Now try to understand another financial riddle

We revealed here yesterday how Imperial College turned from being an institution with a zero borrowing requirement under Sir Ron Oxburgh to one needing an overdraft facility of £175m under Sir Richard Sykes. Now apply your thinking powers to another riddle in Imperial’s handling of figures. Everyone who has followed Wye Park must, by now, be aware that hard numbers are extremely difficult to find. The forecast cost has varied in the mouths of some of Imperial’s most senior officers by as much as half a billion pounds in a single week.

But consider another strange anomaly. When Sir Ron Oxburgh negotiated the ‘merger’ of Imperial with Wye in 1998 the then Imperial management was so unconcerned about the financial aspects of the deal that it scarcely merited much of a mention. A report to the governing body on June 26 1998 at which the merger was effectively agreed declared, ‘Financially, Wye had an underlying recurrent deficit in 1997-97 of £500k (on a turnover of £12.5m). At 31 July 1997 they held £2.7m in their general reserve and carried a £1.8m debt. They showed £16m tangible assets on their balance sheet. Their intention is to produce a recurrent surplus by the time of the merger and they have a credible rationalisation plan to achieve this.’

Now take a look at the council minutes from April 1 last year to see what three years under the iron hand of the super-efficient, private enterprise friendly Sykes regime have done to the college — or so they claim.

Deputy rector Professor Sir Leszek Borysiewicz, the man who has been gunning for Wye throughout, told this meeting, ‘Since the merger, Imperial had, in effect, been subsidising activities at the Wye Campus by between £2m and £3m per annum. The College had no option but to address these losses and also determine an academic structure that would allow the Faculty to move forward.’

Note two things here that are typical when Imperial starts to discuss financial matters. One is that the sums simply don’t add up. The merger was agreed in 1988 but didn’t take place until 2000, at which stage the decline in Wye was scarcely under way. Is it possible that the financial situation of the college could have declined so dramatically in the space of less than twenty four months? And if it had, why was no-one jumping up and down about it until Sir Ron Oxburgh had left and Richard Sykes had come on board?

Note, too, the second hallmark of an Imperial statement: the imprecision. There is a considerable difference between £2m and £3m. Exactly £1m to be precise, which is a hell of a lot of money, a variation of between thirty three and fifty per cent depending on which baseline figure you choose. If the deputy managing director of a public company — someone whose position is comparable to Prof Borys’ out here in the real world most of us inhabit — stood up before his board and said one division of the organisation was losing ‘between £2m and £3m’ he would have been eaten alive, and deservedly so. Which is it? How are the numbers reached? How come this has supposedly been happening for five years with very little being made of the fact?

And what did Richard Sykes himself have to say? This: ‘…it was clear that funds for investment in the future of Wye would have to be generated there. Because of its location, teaching was not a long-term option.’

In other words, the whole basis of the Oxburgh plan to make Wye a high-tech life science outpost of Imperial was a waste of time, and had clearly been long abandoned by these people in favour of ‘raising funds for investment’ for something other than teaching. Whatever you make of that decision, you have to say that the governance procedures displayed in these minutes fall far short of anything one would expect in the private sector. There any half-decent non-executive director would have been jumping up and down about the interests of his or her shareholders long ago. In the heady, academic of Imperial, random numbers just get batted around willy nilly, without justification or explanation and previous policies appear to be overturned in private then merely handed on to the ‘board’ for a rubber stamp.

The Imperial of Richard Sykes likes to make much of the idea that it is a 21st century institution keen to work hand in hand with private enterprise to make the world a better place. But if a private company was run like this the shareholders would be shouting for directors’ blood at the first available annual general meeting. Imperial, luckily, has no such thing; it simply lives off our money in the way its leaders see fit. Where are the real auditors when you need them?

Imperial Council April 1, 2005

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About David Hewson

Professional novelist, published in more than 20 languages. Creator of the Nic Costa series set in modern Rome. Most recent book the novel of the Danish TV series, The Killing.
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