Principals at Dundee University blamed for failures that led to financial crisis

A scathing review into the University of Dundee’s finances has found its most senior leaders repeatedly failed in their duties as the institution edged towards a major cash crisis.

Led by Professor Pamela Gillies, the report highlights serious concerns over governance and transparency at the highest levels of the university.

It found the professors breached ethics rules, ignored financial red flags and operated in “isolation of facts”.

Former principal Professor Iain Gillespie is heavily criticised for giving what the report describes as an “unrealistically positive” assessment of the university’s financial position.

His former deputy and current interim principal, Professor Shane O’Neill, also came under fire.

In one of the most serious findings, the review concludes that Gillespie, O’Neill and former chief operating officer Jim McGeorge collectively breached ethical standards by failing to disclose the true state of the university’s finances.

Members of the university executive group (UEG), which included the “triumvirate” of O’Neill, Gillespie and McGeorge, were found to have “failed” last year to “properly respond to the worsening situation” and disclose the looming crisis to other university officials.

The report found the root causes of the financial issues included the decline in overseas postgraduate students coming to the university and the growth agenda proposed by leaders.

According to the report, the “credibility and accuracy” of reports given to senior leaders regarding the financial situation were “poor”.

The key findings from the investigation are:

Poor financial judgement
Inadequate management and reporting
Poor monitoring of the financial key performance indicators
Lack of agility by leadership in responding to a fall in income
Weak governance in relation to financial accountability by the court

Dr Ian Mair, deputy chair of court, the university’s governing body, said: “It is evident from the report that there have been clear failings in financial monitoring, management and governance.

“While there were significant external factors, which have affected the higher education sector across the UK to varying degrees, the university’s response to these, and responsible management of our finances, has fallen well short of the standards that everyone should have expected.

“We have already seen significant change in our senior leadership, both on the executive group and court.

“There will now be further change. Professor Shane O’Neill, interim principal and vice-chancellor has indicated to me that he believes that now is an appropriate time for him to step aside.

“The court will be taking steps to make an interim appointment and we hope to do that in a matter of days.”

Professor O’Neill said it is important for the university to move on with new leadership.

“This has not been an easy decision for me,” he said. “I have been here at Dundee for four years, initially as senior vice-principal and then deputy vice-chancellor and provost. I have been very proud of the great things this university does for our city and for wider society, and of all our staff and students.

“The university will continue to have a transformative impact for many years to come through education, research and enterprise.

“I have done all I can to set the university on a path to recovery, engaging with internal and external stakeholders to find the best way forward. I had hoped that we would be further along that path by now, and it will now be for others to steer that course into the future.

“I am truly sorry for the impact this financial crisis has had on many people, particularly our staff and students.”

Acting chair of the university court Tricia Bey and the convener of the finance and policy committee, Carla Rossini, also announced on Thursday they will bring forward their departures and leave immediately.

Education secretary Jenny Gilruth said she would be updating the Scottish Parliament next week with a detailed statement on the investigation.

She said: “I would like to sincerely thank Professor Gillies and the investigation team for producing such a comprehensive report which sets out clearly the chain of events which has led to the University’s current financial difficulties.

“It is evident from the findings that there are serious questions which must be answered by the University of Dundee’s management team.

“This is obviously a difficult time for the University but I welcome the decisive action which has been taken with the changes in leadership. It is vital that we now move to a period of stability to ensure the institution can move forward and thrive into the future. The report recognises the vibrant community of committed staff and students – they remain our priority during this challenging period.

“Whilst the University is an autonomous institution which is ultimately responsible for decision-making around it’s day to day operations, the Scottish Government will do everything possible to secure a positive future for Dundee.”

Miles Briggs, the Scottish Conservative shadow cabinet secretary for education and skills, said: “This is a devastating report into the gross mismanagement that has existed for far too long at the University of Dundee.

“In light of the damning findings it is welcome they have done the right thing and resigned from their roles instantly.

“Senior figures were told what they had to do to get Dundee University into a sustainable position but they repeatedly failed to act, and covered-up the true state of its financial position.

“Sustained SNP cuts and Labour’s National Insurance hikes are only adding to the pressures facing universities like Dundee, but it should never have reached this point.

“The report is scathing about the inexcusable failures by those in leadership roles. It is now essential that this is a watershed moment to ensure no Scottish university will ever face such a situation in future.”

Insight Lynne Rankin Dundee reporter

This is the latest damning report into how the university came close to collapse.

Earlier this week, independent accountants said the university had overspent and failed to highlight the true scale of the financial crisis it was facing.

Next week, key figures who were at the top of the tree when the university’s finances started to unravel will give evidence to Holyrood’s education committee.

Former Principal Iain Gillespie, who resigned in December, weeks after the £30m deficit was revealed, will be grilled by MSPs next Thursday.

Former finance director Peter Fotheringham, who left in October just before the crisis emerged, will also face politicians.

Many believe they are responsible for the financial mess the university is in and want to hear what they knew when, and why action wasn’t taken earlier.