British Council apologises for commercial abuse of FCO position

The British Council has issued an apology for a ‘lapse’ that saw it take advantage of Levant Education’s business and collaboration with the FCO in Azerbaijan to launch its own competing offer in the same market.

What happens when a UK private enterprise seeks (and pays for) support from the British government in new markets? If that company is in the business of international education, it is likely to find that it has flashed up on the radar of an aggressive, state-funded competitor.

In 2012 UK education company Levant Education commissioned support from UKTI, the FCO and the British Council to launch UK-focussed education fairs in Azerbaijan, after successfully launching similar events in Turkey. That support cost Levant Education thousands of pounds for UKTI/FCO facilities (the event reception was hosted at the UK Embassy, where the Ambassador spoke to a specially invited audience) and would go on to cost a lot more.

UK in Azerbaijan Ambassador Irfan Siddiq
UK in Azerbaijan Ambassador Irfan Siddiq

At the reception, and subsequently at the exhibition itself the next day, British Council staff quietly approached the university representatives who had joined the ground-breaking event. As BC ‘Head of HE and Education Services’ Gordon Slaven’s apology admits, they “used the opportunity to enquire into participants interest in a possible British Council exhibition.”

During the ‘independent’ investigation conducted by Verita (paid for by the British Council…) in London, British Council staff admitted that they had been under pressure to identify ways to increase revenue and make more money in 2012, as the government grant was being cut. That drive to be more commercially aggressive is what undoubtedly pushed BC staff to abuse its FCO status in Azerbaijan to gain unfair competitive advantage, going into direct competition with a private enterprise that had both paid the FCO for its assistance, and secured a promise of non-competition from the British Council Regional Director, Helen Silvestre.

Wolf In Sheep's ClothingBritish Council SIEM (Services for International Education Marketing) products – exhibitions, market reports, online marketing – were launched in Azerbaijan in 2013, following Levant Education’s first successful exhibition. The British Council is seen as a government office, an FCO agency, and a charity – useful branding and cover for its lucrative commercial operations that generate £1 billion every year, tax-free, from IELTS testing, English teaching, Education Marketing and education related contracts.

The Verita investigation uncovered incredible duplicity from British Council staff in Baku and Istanbul. While working with Levant Education on its new project, in apparent harmony and good humour, they were simultaneously working to duplicate the event and sell the idea to UK universities and education providers.

Levant Education Managing Director and owner David Mitchell writes:

sb_exhibit_oct16fThe British Council’s recently introduced ‘Independent Complaints Process’ has failed its first test since a critical Foreign & Commonwealth Office Triennial Review highlighted competition and accountability issues in 2014.

The Council has half-heartedly apologised for its blatant hijacking of our business in Azerbaijan. However the Verita investigation report was carried out as a paid-for service for the British Council, covering up more than it revealed. The final report skates over unfair competition issues, provides for no accountability for Management decisions taken in Istanbul and Baku, and goes to great lengths to ‘blame the victim’ – bizarrely finding that Levant Education was in some way to blame because it later dared to publicly complain about the BC’s dishonest behaviour.

The report also fails to address the financial impact on Levant Education: between money invested in the project, fees to UKTI/the FCO, and lost earnings due the unfair state competition, Levant has lost a six figure sum after making the mistake of trusting the FCO, UKTI and British Council.

Levant Education will be seeking a review from the parliamentary ombudsman, and seeking legal advice also. A genuine investigation needs to be conducted by an independent body, rather than a paid-for public relations service on behalf of the government agency. The British Council should not be allowed to compete for competitive commercial services while disguised as a government agency/FCO department/charitable concern. The BC’s actions in Azerbaijan, and in Turkey (where it also ignored promises made in regards to fair competition) were dishonest, anti-competitive and devious. The apology is a start, but once again the British Council has been shown to be more concerned about commercial gain and face-saving PR than about accountability, transparency or fair competition.

The British Council: Transparency

British Council redactedIt’s nearly 2 years since a Foreign & Commonwealth report, following a root and branch Triennial Review concluded that their were serious concerns around commercial accountability, financial transparency, conflicts of interest and fair competition with the private sector.

Since the review the British Council has made efforts to improve transparency, stating on its website that it is ‘fully committed to transparency in our decision-making processes, how we work and the programmes and services we provide. Transparency is an important aspect of the British Council’s accountability to the UK public, Parliament and the people who participate in our programmes and projects‘.

Part of that transparency is to publish the minutes of its Board of Trustees meetings. At the time of writing, they hadn’t got round to this yet in 2016, so we should look back to 2015 to see how the Council’s commitment to transparency is going. Here are some highlights:

  • Chair’s Business

Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the effective conduct of public affairs” as defined in Section 36 (Prejudice to the effective conduct of public affairs) of the Freedom of Information Act 2000*.

  • Triennial Review

Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the effective conduct of public affairs” as defined in Section 36 (Prejudice to the effective conduct of public affairs) of the Freedom of Information Act 2000*.

  • Status Resolution: Macau

Tax Avoidance

The Board approved a resolution to authorise the British Council’s branch in Hong Kong to register with the Macau Tax Department. The resolution was proposed by Usha Prashar and seconded by Gareth Bullock.

  • Examinations: Secure English Language Testing (SELT)

Hammond and May

Mark informed the Board that the IELTS consortium of Cambridge Assessment, IDP and British Council has been named by UK Visas and Immigration (UKVI) as a preferred bidder for one of two SELT concessions for testing within the UK, and for one of either one or two concessions for testing in the rest of the world. He also corrected the figures in the paper which should read that the potential additional income is R£DACTED

  • COO Report

Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the commercial interests” of either the British Council or another party, as it is defined in Section 43 (Commercial interests) of the Freedom of Information Act 2000*.

  • Report from the Audit CommitteeThe risk reserve had been cut by £4million as the Committee had agreed that risks from tax exposure had been reduced the Global Finance Change Programme was on track:Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the commercial interests” of either the British Council or another party, as it is defined in Section 43 (Commercial interests) of the Freedom of Information Act 2000*.

    New entities for our operation in Russia

Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the effective conduct of public affairs” as defined in Section 36 (Prejudice to the effective conduct of public affairs) of the Freedom of Information Act 2000*.

  • Any other business Information in this section has been redacted/removed as it is likely to be exempt from disclosure on the grounds that it is “likely to prejudice the commercial interests” of either the British Council or another party, as it is defined in Section 43 (Commercial interests) of the Freedom of Information Act 2000*.

So, about as transparent as REDACTED then. 

The British Council: Conflicts of interest

The British Council and ‘clarity of purpose’

Wolf In Sheep's Clothing

In the 2014 Triennial Review report about the British Council, another area of concern for the FCO is ‘clarity of purpose’, or conflict of interest in plain English.

In its Corporate Plan, the British Council claims to create value for the UK by:

  • Creating introductions, connections and business opportunities for UK organisations, social enterprises and businesses, helping them to learn from overseas engagement.

UK companies in international education (a sector estimated to be worth $6.3 trillion globally) can turn to ‘UKTI Education’ for assistance. FCO Minister of State, Hugo Swire, points out that the FCO and British Council support UKTI in promoting UK education exports.

Mr Swire writes, in a letter to Levant Education, that “UKTI and the British Council now share opportunities worth more than £100k with the wider international education sector.”

£100k is about half of what cooperation with UKTI and the British Council has cost Levant Education, one Small Enterprise, since agreeing to work together in 2012. It is also a tiny fraction of the Council’s £1 billion annual income.

The British Council earns £100k every hour of every day – £100k is the crumbs that fall from the British Council’s table to the ‘wider international education sector’.  

What Levant Education and many others* have learnt is this: For UK SME’s and entrepreneurs in international education engaging UKTI to help in international markets, the British Council will indeed step in to ‘support’. If the export project is successful and set to provide a return on investment for the SME, the British Council will then exploit its position to channel those business opportunities for itself, quickly snuffing out competition from the SME that created the project in the first place.

Conflict of interest is the nice term for this behaviour…  If the British Council is serious about helping to create opportunities for UK businesses, working with UKTI, it must cease to compete with those same UK businesses, for those same business opportunities. 

 

*for example, a group of UK companies tried, in vain, to seek address for the problem with Lord Green at BIS and the FCO in 2012:

It is the experience of those companies represented here that the BC finds it hard to demonstrate any competitive neutrality. The BC, as a supplier of services in its own right, increasingly competes with other UK providers, with the almost inevitable conflict of interest.

Although the BC provides the clearest example there is a widespread perception that a number of other grant-funded, quasi government agencies and organisations are also beginning to present market conflicts and issues. These agencies are not competitively neutral and there is no level playing field when it comes to their operations and practice abroad. They significantly increase, especially during competitive procurement, the costs and risks for others both those already participating in as well as those considering and entering the market. These agencies are also perceived to have access to more current information, support and contacts abroad than other non-subsidised, commercial providers. This latter issue has been a long standing complaint common to most providers, and thus far, successive Governments have failed to address or recognise it.

Neil McIntosh, Chief Executive, CfBT Education Trust

Graham Able, CEO, Alpha Plus Group

David Blackie, Managing Director, International Education Connect Ltd

Barry Brooks, Group Strategy Director, Tribal Group

Marian Brooks, Executive Director, Mott MacDonald, Cambridge Education

Andrew Fitzmaurice, CEO, Nord Anglia Plc

Ian Hunt, Managing Director, Gabbitas

Simon Lebus, Group Chief Executive, Cambridge Assessment

Kevin McNeany, Chairman, Orbital Education Ltd

Peter Miller, President Learning Solutions, Pearson International

Professor James Tooley, EG West Centre, Newcastle University