The Auditor General has indicated that claims of fraud at a crisis-hit college may require police involvement.

Stephen Boyle’s remarks to MSPs came after he was questioned about allegations concerning “potential financial irregularities” linked to “private businesses” operating from South Lanarkshire College (SLC) while allegedly using its materials and lecturing staff time. It is understood the alleged activity, outlined in management board minutes for a meeting on June 8 last year, centred on the institution’s construction faculty.

The minutes confirm there were also claims regarding potential timetabling “anomalies” involving fabrication of hours, students and classes. In addition, it was alleged staff were subjected to “systematic” bullying and intimidation over a “prolonged” period.

Receipt of the complaints in September 2020 led to college principal Aileen McKechnie commissioning a forensic investigation by internal auditors Azets. It is understood the claims are connected to the time before her tenure.

READ MORE: Nicola Sturgeon signals she is open to probe at college mired in fraud claims

The probe resulted in a report that was provided to SLC in May last year and contains recommendations for improvement to procedures. College bosses said the recommendations were accepted in full. They have also stressed the report concluded there was "no evidence of criminality that would have necessitated a further investigation by the police".

However, the Azets document has never been published and the precise terms and scope of the investigation that led to its production remain unknown.

When asked previously to comment on specific allegations described in the June 2021 board papers, SLC referred The Herald to a management plan that sets out auditor recommendations and action taken to meet them. The plan suggests failings or weaknesses were uncovered in areas such as procurement, preventing bribery, carrying out supplier due diligence, accepting hospitality or gifts, HR, overseeing budgets and expenditure, stock control, inventory management, and protecting access to storerooms and other locations that are “susceptible to theft”.

Bosses were also advised to tighten processes for course and lecturer timetabling, the monitoring of student attendance, student withdrawals and booking out college vehicles. The recommendations and update contain recurring references to the construction faculty.

According to board papers, a separate HR probe was carried out into bullying and intimidation claims.

HeraldScotland: The college is investigating complaints against Andy Kerr (left), a former Labour minister, and (right) college principal Aileen McKechnie.The college is investigating complaints against Andy Kerr (left), a former Labour minister, and (right) college principal Aileen McKechnie.

Asked by Conservative MSP Graham Simpson if he was aware of allegations as set out in the June 2021 minutes, Mr Boyle told Holyrood’s Public Audit Committee: “The generality of the concerns – yes. The specific minute that you refer to, I hadn’t read that board minute from the college.

“Noting some of the phrases that you refer to in respect of allegations about behaviours – potential irregularities, potential fabrications - these are all very serious matters, no doubt.

"In discharging their oversight of public funds, public bodies need to have effective control environment governance arrangements in place. And the board will want to be satisfied, I’m sure, that all of these allegations are properly investigated.”

Addressing committee convener Richard Leonard, Mr Boyle added: “In the event that it is deemed that these allegations of such seriousness have resulted in not just improper conduct but potential... if there's any financial irregularities, there is an obligation, of course, to report such concerns to Police Scotland.” His remarks prompted Mr Simpson to say: “That’s my view – that this could be a police matter.”

READ MORE: South Lanarkshire College failed to meet governance standards, say auditors

Concerns over alleged fraud come amid signs that SLC last year suffered a serious governance breakdown. In November, the board agreed to commission two independent investigations into complaints against its chair Andy Kerr, Ms McKechnie and interim clerk Brian Keegan. The board also agreed to suspend Ms McKechnie and Mr Keegan for the duration of the investigations. Mr Kerr, a former Labour minister, voluntarily stepped aside from his role for the same period. The inquiries are ongoing. 

Last month, Audit Scotland published a report that highlighted areas where SLC had not fully complied with the Code of Good Governance for Colleges. This included the board not meeting for five months from June 2021, and the audit and risk committee not meeting for six months from May 2021.

Police Scotland said yesterday that initial checks indicated no report or notification of alleged fraud at SLC had ever been received.

A college spokesman said: “South Lanarkshire College takes any allegation of staff or board misconduct extremely seriously.

"Following receipt of anonymous allegations in September 2020, South Lanarkshire College conducted an independent, externally led, forensic investigation. The report, produced by Azets, concluded that there was no evidence of criminality that would have necessitated a further investigation by the police. However, recommendations were identified, all of which were accepted by the college. The management response to the Azets report details those recommendations in full and is available publicly on the college website.

"At South Lanarkshire College, we provide a supportive environment that is safe, respectful, equitable and inclusive for all students and staff.

"Unrelated to the Azets report, South Lanarkshire College received whistleblowing concerns in September and November 2021 which are the subject of ongoing investigations. The college has engaged independent external advisers to conduct the investigations and, at this time, it would be inappropriate to comment further.”