BBC News has reported that Clydesdale Bank has announced that as a gesture of goodwill, it will forgive the debts of 27 schools around Britain accrued as part of a massive school technology lease scam. According to the BBC’s news program Panorama, as many as 169 schools might have been swindled by the program, and as many as 10 head teachers have resigned as a result.
Two firms, LTM and DTS, convinced the schools to sign deals that would provide them with office equipment like computers and copiers at as much as ten times the price that could be obtained elsewhere. Under the deal structure, the schools were left to pay off these expenses even in the cases where the equipment wasn’t delivered or was delivered damaged.
Although both companies have now gone out of business — leaving behind more than £30 million in debts — the schools that had contracts with them remain on the hook to lending institutions for the money they borrowed to finance the deals.
The debts that schools across the country were left to pay has put some in danger of closing. Other schools have been left with hefty bills to pay for equipment that in some instances did not arrive and in other cases was damaged or substandard.
In total, more than 70,000 pupils have been affected.
Before the Clydesdale announcement, the Chair of the Common Public Accounts Committee, Margartet Hodge MP, said that even though there was no legal obligation for the lenders to examine the terms of the lease agreements they agreed to finance, there is still a “moral responsibility” for them to have done so — and had a moral imperative to intervene to stop the schools from finalizing the deals.
The spokesman for Clydesdale said that the debt forgiveness shouldn’t be looked at as an admission that the bank didn’t provide sufficient oversight of the loans, saying that the company had no responsibility to insert itself in the negotiations or the process by which the schools choose their equipment suppliers. Still, considering how much of a burden these debts placed on some of the schools affected, the bank took a “sympathetic view of the situation” which is why it decided to act as it did.
The bank, which called in the police to investigate the actions of both LTM and DTS, 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.”