land banking involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.
The companies involved soon disappear with investors' money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme
It is reasonable to assume that if you take out a mobile phone contract at £30 a month for 24 months that's exactly what you'll pay unless you exceed the tariff. Yet mobile phone providers have come under fire for a snag buried in the small print – a clause to allow mid-contract price rises.
Prices are rising by a median of 81p a month and 70% of consumers are completely unaware off this sneaky move, according to Tesco Mobile, so be sure to check any new contracts before you sign the dotted line.
Fraudsters recruit unknowing accomplices through email under the guise of offering employment, seeking a personal favour, or through internet shopping sites. The recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on.
The 'mules' are frequently offered a small financial incentive to encourage involvement and face difficulties in proving their innocence when the fraud is discovered.
The scams claim to offer people the chance to profit from carbon credits. Under regulations that permit businesses to emit a tonne of CO2 – the companies claim to offer investment in green projects like a forestry scheme or a solar panel project, which generates carbon credits that are then sold on to heavy industry.
A flashy brochure or website tells of a reliable 'government-backed' scheme which provides reliable returns for investors. Such a scheme doesn't exist however – a reality investors only discovered when they have parted with their cash and the company is untraceable. As with land banking, fraudulent companies are not covered by the FSA so victims have no course for recompense
Receiving an email from the taxman saying you are owed a payment may seem like a nice surprise, but it is actually from fraudsters trying to relieve you of your cash instead.
The emails provide a "click-through link" to a cloned replica of the HMRC website. The recipient is then asked to provide their credit or debit card details - all the information the criminals need to clear your account, and sell on your personal details.
Insurer Direct Line reported a hike in the number of 'crash for cash' scams last year – where fraudsters fake accidents by making unnecessary emergency stops at busy roundabouts or slip roads, forcing motorists to crash into them.
They then make bogus claims to the innocent motorist's insurer, often including fictitious injuries and passengers.
Learner drivers have been taken for ride by being unknowingly taught by trainee instructors. An investigation by the AA found up to 27,000 extra driving tests have been failed in the last year because one in 10 learner drivers are unwittingly taught by an instructor they do not know is learning on the job.
July saw the arrest of a Leicester postman who stole £46,686 worth of mail over two-and-a-half years. Yogeshbhai Patel, 38, was jailed for two years for stealing mail including 2,000 DVDs and 2,250 games along with CDs and other electrical equipment. He intercepting the valuable packages and spent the money on living a luxury lifestyle including helicopter rides and a trip to Las Vegas.
The Trading Standards Institute reported over 200 cases where elderly homeowners have been targeted by telephone cold callers, purporting to be from their energy supplier and offering energy saving devices which could cut their bills by 40%.
The TSI tested the devices in homes where owners had fallen for the scam, only to find they both failed to satisfy electrical safety standards or deliver any tangible energy savings.
Thermal cameras that track ATM pin numbers are the latest weapon in their arsenal and US scientists have warned it is the next threat for this form of crime. Researchers at the University of California at San Diego found that up to 45 seconds after a person types their pin code into an ATM machine or door entry pad the numbers and even the sequence are still readable by thermal cameras.