Fraudulent Apprenticeships Scheme Results in Administration & Director Ban
Introduction
The collapse of London College of Global Education Ltd, a training provider based in East London, exemplifies a shocking case of fraudulent activity in the education sector. Founded by Narayan Sah, the company was subject to an investigation by the Education and Skills Funding Agency (ESFA) after irregularities in its apprenticeship programme were discovered. The investigation revealed that the company had falsely claimed almost £1 million in funding for apprenticeships that did not exist.
Following the investigation, Sah was banned from being a company director for seven years, and the company entered liquidation in July 2021. Nimish Patel and Hasib Howlader of Hudson Weir were appointed as joint liquidators to manage the process. This case study examines the fraudulent activities that led to the company’s downfall and the legal and financial consequences.
Background and Fraudulent Activity
London College of Global Education Ltd (LCGE) was established in 2010 under the name Sagarmatha Consulting Limited. Initially a legitimate educational provider, the company began offering apprenticeship programmes in 2020, with a focus on advanced and higher-level ICT apprenticeships. According to DfE figures, the company recorded 400 apprenticeship starts in its first year.
However, a 2021 Ofsted monitoring visit raised concerns about the legitimacy of the provider’s apprenticeships. Ofsted inspectors found examples of individuals listed as apprentices who were not studying at the provider. This led to an investigation by the ESFA, which uncovered widespread fraudulent activity.
In the 2020/21 financial year, Narayan Sah and his company had claimed £994,690 for 471 apprentices. However, after Ofsted’s findings, Sah conducted an internal verification of learners and removed 463 of those apprentices from the list as they were found to be ineligible for funding if they existed at all.
The Investigation and Findings
The ESFA’s investigation uncovered serious irregularities in the company’s reporting and operations:
- Ghost Apprenticeships: The bulk of the company’s 471 apprenticeships were found to be fraudulent, with 463 apprentices either not existing or being ineligible for funding. Many of the non-existent apprenticeships were tied to advanced and higher-level ICT programmes.
- No Completed Qualifications: Despite claiming almost £1 million in funding, none of the enrolled learners completed the apprenticeship qualifications for which funding had been received. This raised red flags for both the ESFA and Ofsted, who questioned how the provider had received funding for so many incomplete and non-existent learners.
- Remote Off-the-Job Training: Ofsted’s report indicated that all off-the-job training for the apprenticeships was delivered remotely. While remote training became more common during the COVID-19 pandemic, the scale and nature of the fraud went beyond normal operational challenges.
- Demand for Repayment: The ESFA initially demanded the return of £885,989 in fraudulent funding. By the time the company entered liquidation, this amount was reduced to £429,189.
Administration and Liquidation
In July 2021, London College of Global Education entered liquidation, with Hasib Howlader of Hudson Weir was appointed as liquidator, to manage the company’s affairs, sell off any remaining assets, and repay creditors as much as possible.
The liquidation report revealed that the company had liabilities of more than £1 million, including:
- £20,000 owed to HSBC
- £18,000 owed to Dubai-based – Seeding Brains Education and Training
- £168 owed to LSECT, the publisher of FE Week
The liquidators’ report published on Companies House in September 2022 indicated that discussions with the ESFA regarding the company’s conduct were ongoing. Due to the sensitive nature of the case and potential future litigation, the joint liquidators did not disclose the specifics of the ESFA investigation at that stage.
Narayan Sah’s Director Ban
As a result of the activities uncovered by the ESFA, Narayan Sah was handed a seven-year ban from serving as a company director. The Insolvency Service found that Sah had deliberately submitted false claims for apprenticeship funding, misrepresenting the number of apprentices enrolled at his institution and receiving nearly £1 million of public money. His disqualification is effective until May 2030.
Lessons Learned
This case serves as a stark reminder of the need for stringent oversight and monitoring in the education sector, particularly when public funding is involved. Several key lessons emerge from this case:
- The Importance of Regulatory Oversight: The fraudulent activities at London College of Global Education might have continued undetected without the intervention of Ofsted and the ESFA. Regular audits and inspections are crucial to maintaining accountability and preventing misuse of public funds in the education sector.
- The Dangers of Misrepresentation: Narayan Sah’s case highlights the consequences of misrepresenting data to obtain public funds. The fraudulent apprenticeships not only deprived genuine learners of resources but also damaged the integrity of the apprenticeship system, which relies on accurate reporting.
- The Financial Implications of Fraud: Fraud of this scale has severe financial consequences, both for the company involved and for the public sector. In this case, the ESFA was left seeking repayment of hundreds of thousands of pounds in wrongly obtained funding. For the creditors, the liquidation of the company meant recovering only a fraction of what was owed.
- Director Accountability: Sah’s seven-year director ban sends a clear message about the consequences of corporate mismanagement and fraud. Directors have a legal duty to ensure their companies are run honestly and transparently, especially when public funds are involved.
Conclusion
The case of London College of Global Education Ltd and its fraudulent apprenticeship scheme underscores the critical role of oversight bodies like Ofsted and the ESFA in safeguarding public funds. While the scale of the fraud was substantial, swift action by the ESFA helped uncover the wrongdoing and minimise further damage.
Nimish Patel and Hasib Howlader have continued to work on liquidating the company’s assets and managing its outstanding liabilities. As investigations continue, this case serves as a warning to other educational providers about the importance of transparency and accountability in handling public money.
Ultimately, the downfall of London College of Global Education is a cautionary tale about the severe legal and financial consequences that follow from engaging in fraudulent practices, particularly in sectors entrusted with public resources.
