Anger over school that failed

By ALAN PERROTT education reporter

Adrian Gray, director of failed English language school Modern Age Institute of Learning, has faced up to his creditors and staff.

But his admissions and apologies won little sympathy from a creditors meeting held in Remuera yesterday.

Adding to their anger was the absence of Anthony Kim, the Albany-based director who Mr Gray said had run the company for the past year. Modern Age was one of the country's largest language schools, with six campuses in Auckland, Tauranga, Wellington and Christchurch and branch offices in Korea, Japan and China.

The company's financial troubles were first exposed by the Herald on August 28.

Modern Age went into voluntary liquidation on September 9 after failing to find new investors or plug money leaking from overseas offices.

About 40 staff and creditors were at yesterday's meeting to hear how the company went from boom to bust in just two years.

A total debt of $4,404,000, includes more than $2.1 million in prepaid student tuition and homestay fees, more than $1 million owed to unsecured creditors, an outstanding tax bill of $538,000, and $431,000 in unpaid wages and holiday pay owed to the school's 120-strong staff.

"Firstly, please accept my sincere apologies for the collapse of Modern Age," began director Adrian Gray, a Mormon elder from Tauranga.

He then revealed several factors contributing to the school's failure:

* Two years of rapid expansion led to unsustainable running costs of $1 million a month.

* Director Anthony Kim had been unable to maintain the expected flow of students.

* About $1.2 million was spent on legal action over a copyright dispute and fallout from the purchase of another failed school, New Zealand College of Studies.

* NZCS director Austin Choo allegedly passed on only $200,000 of the $600,000 needed to cover costs associated with its 100 students and 20 staff.

* The part-time manager of the Modern Age office in Tokyo was alleged to have taken money out of the company.

* Student tuition and homestay fees prepaid in Japan had not been placed in New Zealand accounts.

"Since the industry boom of 2000, Modern Age found itself on a rollercoaster ride it could not get off," Mr Gray said.

"We had difficulties in the management of the company ... to a large extent I didn't support [Mr Kim's] decisions and that became a real obstacle for me. That's why I stepped aside as managing director [a year ago]."

He said deepening financial woes had led management to use money from a trust fund - required to protect student tuition fees - to keep the school running.

This trust contained $558,000 last December, but was found to be empty during an audit in August. Mr Gray said to his knowledge no funds had been misappropriated and there had been no attempt to deceive staff or students.

He said Mr Kim could better explain the decisions taken over the past year and put his absence down to the loss of face he has suffered from the business failure.

Modern Age staff heard that money earmarked to pay their outstanding wages, and money owed to homestay families, had instead been paid to the new owners of their Christchurch campus.

Jenny Rowland, former head of the Modern Age Newmarket campus, expressed the anger of those present.

"The staff, management and students were just fed a long litany of lies," she told Mr Gray. "We gave our professional integrity, our energy, our lives to this school and we have been deceived."

A damage control mission, led by Education Minister Trevor Mallard, last week visited China to offer assurances about the safety and quality of this country's schools.

Liquidator Jeff Meltzer said staff could expect to see little of their lost wages.

The conduct of the company's directors is being investigated.