Two Hertfordshire based companies signed up 169 schools to a scheme whereby the schools took out loans from banks for computer and photocopying equipment.  

The problem is that the equipment supplier not only provided sub-standard equipment at very high prices, but then went into administration with debts of around £30m, leaving schools without any supply at all. Instead the schools have been left with very significant debts.

Schools have been left in desperate situations, with as many as 70,000 pupils nationwide reported to have been affected and experienced teaching professionals being forced to leave their posts. One example is a Primary School in Suffolk, which was left owing more than £500,000 for 125 laptops. The head teacher had signed the deal after being told the school could lease as many laptops as necessary and, because of “corporate sponsorship”, would not have to pay for them.  

Stephen Sklaroff, of the Finance and Leasing Association, speaking on behalf of the finance industry, has said it was up to the schools - not the financing companies such as banks - to make sure they were not signing bad deals. That statement may sound stark in the immediate aftermath of publicity about what has happened, but the industry’s position has been tempered by reports that at least one high street bank is now offering to write off debts with 27 schools.

However, had the schools taken some simple advice they would have understood that the supposed corporate sponsorship was actually a commitment to repay a loan that could jeopardise the school’s financial stability. Even though the fraudsters may well have misrepresented the true position, some due care and attention could have prevented the scheme from spreading so widely, a summary that applies in many varied situations where fraudsters seek to tread.  

About the author

Susan Hopcraft Partner

Susan advises on all aspects dispute resolution particularly in the financial services sector. She has extensive insurance, professional negligence and restrictive covenants experience. She deals with claims against solicitors, valuers, surveyors, brokers and accountants, fraud issues, recoveries for lenders and bank mis-selling.