City & Guilds Executives Awarded Themselves Nearly £3m in Unauthorized Bonuses After Privatization

The Unauthorized Bonus Scheme

An internal investigation into last year's £166m sale of City & Guilds has revealed that the two most senior executives awarded themselves millions of pounds in bonuses "without authorisation from, or knowledge of" their superiors. Kirstie Donnelly, the former chief executive, and Abid Ismail, the finance chief, "directly authorised and paid bonuses to themselves" of nearly £3m combined.

Extended Payouts to Leadership Team

The investigation found that a further £2m was paid to other senior executives and 60 more junior colleagues in a scheme run from the newly privatised company. These payments came alongside sizeable salary increases for the top executives, with Donnelly granted an extra £100,000 a year, lifting her salary to about £430,000, and Ismail's base pay increasing by 30%, rising by about £70,000 to £300,000.

Financial Impact of the Privatisation

The payouts occurred as the newly private-owned City & Guilds business embarked on a £22m cost-cutting drive and was shrinking its UK workforce after its sale. In total, the pay of the top six executives more than tripled after the deal, raising questions about the financial priorities of the newly privatised organisation.

Reputational Damage and Legal Consequences

PeopleCert, the private company that acquired the City & Guilds vocational awards business, stated the bonuses and salary increases "were in direct breach of [Donnelly's and Ismail's] duties and responsibilities as office holders and caused significant harm to the organisation's reputation." The company intends to take all action available to ensure the recovery of these amounts (£1.7m and £1.2m respectively) and will make appropriate referrals to the relevant authorities.

Charity Origins and Regulatory Response

Founded in 1878 by the City of London and a group of 16 livery companies, the original City & Guilds Institute developed a national system of technical education. The Guardian's reporting prompted the Charity Commission to open a statutory inquiry into a range of issues at City & Guilds, including "the sale and bonuses awarded to its executives." Donnelly and Ismail were suspended "for a short period" as PeopleCert commissioned its internal investigation.

Legal Defense and Future Outlook

Lawyers for Donnelly and Ismail said their clients had "acted reasonably and honestly at all times" and would present evidence to the courts showing that all bonus payments were approved, documented and implemented as part of the wider transaction process. Meanwhile, PeopleCert stated that while there was no evidence of wrongdoing on the wider executive leadership team's part, they would also be requesting repayment of serving ELT members' bonus payments in full.