Schools hear from Saltaire businessman

Saltaire-based Link Telecom, which is in administration, now collectively owes 90 organisations – including schools – more than £750,000, with just under £500,000 owed to schools in the Bradford district.

The schools agreed to sign up to three-year deals with Link Telecom, which in turn would pay each school’s monthly outlay for line rentals to mobile network provider O2.

The deal meant in effect schools would get free phones and line rental, with Link Telecom sending out monthly or annual cheques to cover the money the schools paid to O2. In return, O2 would pay Link Telecom commission for connecting the schools to its network.

But some of the cashback payments stopped when Link ran into financial difficulties, caused partly by O2 cutting the amount of commission it paid to the company.

It has now emerged that schools were still making monthly payments to O2 even after Link Telecom realised it might not have enough money to cover all of the cashback payments – which has left some schools with huge holes in their budgets.

Sian Harris, head of Challenge College in Frizinghall, Bradford, told a tense meeting called by Link Telecom for some of its creditors that the school was now expected to struggle financially later this year because of the amount of money it was owed.

The business manager of another West Yorkshire school told the meeting it was owed £39,000 by Link Telecom and had now cancelled its contract.

He said schools had been “strung a line” between January last year, when O2 cut the amount of commission paid to Link Telecom, to last October when Link went into administration.

He said: “If we had been told in January, we would have been able to save ourselves that money.

“It was to pay for our children’s education and that money has been lost now.”

Link Telecom managing director Gary Fawcett told the meeting that he did not tell the schools about O2 cutting the commission it paid – and therefore the amount of cashback paid to schools – because he “fully intended” to pay out.

But his financial problems were compounded when the company’s bank realised it was making a loss on each of its 9,000 existing O2 contracts and called in its overdraft.

Mr Fawcett said: “We believe that, until the bank became a victim of the problem, that we would have been able to honour the (cashback) contracts.”

No formal agreements were signed with the schools when negotiating the deals about how much cashback would be paid and when it would be paid and most were negotiated by Link Telecom giving “verbal assurances” of payment, said Mr Fawcett.

Many of Link Telecom’s creditors also claim they were left with unused mobile phones and SIM cards after the company signed them up for more phones than they needed, to claim more commission from O2 – allegations Mr Fawcett denies.

“It was made very clear to the workforce that these phones had to be used,” he said.

“We only ever supplied the number of connections the schools were comfortable with.”

Mr Fawcett said he is now taking legal action against O2, which he claims changed the terms of its contract without notifying Link Telecom.

Meanwhile, O2 is working with 15 schools in the Bradford district, some of which have already had their contracts effectively cancelled.

An O2 spokesman said: “We intend to resolve any complaints with the schools directly.”

Mr Fawcett also told the meeting the company’s creditors would have a chance of getting their money back by signing up to new deals with Vodaphone.

The contracts will be supplied by Link’s new owner, Portsmouth-based mobile phone tycoon, Darren Ridge, he said.

Mr Fawcett said: “Vodaphone has created a fund to which we can appeal to get customers out if they are stuck in an O2 deal for the next 12 to 18 months. We can apply for some cash to help them get out.”

The O2 spokesman said: “We intend to resolve any complaints with the schools directly and we will be meeting with a number of them, or their representative, this week.”