The new owner of City & Guilds Ltd (CGL) plans to reclaim £2.9m that it claims was paid to former bosses of the organisation without appropriate authorisation.
PeopleCert announced on Monday the outcome of its internal investigation into the payment of bonus payments by former leaders of CGL following its acquisition from the City & Guilds charity in October last year.
It concluded that Kirstie Donnelly, who was the charity’s chief executive, and Abid Ismail, its former chief finance officer, “directly authorised and paid bonuses to themselves, other members of the executive leadership team and a further 60 colleagues totalling approximately £5m”.
PeopleCert said these payments, made after CGL transferred from the City & Guilds charity along with almost all its staff, happened without the charity or new owners knowing.
The company said Donnelly and Ismail’s actions “were in direct breach of their duties and responsibilities as office holders and caused significant harm to the organisation’s reputation”.
It pledged to “take all action available” to recover £1.7m from Donnelly and £1.2m from Ismail and that it would “make appropriate referrals to the relevant authorities”.
Donnelly and Ismail had both transferred along with CGL to PeopleCert but left after the new owners became aware of the bonus payments.
Both were subsequently dismissed for gross misconduct in April without financial settlement following a disciplinary process. PeopleCert said an appeal against this decision was not upheld.
Legal representatives for Donnelly and Ismail said in a statement that the pair planned to sue PeopleCert in respect of their “unfair” dismissals.
“Our clients will present all their evidence to the courts in due course,” they said.
“That evidence overwhelmingly demonstrates that all bonus payments referenced in PeopleCert’s statement were approved, documented and implemented as part of the wider transaction process.
“It further shows that both the seller and the buyer, along with their advisers, were fully involved in the structuring and approval of the bonuses paid.”
Attempt to recover other funds
PeopleCert said it would also be requesting repayment of bonuses paid to other executive leaders still currently working at CGL but stated that there was “no evidence of wrongdoing on their part”.
Meanwhile, 60 bonus payments to other CGL employees will be ratified by PeopleCert and no attempt will be made recover the amounts.
“This has been a complex and protracted matter, but we’ve moved as quickly as the necessary process would allow us,” PeopleCert said in a statement.
“What is important is that we do the right thing in order to rebuild trust in the organisation.”
The Charity Commission opened a statutory inquiry in January to investigate concerns about the £166m CGL transfer, including bonuses awarded to executives.
Both PeopleCert and the representatives for Donnelly and Ismail said their evidence had been shared with the commission.
PeopleCert added a further investigation has begun into “allegations of manipulation of information provided to bidders during the sale process, following information that was first brought to us by the Times newspaper”.
The commission declined to comment as its investigation continues.
