Education centre and students accused of $30m loan fraud

1:00 pm

A Taranaki private education centre and many of its students have been accused of fraud involving more than $30 million of taxpayers' money.

Tertiary Education Minister Steve Maharey and government officials said further investigations were being made after inquiries led to serious doubts about a course being offered by the Practical Education Training Centre (PETC) in New Plymouth.

"Nearly $10 million of tuition subsidies and more than $25 million of student loads may be involved," Mr Maharey said.

The allegations revolve around an extramural course for the National Certificate in Travel.

After concerns about the education centre and the poor results of the course's participants, initial investigations earlier this year led to the suspension of funding and the matter being referred to the Serious Fraud Office for further inquiries.

Audits found that of the 4000 students enrolled on the course, as many as 2000 had failed to obtain any unit standards and most of those people had submitted no work at all.

More than 150 students, most of whom had achieved no unit standards, had "gone - no address".

In over 700 cases more than one member of a household was enrolled in the course.

Students were also allowed to use their student loans to buy computers and multiple computers were being sent to the same house.

"In one case, five members of a household had enrolled meaning there were five computers in the household," Mr Maharey said.

Access to a computer was only necessary for one of 14 units offered in the course.

An official said there had been a small number of cases discovered of students on-selling their computers after they enrolled.

The Education Ministry became suspicious after "explosive growth" in the early months of this year following on from poor results on the course in 2000.

The New Zealand Qualification Authority began an audit in June which raised serious quality issues. Funding for the distance learning course was suspended in August as were student loans for those enrolling.

"The seriousness and complexity of this matter means all agencies have proceeded with caution to protect genuine students on the courses and PETC staff, and also to protect the Crown from any legal challenge by the PETC," Mr Maharey said.

Mr Maharey said both students and the PETC had been alleged to have committed fraud. The Social Development Ministry's Student Services division has begun investigating the magnitude and timing of possible misuse of the student loan scheme by students while the ministry is investigating the centre.

Officials said it was a matter of proving intent and agreed it would be difficult to prove a case against students.

Mr Maharey said the case demonstrated a number of loopholes which had been addressed as part of the new funding policy for tertiary education and better monitoring.

- NZPA