Leeds Metropolitan University bought shares in My Peak Potential (MPP) in 2008 and has loaned the company in excess of £600,000 since, including a series of payments to keep the company afloat.
So far, just £5,000 has been repaid and university governors have effectively written off the investment amid fears the company will not survive the recession.
The decision to invest in MPP was part of an ambitious and controversial spending spree under the regime of the former Leeds Met vice-chancellor Simon Lee. The company offers a combination of specialist leadership and management training as well as activity-based holidays to the general public at the Carnegie Alpenrose Centre, set in the foothills of the Bavarian Alps.
Leeds Met has spent in excess of £200,000 on staff and students trips to MPP’s Bavarian lodge since April 2007 – including a trip by Patricia Lee, the wife of the former vice-chancellor, who was not a university employee.
Shortly after her June 2008 visit, Mrs Lee described the experience as the “realisation of a teenage dream” but the university’s relationship with MPP has turned into something of a financial nightmare.
Stephen Willis, Leeds Met’s finance director, took a seat on MPP’s board when the university bought its shareholding in October 2008 to deepen a partnership which began in 2004. But the company has continued to struggle despite the university itself paying significant sums to send staff and students to the Bavarian retreat.
Leeds Met said 234 members of staff had visited Carnegie Alpenrose Centre on staff development programmes and, in all, £202,285.24 had been spent with MPP.
The university spent £100,000 acquiring a 30 per cent shareholding and at the same time loaned MPP £400,000. A further £228,772 has been loaned since, including regular monthly £5,000 payments in the last financial year to stop the company going out of business. It was due to begin repaying nearly 18 months ago but has so far only made a one-off payment of £5,000 a fortnight ago.
MPP’s ailing finances were apparent in Leeds Met’s last set of accounts which referred to the loans – due to be repaid between December 2009 and December 2015 – and said they were written off as unlikely to be repaid.
The accounts said the loans were partly secured against the assets but the university had taken a prudent approach and assumed the assets would not realise enough to make any repayments..”
Although payments continued to be made to keep MPP going, patience appeared to run out last October when minutes of Leeds Met’s governing board recorded the university “was not providing further investment” .
The minutes added: “The Vice Chancellor (now Susan Price) had authorised expenditure of a further £5,000 to the end of October. If, as anticipated, the company were to cease trading and be wound up, further investment of up to £4,000 per month may be required whilst the company sought to dispose of its assets. Any further investment would be intended to secure the University’s interests by maximizing its receipts from the sale of the company’s assets.”
But another £5,000 was paid to MPP in December to keep the company afloat.
Asked about the outcome of the public investment, Leeds Met said: “In line with the then strategy of the University to focus on active learning, coaching and international experiences for our students and staff, we entered into a partnership with My Peak Potential.
“We felt at the time that this was a good opportunity to provide outdoor development activity for students and staff, in line with the strategy.
“Like many companies MPP were hit hard by the recession, but we have been working with them in order to safeguard our initial investment as far as possible and have held continued discussions with them.”
MPP’s chairman Derek Henderson said: “I am reasonably confident the business will survive.”