Reading, Writing and Rip-Offs Panorama

Tonight on Panorama, the rip-off which has cost our schools millions,

at a time when there's precious little money to go round. It's

brought some schools to the brink of financial ruin. It has even

ended teachers' careers. He told us it was a scam. It was

like my world had just fallen apart. These are some of the men involved.

They've made themselves rich with sports cars, big houses and

holidays in the sun. For them to go and walk around in

their luxury houses with their swimming pools, the nice cars.

makes you sick. We name some of the hundreds of

schools around the country, saddled with huge debts.

The state is being ripped off by private companies trying to make a

quick buck at the expense of quality teaching for our kids.

And we catch up with some of those who personally profited at the

expense of our childrens' education. You're asking me questions that I

Under surveillance by Panorama, this man's business has devastated

the lives of many head teachers and siphoned so much money from our

children's schools that some have been near to closure. A few miles

away, a fellow company director leaves his �1 million home.

And another, who has made a fortune from the same rip-off. The trio ran

computer supply companies, stripping them of millions and

leaving schools to pick up the bill. What they've done has been so

damaging, personally and financially, that few of of the

victims would speak to us. Then we met this former headteacher.

Why did you insist on being anonymous for this? For me as a

professional it was an incredibly difficult time. I still feel that

other people would think I was guiltyle doing something wrong. It

is out of fear for the reaction that there may be to the school or

from the local authority. Like in any other school, there was

pressure for her to keep up-to-date with the latest IT equipment.

She remembers the day a salesman called.

I remember him as being a small, Italian, lots of gold, lots of

jewellery. A big car. He was very aggressive. He was very

intimidating. Almost bullying in the sense he kept going, you will

have our business. I was very much saying that I needed to go to the

governors. We had a meeting tomorrow night, that I would take

that to them and get back with their view, but they would not

leave until I had signed something. She signed for 20 laptops and a

photocopier. She did not realise that the mark-up was almost 20

times the going price. The final bill was �160,000.

If you had known how much money the school was to have to part with,

would you have signed it? The salesman worked for a company

run by Angelo Tinnerello. There was another, James Lowe. It

was one of those salesman that persuaded her to sign a contract

with a massive contract, that had far-reaching consequences for her

and her school. ADVERTISEMENT: In the meantime we

will do more written work... Schools used to be pretty

straightforward places the. The teachers used black boards. The

kids had nothing to write with but pens and nothing to write on but

paper. The food was primitive too. ADVERTISEMENT: I can't do it. I

have not go got a pen. What is the point of coming to school without a

pen? Now even primary schools want state-of-the-art laptops, smart

board and touch-screen technology. The companies took advantage of

schools with big IT ambitions, but two of the men we investigated went

further than simply overcharging. They had a scam to deceive schools

into thinking that their equipment would be free. This is how it works.

A flash salesman turns up at the school. He says that they can

supply all of the laptops and the photo coppice thankfully they want.

You are leasing them, but no you don't have to pay. They do that

because there is a special promotional offer. To the school

they are free. Then the supply company goes to a

bank. It says that a school has agreed to

pay all of this money for IT, to give them the funds to buy the

equipment and the bank gets the money back with interest from the

school. Then the equipment arrives, along

with the first bill. Remember, the salesman said that his supply

company will pay. They do, for a time.

But then, they go bust, leaving the school owing all of the money to

the banks. A debt which could hang over them for years.

To our anonymous headteacher, what seemed like a good deal ended her

career. My governors came in and suspended

On what grounds? On the grounds of financial irregularities. Acting

outside my remit of responsibility and signing leases.

How did you feel about that? Shocked.

Devastated. The company responsible was called

LTM. They were based in Hertfordshire. We began digging to

discover how many other schools had fallen for their scheme it was not

easy. The victims schools preferred to keep the losses quiet, but we

began to discover dozens of them. And not all were victims of LTM.

Other companies were pouring into the marketplace, cashing in on the

re-tooling of our classrooms. Whilst LTM had started conning head

teachers, others were charming them into paying vastly inflateed prices.

We invited a School Leasing Expert to guess just how much some of the

companies had been charging. Right, what we have here are three

pieces of equipment from three different schools that were taken

on leases. Local authorities told us the

prices. Some of them for rolling contracts over several years.

The first one is from a primary school in West Bromwich. I will

show you one of the manufacture charges. That is that price.

�458. What do you think that a leasing company may have charged?

Maybe a 15% mark-up. OK, so about �600 you are thinking?

Yes. This value is... �3,033. That is

about seven times more. That is very much more, isn't it?

Back in the old days, teachers did not sign big money contracts unless

they had been checked and approved by either the local authority or

experts at the Department for Education.

But as the Government pushs to hand more financial independence to

schools, those experts have largely gone. They are victims of the cuts.

Debra Whittaker used to be one of them.

It was to help the schools to buy the things that they needed to

support the school in a way that avoided these kinds of pitfalls and

to get the best value from the budgets that they had.

It sounds like a good idea, why did it stop? The changing Government,

they decided, I guess, that it did not fit.

The Government's determined to free schools from local authority

control. Increasingly, they run their own

budgets, but it means that there are fewer experts for them to

consultant. That can end up with head teachers making some terrible

decisions. OK, so this is a fax machine from a

West Midlands secondary school. On the internet you can buy it for

that, �1,500. What is aroom price for a leasing company to charge?

Hmm well, you have the supplier, he will have a mark-up then the

finances company, he will back the purchase. So you will have more

money on top of that, but you wouldn't expect to be paying more

than �2,500. �10,000 would be bad? That would be

bad. �20,000? Terrible.

�30 ,000? Oh, dear. The price is �42,000.

Shocking. You wouldn't believe how few

schools have the financess to go it alone. There was a nationwide

inquiry to find out. The authorities we surveyed said

that most of their primary school had absolutely no financial

competence among the governing body which is supposed to oversee what

happens in the schools. Head teachers, of course, are not there,

they know thou run budgets, they are there bus they know how to

teach children to learn. We told Margaret Hodge, about the

money for school IT that had gone into directors' pockets.

All of my Committee get upset when we know we are in a world where the

public expenditure is cut and when we want the best education for our

children, that then the state is being ripped off by private

companies trying to make a quick buck at the expense of quality

teaching for our kids. Photocopiers, they are notorious in

schools? They are a bit. This one is from a primary school

in Essex. The manufacture would sell it for just over �10,000. Do

you want to have a punt at what the leasehold company charged? Well, it

could be anything up to �707,000? It is more than twice that, this

one is �174,000. For a photocopier? Yes.

Those prices have put some schools into serious long-term debt, but

how many? By this time we had discovered nearly00 victims of LTM

or a related company, affecting the education of about 70,000 children.

At Katesgrove School in Reading, for 330 laptops, they owe �1

million and 110 of the laptops were never delivered. The headteacher

resigned. At St Joseph's Catholic School in

Slough, they're saddled with a debt of �1.4 million. The school nearly

had to close until some neighbouring schools stepped in to

help it out. The headteacher's been suspended

along with other members of staff N London, Gloucester Primary School's

laptops could be bought for �650 each, but they were charged �4,000

each, including other equipment, the total debt was �1..9 million.

At Lying Primary School in the Midlands, the scammers got creative.

Last year they provided one set of laptops, but dishonestly convinced

two banks to provide finances, meaning that they got paid twice

for the same equipment. It is fraud. It is left -- it has left Lying

Primary School more than �1 million in debt and fatesing a bleak future.

The headteacher has resigned. Finally, we found a teacher who had

been stung and would agree to talk on camera. Liz Steel was the head

of Glemsford Primary School in Suffolk. When the salesman from LTM

appeared. He told her the story, that her IT equipment would be free,

thanks to a special promotional offer.

Liz signed. The company did pay their

instalments for a while, but not willingly.

We had to keep ringing up to get their side of it.

To get them to pay the banks. I was beginning to get a little worried,

but they sent in their so-called top salesman, he told us that there

was nothing to worry about. That the previous people had not been

running it properly, but now that everything was on track.

Then the supply company stopped paying for the school equipment.

The free promotion they claimed to have was a lie. The company went

into administration, removing itself from the deal and leaving

the school massively in debt to the bank.

Her school was left with 125 laptops for which they owed half a

million pounds to Clydesdale Bank who came to visit.

When the autoitor came in to count the equipment, he sat down and told

us it was a scam. It was like my world had just

fallen apart. I was well, I was in panic.

Absolute panic. I saw my world collapsing in front of me, really.

I knew that this would be terrible. Devastating.

The governors faced a half a million pound bill and a bat toll

stop the school shutting down, but the local authority stepped in and

after 40 years in teaching, the I went into school and I was told

that they were on their way to suspend me and I was advised to

leave the building. I left the building and the suspension took

place in the car on the way home. Meanwhile, Angelo Tinerello had

made himself rich. James Lowe left the company in early 2010. But not

before sharing a salary of �1.6 million with Angelo Tinerello.

After that, the company appeared on the surface to be booming, with

millions of pounds passing through its accounts. It was employing

dozens of staff, targeting schools, sending out pressure sales man, and

persuading headteachers to sign of the -- signed the most outlandish

contracts. It may be a mark of how well they were doing. There was no

Ford Mondeo company car for these people. They preferred something a

The company cars were Maseratis, In our photograph of LTM's offices,

you can see two Maseratis parked outside. Some former sales men

agreed to tell us the view from the inside in the months before the

company went bust. Their words are spoken by actors. They would take

their favourite away on trips. The trip to Las Vegas with �5,000

spending money was the top prize. They were massive gamblers. On

their computers they would always have betting website open and work

functions were always at the races and casinos. LTM went out of

business with debts of �16 million. So where did all the money go? Lots

seems to have gone to directors. According to the paperwork, in 2008,

when James Lowe was still a director, he and Angelo Tinerello

took out a mysterious director's loan of �1.8 million between them.

Money that came at the expense of children's education. James Lowe

lives in this grand house in Hertfordshire. When our team

visited, the man himself emerged. What are you doing? We are from

Panorama. We are doing a programme about LTM. What about it? I sold my

shares two years ago. As far as I know, the company has now gone bust.

Who did you sell the shares to? Angelo Tinerello. Do you know

anything about the company ripping off scores and allegations of scams

against schools? I have heard about it but I don't know why you are at

my house. There was no rip-off when you were the director and

shareholder? Absolutely not. That is not true. Schools were ripped

off when he was a director and on at least one occasion he was

personally involved. Our suspended a teacher dealt with him directly.

-- headteacher. Yes, James Lowe was director of the company at that

point and he knew about that deal. I know because I have several

emails from him. And what about his share of that �1.8 million loan

mentioned in the accounts? I did not get �900,000. It is in the

company accounts. 2009. Did the money come to me? It did not. Speak

to the insolvency people. Have I received �900,000? I would tell you.

I am happy for you to go through any financial implications that I

have. So the accounts of false? They are not balls. You are being

very clever and putting words in my mouth. -- they are not false. You

are asking the questions that I have no control over. LTM was then

joined by another company based in the very same heart which offers.

This was its sister company, DTS. - - heart picture of this. This

company acted in a similar way. Many of the staff were also the

same. The director of LTM was a Sicilian called Gino Graffato. His

family are originally from the small town of Roccamena in the

Mafia heartland. According to his former staff, he could not resist

playing up the connection. Gino Graffato enjoyed holidays in Sicily.

He had a property on a clifftop and he used to make jokes about being

the Italian Mafia. When I questioned him about it, he just

laughed it off. Even in his company records, there is an Italian

connection. The main shareholder of LTM is listed as Nostra Asset

Management Trust. One of his victims was a primary school in

Berkshire. Dedworth School, with just over 200 children, was like

many others and struggling financially when the offer of free

laptops came along. It seemed like the answer to all their prayers. It

was the then headteacher who was targeted and who signed the offer

of free equipment. I knew nothing about it as chair of governors. It

was not something that we were really aware of and it was a bit of

it surprise when we started to discover that we had a large amount

of money to pay off. The deal was for 40 laptops but within a year,

fewer than half of them are still working. Cara and Jamie have

children at the school and both of them are governors. Good to see you.

These are the laptops? Yes. How many do we have here? Around 10.

And this cost, what? �120,000? �120,000. And these are the only

ones that work? My understanding is that you have ditched the other

ones. And this one has got a note on, not connected to the internet.

Are sown some of these are not working properly either. -- also

some of these. It is my children's lives. Everybody, not good. Would

they have done this to their own children's school, their education

and the reputation of the school? 200 children at debt with school

have been left struggling with malfunctioning computers and now

the teaching budget faces cuts. sales techniques used by these

people are very clever. And people are very manipulative and the use

techniques that means that you do not necessarily question everything

that is being told to you. When DTS and LTM went bust, they owed �30

million. Much of it was to schools and banks. We took Cara and Jamie

to visit the homes of the directors. �1.5 million house, not bad. Lovely,

actually. This is one of Angelo Tinerello's properties. It is the

address he gives at Companies House. I know people that have worked hard

all their lives and they have not got anything like this. I mean

proper people, hard-working people. It just makes you sick. It seems he

does not actually live in that one but another one round the corner.

Most people at school live in council flats. This is Gino

Graffato's house, the man with the Think how easy it has been for them

to get into our school and other ones as well. Just to take money

that his -- is scarce for our children and their education, for

them to walk around in their luxury houses with swimming pools and a

nice cars. It is criminal. They might wonder who is there to stop

schools making such terrible mistakes in the future. Schools are

getting more and more independence from local Government. That is the

trend of this Government's policy. In the old days, the local

authority would have intervened because they would have had

responsibility for ensuring that and they do have some powers. But

in the New World with academies and free schools, Michael Gove himself

will have to take responsibility if a school goes bust. It is megabucks

you are talking about here and it is quite shocking. I think that you

have raised issues that my committee will want to pursue.

Education Secretary Michael Gove declined an interview but his

department says that they are trying to help local schools with

fraudulent suppliers. They say they give her advice to schools,

sometimes through the Government website. But there is someone else

in the equation that we have not talked about yet. This can only

works if the banks play ball. They signed off the loan so they must

know how much the equipment costs. Do they have a responsibility?

probably do not have a legal responsibility but they do have a

moral responsibility. If I was sitting in a major bank knowing

that supply companies are fleecing our schools, I would accept my

moral imperative. I would intervene on behalf of the education sector.

Industry insiders claim that the banks have been blinded by the

prospect of making big profit from cast-iron loans backed ultimately

by the public purse. They have huge funds invested in school leases,

around �300 million across the UK. Much of it is entirely legitimate.

But what about that moral imperative to look out on behalf of

the education sector? None of the banks would talk. They put up their

trade body instead. What kind of checks would your members make

before allowing one of these huge leases to go through? Typically

what would happen is that members would check with the school, in

this case, that the goods that they are acquiring of the ones that they

want. And at the price that they have struck with the supplier.

about the value for money and the fairness of the deal? Value for

money is something that the school have to take account of in making

the purchase in the first place. One bank dealing with DTS was

Clydesdale, which has been pursuing 27 schools for money owed. We put a

series of questions to the bank and then late last week they did

something unexpected. How much do you owe at the moment to Clydesdale

Bank? �210,000. We spoke to them last night. They have said that

they will fight the debt a way. They will clear it completely, so

you owe them nothing. That is amazing. Thank you so much. That is

fantastic for the school and the staff and children. It is great

news for us but we would like to see everybody cleared. I think a

lot of places have been affected and a lot of banks have been

involved and it would be great to see everyone cleared of those debts.

Following our investigation, Clydesdale has now agreed to write

off the debts of for of its schools, freeing them from repayments of

many millions of pounds. -- for all of its schools. So what about

Angelo Tinerello and Gino Graffato? The police are now investigating

their activities. Tomorrow morning many more teachers around the

country will be examining their records to see if they have signed