Medical college closure after London campus financing problems

A private medical institution, Allianze University College of Medical Sciences based in Penang, has had to close down with reports of many staff left unpaid and students scrambling to find alternatives.

The college, which also has a branch in Indonesia collaborating with Universitas Sumatera Utara, caused considerable surprise when it paid some £30 million (US$47 million) for a major campus in London in 2013, acquired from Middlesex University.

It appears the acquisition of the London campus may have triggered its current financial woes.

But the closure of Allianze University College of Medical Sciences, or AUCMS, in Malaysia has raised questions as to why the warning signals of its financial problems were not heeded earlier by the relevant authorities in Malaysia.

Complaints

The Consumers Association of Penang said in a statement this week that it had been corresponding with government bodies since it received complaints from staff and students at AUCMS earlier this year.

Grievances included student dissatisfaction with AUCMS facilities and quality of some lecturers, staff not being paid, students not receiving their certificates long after completing a programme, and other complaints such as misleading advertising, the consumer group said.

Nonetheless, one of the institution’s founders continued to maintain that AUCMS’ financial problems were temporary and could be resolved.

“AUCMS remains committed and would like to return to its former status and produce quality graduates,” said founder Zainuddin Wazir, who suggested in a statement published in Malaysia’s New Straits Times newspaper on 18 November that cash flow problems related to the acquisition of the London campus and other issues had led to difficulties at the medical college’s main campus in Malaysia.

“The current issue is financial and not mismanagement,” Wazir said and appealed for short term funds from banks in Malaysia and government agencies to help AUCMS recover from its “financial woes”.

London campus

The London campus is currently being disposed of, according to Wazir.

In the statement in New Straits Times issued from London, he said AUCMS has secured an agreement with EXIM Bank which provided the loan to acquire the site in 2013, to give a period of six months beginning in July this year to sell off the Trent Park campus to help solve the financial problems.

Wazir said: “The London campus was to be a stepping stone for AUCMS to expand to an international level.” The purchase was facilitated by EXIM Bank Malaysia “but we were given only a part of the total sum which was approved".

“The failure to get the full sum meant that the campus could not function as planned. However, the interest payment was still required although the purchased property could not be used as planned and could not generate income as expected.

"This has resulted in a serious financial crisis for AUCMS.”

Wazir added that the cash flow problem had affected other payments and had complicated operations of the university.

The AUCMS London campus included a mansion that is a listed building. This means that any alterations must be approved by the local authority, making it expensive to renovate. The local authority in an official document on the conditions of sale for the site in 2012 put the cost of renovating the mansion alone at over £1.2 million.

In London Douglas Coker, spokesperson for the local Green Party, said: “The building has been let go over a period of years. There are places where it is not in a good state of repair. Whoever takes it on will have to spend millions of pounds.”

Earlier this year the party, concerned about conservation of the mansion, said: “It is clear that AUCMS did not really understand the condition of the buildings it has bought."

Protest

Almost 100 AUCMS staff held a protest outside the buildings in Malaysia in September, complaining of unpaid salaries and saying some unpaid staff had left, leaving students in the lurch.

However, the government had been aware of problems at AUCMS as far back as January this year, according to some reports.

Unpaid staff included a group of 17 medical lecturers from Pakistan who said they had not been paid since February. “The contracts were signed between our governments, not between us and the university,” said one of the lecturers who would not be named.

SM Mohamed Idris, president of the Consumers Association of Penang, called for a full inquiry into the operations of private education institutions in Malaysia.

“How could this problem be allowed to get out of hand?” said Idris, questioning whether government bodies had been properly monitoring higher education institutions and their finances.

“The government needs to take action against those responsible for this mess. They must be held accountable for the ordeal they have put these people [students and staff] through.”

“We also call for a full inquiry into the operations of private education institutions. Today, they function more like a business where the main concern is not to educate students.”

In July, the US-based Johns Hopkins University School of Medicine terminated its contract with Perdana University Graduate School of Medicine in Malaysia.

Students

AUCMS had some 2,000 students and some 500 staff when it shut down.

The Education Ministry in Malaysia is allowing students to transfer to other medical institutions, but transfers have been hindered by strict lecturer-to-student ratios set by the Malaysian Medical Council, or MMC, which does not allow other institutions to take on the students if they are near the limits.

The MMC said in a statement issued on 4 November: "In relation to the credit transfer or the transfer of medical students from one university to another, the MMC always considers the welfare and the interests of the students to be transferred as well as the existing students in the receiving university.

“The transfer should not lead to the compromise and disruption of studies of the students already present in the receiving university. Similarly, there should not be any impairment of the capability of the receiving university to ensure an optimum learning and adequate teaching environment for all the students.

“The receiving university should have adequate facilities to cater for additional students to be enrolled, and the lecturer-to-student ratio should not exceed 1:8.”

The MMC noted that AUCMS students had “not been provided with regular teaching for quite some time”, which could put them at a disadvantage for lateral transfer to other institutions.

Founded in 2002, AUCMS was to deliver some of its medical degrees under a partnership established in 2011 with National University of Ireland, Galway, and University College Cork. No students have yet graduated under that scheme.

Malaysia has some 33 public and private medical colleges producing around 3,500 medical doctors a year.