Inquiry found huge settlement "fell below required standards"
OSCR has ruled trustees at the University of Aberdeen breached their duties by making payments to the former principal.
It comes in a published inquiry by the Office of the Scottish Charity Regulator.
Prof Sir Ian Diamond announced his plans to retire in 2017, but his 12-month notice period only began when he had actually left his post in 2018.
In its accounts, the university showed a total of £601,000 paid to the former principal on his retirement. There was also a payment of £50,000 made on his behalf by the University for outplacement support to assist him with finding new employment which was not disclosed in the accounts.
The regulator opened an inquiry into the university on 10 July 2019. The regulator found that the charity trustees breached the terms under which the university received funding from the SFC, resulting in a liability to return a portion of the funds.
They also breached the university’s financial regulations in failing to obtain guidance from the SFC before making a severance payment, and were unable to provide evidence that the settlement decision reached by the remuneration committee was fully reported to and considered by the University Court as required.
The report found that the level of care and diligence that was exercised by the charity trustees in reaching a settlement with the principal “fell below the required standard in a number of respects”.
The report, which decided against any enforcement action, said: "We conclude that charity trustees who were members of the university's Remuneration Committee at the time of the events in question (summer 2017) were in breach of their trustee duty to act in the interests of the university.
"In particular, they failed to act with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person in respect of their conduct in agreeing the heads of terms of the severance settlement with the principal."
The university repaid £119,000 to the Scottish Funding Council, and has asked Prof Diamond to for a repayment.
