:00:10. > :00:13.Tonight on Panorama, the rip-off which has cost our schools millions,
:00:13. > :00:23.at a time when there's precious little money to go round. It's
:00:23. > :00:24.
:00:24. > :00:29.brought some schools to the brink of financial ruin. It has even
:00:29. > :00:35.ended teachers' careers. He told us it was a scam. It was
:00:35. > :00:40.like my world had just fallen apart. These are some of the men involved.
:00:40. > :00:44.They've made themselves rich with sports cars, big houses and
:00:44. > :00:48.holidays in the sun. For them to go and walk around in
:00:48. > :00:52.their luxury houses with their swimming pools, the nice cars.
:00:52. > :00:56.makes you sick. We name some of the hundreds of
:00:56. > :01:00.schools around the country, saddled with huge debts.
:01:00. > :01:03.The state is being ripped off by private companies trying to make a
:01:03. > :01:08.quick buck at the expense of quality teaching for our kids.
:01:08. > :01:12.And we catch up with some of those who personally profited at the
:01:12. > :01:22.expense of our childrens' education. You're asking me questions that I
:01:22. > :01:33.
:01:33. > :01:39.Under surveillance by Panorama, this man's business has devastated
:01:39. > :01:43.the lives of many head teachers and siphoned so much money from our
:01:43. > :01:48.children's schools that some have been near to closure. A few miles
:01:48. > :01:55.away, a fellow company director leaves his �1 million home.
:01:56. > :01:59.And another, who has made a fortune from the same rip-off. The trio ran
:01:59. > :02:06.computer supply companies, stripping them of millions and
:02:06. > :02:09.leaving schools to pick up the bill. What they've done has been so
:02:09. > :02:15.damaging, personally and financially, that few of of the
:02:15. > :02:20.victims would speak to us. Then we met this former headteacher.
:02:20. > :02:25.Why did you insist on being anonymous for this? For me as a
:02:25. > :02:29.professional it was an incredibly difficult time. I still feel that
:02:29. > :02:33.other people would think I was guiltyle doing something wrong. It
:02:34. > :02:39.is out of fear for the reaction that there may be to the school or
:02:39. > :02:44.from the local authority. Like in any other school, there was
:02:44. > :02:48.pressure for her to keep up-to-date with the latest IT equipment.
:02:48. > :02:53.She remembers the day a salesman called.
:02:53. > :02:59.I remember him as being a small, Italian, lots of gold, lots of
:02:59. > :03:03.jewellery. A big car. He was very aggressive. He was very
:03:03. > :03:06.intimidating. Almost bullying in the sense he kept going, you will
:03:06. > :03:10.have our business. I was very much saying that I needed to go to the
:03:10. > :03:14.governors. We had a meeting tomorrow night, that I would take
:03:14. > :03:19.that to them and get back with their view, but they would not
:03:19. > :03:23.leave until I had signed something. She signed for 20 laptops and a
:03:23. > :03:30.photocopier. She did not realise that the mark-up was almost 20
:03:30. > :03:33.times the going price. The final bill was �160,000.
:03:33. > :03:40.If you had known how much money the school was to have to part with,
:03:40. > :03:49.would you have signed it? The salesman worked for a company
:03:49. > :03:54.run by Angelo Tinnerello. There was another, James Lowe. It
:03:54. > :03:58.was one of those salesman that persuaded her to sign a contract
:03:58. > :04:03.with a massive contract, that had far-reaching consequences for her
:04:03. > :04:08.and her school. ADVERTISEMENT: In the meantime we
:04:08. > :04:12.will do more written work... Schools used to be pretty
:04:12. > :04:17.straightforward places the. The teachers used black boards. The
:04:17. > :04:23.kids had nothing to write with but pens and nothing to write on but
:04:23. > :04:29.paper. The food was primitive too. ADVERTISEMENT: I can't do it. I
:04:29. > :04:35.have not go got a pen. What is the point of coming to school without a
:04:35. > :04:39.pen? Now even primary schools want state-of-the-art laptops, smart
:04:39. > :04:44.board and touch-screen technology. The companies took advantage of
:04:44. > :04:49.schools with big IT ambitions, but two of the men we investigated went
:04:49. > :04:56.further than simply overcharging. They had a scam to deceive schools
:04:56. > :04:59.into thinking that their equipment would be free. This is how it works.
:04:59. > :05:05.A flash salesman turns up at the school. He says that they can
:05:05. > :05:09.supply all of the laptops and the photo coppice thankfully they want.
:05:09. > :05:13.You are leasing them, but no you don't have to pay. They do that
:05:13. > :05:17.because there is a special promotional offer. To the school
:05:17. > :05:21.they are free. Then the supply company goes to a
:05:21. > :05:26.bank. It says that a school has agreed to
:05:26. > :05:29.pay all of this money for IT, to give them the funds to buy the
:05:29. > :05:32.equipment and the bank gets the money back with interest from the
:05:32. > :05:36.school. Then the equipment arrives, along
:05:36. > :05:40.with the first bill. Remember, the salesman said that his supply
:05:40. > :05:44.company will pay. They do, for a time.
:05:44. > :05:51.But then, they go bust, leaving the school owing all of the money to
:05:51. > :05:56.the banks. A debt which could hang over them for years.
:05:56. > :05:59.To our anonymous headteacher, what seemed like a good deal ended her
:06:00. > :06:06.career. My governors came in and suspended
:06:06. > :06:09.On what grounds? On the grounds of financial irregularities. Acting
:06:09. > :06:13.outside my remit of responsibility and signing leases.
:06:13. > :06:18.How did you feel about that? Shocked.
:06:18. > :06:22.Devastated. The company responsible was called
:06:23. > :06:28.LTM. They were based in Hertfordshire. We began digging to
:06:28. > :06:32.discover how many other schools had fallen for their scheme it was not
:06:32. > :06:38.easy. The victims schools preferred to keep the losses quiet, but we
:06:38. > :06:45.began to discover dozens of them. And not all were victims of LTM.
:06:45. > :06:50.Other companies were pouring into the marketplace, cashing in on the
:06:50. > :06:58.re-tooling of our classrooms. Whilst LTM had started conning head
:06:58. > :07:01.teachers, others were charming them into paying vastly inflateed prices.
:07:01. > :07:06.We invited a School Leasing Expert to guess just how much some of the
:07:06. > :07:09.companies had been charging. Right, what we have here are three
:07:09. > :07:12.pieces of equipment from three different schools that were taken
:07:12. > :07:16.on leases. Local authorities told us the
:07:16. > :07:21.prices. Some of them for rolling contracts over several years.
:07:21. > :07:28.The first one is from a primary school in West Bromwich. I will
:07:28. > :07:33.show you one of the manufacture charges. That is that price.
:07:33. > :07:38.�458. What do you think that a leasing company may have charged?
:07:38. > :07:43.Maybe a 15% mark-up. OK, so about �600 you are thinking?
:07:43. > :07:48.Yes. This value is... �3,033. That is
:07:48. > :07:53.about seven times more. That is very much more, isn't it?
:07:53. > :07:58.Back in the old days, teachers did not sign big money contracts unless
:07:58. > :08:01.they had been checked and approved by either the local authority or
:08:01. > :08:05.experts at the Department for Education.
:08:05. > :08:10.But as the Government pushs to hand more financial independence to
:08:10. > :08:12.schools, those experts have largely gone. They are victims of the cuts.
:08:12. > :08:16.Debra Whittaker used to be one of them.
:08:16. > :08:22.It was to help the schools to buy the things that they needed to
:08:22. > :08:26.support the school in a way that avoided these kinds of pitfalls and
:08:26. > :08:31.to get the best value from the budgets that they had.
:08:31. > :08:34.It sounds like a good idea, why did it stop? The changing Government,
:08:34. > :08:36.they decided, I guess, that it did not fit.
:08:36. > :08:40.The Government's determined to free schools from local authority
:08:40. > :08:45.control. Increasingly, they run their own
:08:45. > :08:50.budgets, but it means that there are fewer experts for them to
:08:50. > :08:53.consultant. That can end up with head teachers making some terrible
:08:53. > :08:58.decisions. OK, so this is a fax machine from a
:08:58. > :09:05.West Midlands secondary school. On the internet you can buy it for
:09:05. > :09:10.that, �1,500. What is aroom price for a leasing company to charge?
:09:10. > :09:13.Hmm well, you have the supplier, he will have a mark-up then the
:09:13. > :09:21.finances company, he will back the purchase. So you will have more
:09:21. > :09:27.money on top of that, but you wouldn't expect to be paying more
:09:27. > :09:34.than �2,500. �10,000 would be bad? That would be
:09:34. > :09:38.bad. �20,000? Terrible.
:09:38. > :09:42.�30 ,000? Oh, dear. The price is �42,000.
:09:42. > :09:48.Shocking. You wouldn't believe how few
:09:48. > :09:51.schools have the financess to go it alone. There was a nationwide
:09:51. > :09:56.inquiry to find out. The authorities we surveyed said
:09:56. > :10:01.that most of their primary school had absolutely no financial
:10:01. > :10:05.competence among the governing body which is supposed to oversee what
:10:05. > :10:08.happens in the schools. Head teachers, of course, are not there,
:10:09. > :10:13.they know thou run budgets, they are there bus they know how to
:10:13. > :10:20.teach children to learn. We told Margaret Hodge, about the
:10:20. > :10:26.money for school IT that had gone into directors' pockets.
:10:26. > :10:29.All of my Committee get upset when we know we are in a world where the
:10:29. > :10:33.public expenditure is cut and when we want the best education for our
:10:33. > :10:37.children, that then the state is being ripped off by private
:10:37. > :10:43.companies trying to make a quick buck at the expense of quality
:10:43. > :10:49.teaching for our kids. Photocopiers, they are notorious in
:10:49. > :10:53.schools? They are a bit. This one is from a primary school
:10:53. > :11:00.in Essex. The manufacture would sell it for just over �10,000. Do
:11:00. > :11:09.you want to have a punt at what the leasehold company charged? Well, it
:11:09. > :11:19.could be anything up to �707,000? It is more than twice that, this
:11:19. > :11:23.one is �174,000. For a photocopier? Yes.
:11:23. > :11:27.Those prices have put some schools into serious long-term debt, but
:11:27. > :11:33.how many? By this time we had discovered nearly00 victims of LTM
:11:33. > :11:41.or a related company, affecting the education of about 70,000 children.
:11:41. > :11:46.At Katesgrove School in Reading, for 330 laptops, they owe �1
:11:46. > :11:50.million and 110 of the laptops were never delivered. The headteacher
:11:50. > :11:55.resigned. At St Joseph's Catholic School in
:11:55. > :11:58.Slough, they're saddled with a debt of �1.4 million. The school nearly
:11:58. > :12:02.had to close until some neighbouring schools stepped in to
:12:02. > :12:07.help it out. The headteacher's been suspended
:12:07. > :12:13.along with other members of staff N London, Gloucester Primary School's
:12:13. > :12:20.laptops could be bought for �650 each, but they were charged �4,000
:12:21. > :12:24.each, including other equipment, the total debt was �1..9 million.
:12:24. > :12:29.At Lying Primary School in the Midlands, the scammers got creative.
:12:29. > :12:33.Last year they provided one set of laptops, but dishonestly convinced
:12:33. > :12:39.two banks to provide finances, meaning that they got paid twice
:12:39. > :12:43.for the same equipment. It is fraud. It is left -- it has left Lying
:12:43. > :12:52.Primary School more than �1 million in debt and fatesing a bleak future.
:12:52. > :12:57.The headteacher has resigned. Finally, we found a teacher who had
:12:57. > :13:01.been stung and would agree to talk on camera. Liz Steel was the head
:13:01. > :13:06.of Glemsford Primary School in Suffolk. When the salesman from LTM
:13:06. > :13:09.appeared. He told her the story, that her IT equipment would be free,
:13:09. > :13:13.thanks to a special promotional offer.
:13:13. > :13:16.Liz signed. The company did pay their
:13:16. > :13:22.instalments for a while, but not willingly.
:13:22. > :13:27.We had to keep ringing up to get their side of it.
:13:27. > :13:31.To get them to pay the banks. I was beginning to get a little worried,
:13:31. > :13:36.but they sent in their so-called top salesman, he told us that there
:13:36. > :13:40.was nothing to worry about. That the previous people had not been
:13:40. > :13:44.running it properly, but now that everything was on track.
:13:44. > :13:48.Then the supply company stopped paying for the school equipment.
:13:48. > :13:51.The free promotion they claimed to have was a lie. The company went
:13:51. > :13:56.into administration, removing itself from the deal and leaving
:13:56. > :14:04.the school massively in debt to the bank.
:14:04. > :14:07.Her school was left with 125 laptops for which they owed half a
:14:07. > :14:13.million pounds to Clydesdale Bank who came to visit.
:14:13. > :14:19.When the autoitor came in to count the equipment, he sat down and told
:14:19. > :14:26.us it was a scam. It was like my world had just
:14:26. > :14:30.fallen apart. I was well, I was in panic.
:14:30. > :14:37.Absolute panic. I saw my world collapsing in front of me, really.
:14:37. > :14:41.I knew that this would be terrible. Devastating.
:14:41. > :14:45.The governors faced a half a million pound bill and a bat toll
:14:45. > :14:55.stop the school shutting down, but the local authority stepped in and
:14:55. > :14:57.
:14:57. > :15:00.after 40 years in teaching, the I went into school and I was told
:15:00. > :15:03.that they were on their way to suspend me and I was advised to
:15:04. > :15:08.leave the building. I left the building and the suspension took
:15:08. > :15:14.place in the car on the way home. Meanwhile, Angelo Tinerello had
:15:14. > :15:19.made himself rich. James Lowe left the company in early 2010. But not
:15:19. > :15:24.before sharing a salary of �1.6 million with Angelo Tinerello.
:15:24. > :15:28.After that, the company appeared on the surface to be booming, with
:15:28. > :15:34.millions of pounds passing through its accounts. It was employing
:15:34. > :15:43.dozens of staff, targeting schools, sending out pressure sales man, and
:15:43. > :15:49.persuading headteachers to sign of the -- signed the most outlandish
:15:49. > :15:52.contracts. It may be a mark of how well they were doing. There was no
:15:52. > :16:02.Ford Mondeo company car for these people. They preferred something a
:16:02. > :16:21.
:16:21. > :16:27.The company cars were Maseratis, In our photograph of LTM's offices,
:16:27. > :16:31.you can see two Maseratis parked outside. Some former sales men
:16:31. > :16:36.agreed to tell us the view from the inside in the months before the
:16:36. > :16:41.company went bust. Their words are spoken by actors. They would take
:16:41. > :16:45.their favourite away on trips. The trip to Las Vegas with �5,000
:16:45. > :16:48.spending money was the top prize. They were massive gamblers. On
:16:48. > :16:55.their computers they would always have betting website open and work
:16:55. > :17:01.functions were always at the races and casinos. LTM went out of
:17:01. > :17:06.business with debts of �16 million. So where did all the money go? Lots
:17:06. > :17:11.seems to have gone to directors. According to the paperwork, in 2008,
:17:11. > :17:16.when James Lowe was still a director, he and Angelo Tinerello
:17:16. > :17:20.took out a mysterious director's loan of �1.8 million between them.
:17:21. > :17:25.Money that came at the expense of children's education. James Lowe
:17:25. > :17:35.lives in this grand house in Hertfordshire. When our team
:17:35. > :17:40.visited, the man himself emerged. What are you doing? We are from
:17:40. > :17:48.Panorama. We are doing a programme about LTM. What about it? I sold my
:17:48. > :17:53.shares two years ago. As far as I know, the company has now gone bust.
:17:53. > :17:57.Who did you sell the shares to? Angelo Tinerello. Do you know
:17:57. > :18:03.anything about the company ripping off scores and allegations of scams
:18:03. > :18:07.against schools? I have heard about it but I don't know why you are at
:18:07. > :18:12.my house. There was no rip-off when you were the director and
:18:12. > :18:16.shareholder? Absolutely not. That is not true. Schools were ripped
:18:16. > :18:24.off when he was a director and on at least one occasion he was
:18:24. > :18:29.personally involved. Our suspended a teacher dealt with him directly.
:18:29. > :18:34.-- headteacher. Yes, James Lowe was director of the company at that
:18:34. > :18:39.point and he knew about that deal. I know because I have several
:18:39. > :18:45.emails from him. And what about his share of that �1.8 million loan
:18:45. > :18:51.mentioned in the accounts? I did not get �900,000. It is in the
:18:51. > :18:57.company accounts. 2009. Did the money come to me? It did not. Speak
:18:57. > :19:01.to the insolvency people. Have I received �900,000? I would tell you.
:19:01. > :19:05.I am happy for you to go through any financial implications that I
:19:05. > :19:11.have. So the accounts of false? They are not balls. You are being
:19:11. > :19:18.very clever and putting words in my mouth. -- they are not false. You
:19:18. > :19:23.are asking the questions that I have no control over. LTM was then
:19:23. > :19:28.joined by another company based in the very same heart which offers.
:19:28. > :19:32.This was its sister company, DTS. - - heart picture of this. This
:19:33. > :19:39.company acted in a similar way. Many of the staff were also the
:19:39. > :19:43.same. The director of LTM was a Sicilian called Gino Graffato. His
:19:43. > :19:49.family are originally from the small town of Roccamena in the
:19:49. > :19:55.Mafia heartland. According to his former staff, he could not resist
:19:55. > :20:00.playing up the connection. Gino Graffato enjoyed holidays in Sicily.
:20:00. > :20:03.He had a property on a clifftop and he used to make jokes about being
:20:03. > :20:10.the Italian Mafia. When I questioned him about it, he just
:20:10. > :20:15.laughed it off. Even in his company records, there is an Italian
:20:15. > :20:21.connection. The main shareholder of LTM is listed as Nostra Asset
:20:21. > :20:27.Management Trust. One of his victims was a primary school in
:20:27. > :20:29.Berkshire. Dedworth School, with just over 200 children, was like
:20:29. > :20:36.many others and struggling financially when the offer of free
:20:36. > :20:39.laptops came along. It seemed like the answer to all their prayers. It
:20:39. > :20:49.was the then headteacher who was targeted and who signed the offer
:20:49. > :20:53.of free equipment. I knew nothing about it as chair of governors. It
:20:53. > :20:57.was not something that we were really aware of and it was a bit of
:20:57. > :21:01.it surprise when we started to discover that we had a large amount
:21:01. > :21:10.of money to pay off. The deal was for 40 laptops but within a year,
:21:10. > :21:15.fewer than half of them are still working. Cara and Jamie have
:21:15. > :21:23.children at the school and both of them are governors. Good to see you.
:21:23. > :21:33.These are the laptops? Yes. How many do we have here? Around 10.
:21:33. > :21:36.And this cost, what? �120,000? �120,000. And these are the only
:21:36. > :21:41.ones that work? My understanding is that you have ditched the other
:21:41. > :21:46.ones. And this one has got a note on, not connected to the internet.
:21:46. > :21:52.Are sown some of these are not working properly either. -- also
:21:52. > :21:56.some of these. It is my children's lives. Everybody, not good. Would
:21:56. > :22:01.they have done this to their own children's school, their education
:22:01. > :22:05.and the reputation of the school? 200 children at debt with school
:22:05. > :22:09.have been left struggling with malfunctioning computers and now
:22:09. > :22:15.the teaching budget faces cuts. sales techniques used by these
:22:15. > :22:19.people are very clever. And people are very manipulative and the use
:22:19. > :22:26.techniques that means that you do not necessarily question everything
:22:26. > :22:33.that is being told to you. When DTS and LTM went bust, they owed �30
:22:33. > :22:43.million. Much of it was to schools and banks. We took Cara and Jamie
:22:43. > :22:44.
:22:44. > :22:53.to visit the homes of the directors. �1.5 million house, not bad. Lovely,
:22:53. > :22:57.actually. This is one of Angelo Tinerello's properties. It is the
:22:57. > :23:04.address he gives at Companies House. I know people that have worked hard
:23:04. > :23:11.all their lives and they have not got anything like this. I mean
:23:11. > :23:20.proper people, hard-working people. It just makes you sick. It seems he
:23:20. > :23:30.does not actually live in that one but another one round the corner.
:23:30. > :23:32.
:23:32. > :23:42.Most people at school live in council flats. This is Gino
:23:42. > :23:48.
:23:48. > :23:53.Graffato's house, the man with the Think how easy it has been for them
:23:53. > :24:02.to get into our school and other ones as well. Just to take money
:24:02. > :24:07.that his -- is scarce for our children and their education, for
:24:07. > :24:12.them to walk around in their luxury houses with swimming pools and a
:24:12. > :24:17.nice cars. It is criminal. They might wonder who is there to stop
:24:17. > :24:20.schools making such terrible mistakes in the future. Schools are
:24:20. > :24:25.getting more and more independence from local Government. That is the
:24:25. > :24:28.trend of this Government's policy. In the old days, the local
:24:28. > :24:32.authority would have intervened because they would have had
:24:32. > :24:37.responsibility for ensuring that and they do have some powers. But
:24:37. > :24:42.in the New World with academies and free schools, Michael Gove himself
:24:42. > :24:46.will have to take responsibility if a school goes bust. It is megabucks
:24:46. > :24:51.you are talking about here and it is quite shocking. I think that you
:24:51. > :24:53.have raised issues that my committee will want to pursue.
:24:53. > :25:03.Education Secretary Michael Gove declined an interview but his
:25:03. > :25:04.
:25:04. > :25:10.department says that they are trying to help local schools with
:25:10. > :25:13.fraudulent suppliers. They say they give her advice to schools,
:25:13. > :25:17.sometimes through the Government website. But there is someone else
:25:17. > :25:25.in the equation that we have not talked about yet. This can only
:25:25. > :25:33.works if the banks play ball. They signed off the loan so they must
:25:33. > :25:36.know how much the equipment costs. Do they have a responsibility?
:25:36. > :25:41.probably do not have a legal responsibility but they do have a
:25:41. > :25:45.moral responsibility. If I was sitting in a major bank knowing
:25:45. > :25:53.that supply companies are fleecing our schools, I would accept my
:25:53. > :25:56.moral imperative. I would intervene on behalf of the education sector.
:25:56. > :26:02.Industry insiders claim that the banks have been blinded by the
:26:02. > :26:08.prospect of making big profit from cast-iron loans backed ultimately
:26:08. > :26:12.by the public purse. They have huge funds invested in school leases,
:26:12. > :26:16.around �300 million across the UK. Much of it is entirely legitimate.
:26:16. > :26:21.But what about that moral imperative to look out on behalf of
:26:21. > :26:27.the education sector? None of the banks would talk. They put up their
:26:27. > :26:32.trade body instead. What kind of checks would your members make
:26:32. > :26:38.before allowing one of these huge leases to go through? Typically
:26:38. > :26:44.what would happen is that members would check with the school, in
:26:44. > :26:51.this case, that the goods that they are acquiring of the ones that they
:26:51. > :26:55.want. And at the price that they have struck with the supplier.
:26:55. > :26:58.about the value for money and the fairness of the deal? Value for
:26:58. > :27:03.money is something that the school have to take account of in making
:27:03. > :27:08.the purchase in the first place. One bank dealing with DTS was
:27:08. > :27:12.Clydesdale, which has been pursuing 27 schools for money owed. We put a
:27:12. > :27:18.series of questions to the bank and then late last week they did
:27:18. > :27:25.something unexpected. How much do you owe at the moment to Clydesdale
:27:25. > :27:29.Bank? �210,000. We spoke to them last night. They have said that
:27:29. > :27:34.they will fight the debt a way. They will clear it completely, so
:27:34. > :27:38.you owe them nothing. That is amazing. Thank you so much. That is
:27:38. > :27:41.fantastic for the school and the staff and children. It is great
:27:41. > :27:45.news for us but we would like to see everybody cleared. I think a
:27:45. > :27:49.lot of places have been affected and a lot of banks have been
:27:49. > :27:52.involved and it would be great to see everyone cleared of those debts.
:27:52. > :27:59.Following our investigation, Clydesdale has now agreed to write
:27:59. > :28:08.off the debts of for of its schools, freeing them from repayments of
:28:08. > :28:11.many millions of pounds. -- for all of its schools. So what about
:28:12. > :28:16.Angelo Tinerello and Gino Graffato? The police are now investigating
:28:16. > :28:19.their activities. Tomorrow morning many more teachers around the
:28:19. > :28:27.country will be examining their records to see if they have signed