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The Architectural Association is doing very nicely, despite headlines that might have misled you

The AA’s building programme continues apace, via Wright & Wright’s masterplan, now entering its third phase, says Paul Finch

I have avoided until now making any comment on what has been happening at the Architectural Association in respect of its little local difficulty over office equipment and computers. Lurid headlines suggesting the organisation would face debts of £5 million may have been based on facts at the time they were written, but were we getting the context, and therefore something approaching the truth?

We were not being told the whole story, partly because the AA itself, on the advice of the police, lawyers and accountants involved in unpicking the mess, urged it to keep quiet until matters were resolved, which has pretty much now happened.

The saga began in a curious way, with the discovery that the AA’s then finance officer had made an unsecured and unauthorised loan to a junior member of staff, for reasons we can only guess at. This was unconnected to what was to follow, but it tells us something about the finance officer involved, one Stephen Livett. Confronted about his behaviour, he chose to resign, in early 2011.

An interim accountant was appointed, who noticed some large and odd-seeming bills coming in from finance houses in respect of loans relating to equipment of various sorts. No paperwork could be found in respect of any of them, even though the first three (out of what turned out to be 14 contracts) had been countersigned by AA director Brett Steele or, in one case, an appropriate council member. In 11 cases, Livett was the only signatory. The contracts, with respectable household-name finance houses or subsidiaries, meant the AA would be paying vastly in excess of its budget for equipment, generally about £500k a year. After extensive forensic work by the AA’s new finance director, a fraud expert from a major firm of accountants, and a small group of AA councillors and advisers, a clear picture of what had happened came into focus.

A supplier of equipment managed to persuade the AA (and other educational organisations) to become a customer; the supplier would have to be paid in full, up-front for what it supplied, but could organise finance with any number of companies. When the supplier went into administration, the finance houses (eight in total) were as much in the dark as the AA as to what exactly was going on.

Negotiations began as to how matters should be resolved. They have been complicated by uncertainty over what was leased to which organisation (not just the AA), what the machine serial numbers were, and so on. The outcome is that matters will be settled, on a confidential basis, with a total bill for the AA that is a fraction of the £5 million horror stories.

Meanwhile, in the real world, the AA’s building programme continues apace, via Wright & Wright’s masterplan, now entering its third phase. With 700 students and 200 staff, the school is looking healthy and, as a result of recently achieving Quality Assurance Agency status, UK students can now use the government’s loan scheme to go to Bedford Square. Some 20 per cent of the 2012 intake are Brits.

Everyone associated with the AA owes a huge debt to the AA’s ‘Lease recovery group’. It had a grim task, but one entirely necessary for the future of an institution firing on all cylinders.
Panorama, incidentally, has broadcast a programme about primary schools being caught up in what sounds like a similar scam. The AA is still pursuing Mr Livett; his assets are frozen.
You have to be vigilant, especially in the case of people you are obliged to trust.

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