A SCOTTISH college principal and senior managers colluded to "feather their own nests" with nearly £850,000 of public funds and "deliberately withheld" official advice which called the payments into question, MSPs have heard.

Former Coatbridge College principal John Doyle, a member of his staff and five managers shared half of a £1.7 million severance pot between them when the college merged into New College Lanarkshire.

The remaining £850,000 was shared among 26 other people, in a case which Auditor General Caroline Gardner described as one of the most serious failures in governance she has ever encountered.

The Scottish Funding Council (SFC) was powerless to stop them and its concerns appear to have been deliberately withheld from the committee that signed off the payments, she said.

Despite universal outrage from Holyrood's Public Audit Committee, the principal and officials cannot be prosecuted and the money cannot be recovered.

SNP MSP Nigel Don said the case is a "particularly bad example of misuse of funds, deliberate withholding of information and of feathering one's own nest".

Ms Gardner said: "These are very serious failures of governance, amongst the most serious that I have seen in my time in this role.

"A case this egregious is unusual. What appears to have happened is the chair of the board and the principal worked together to achieve a certain outcome, with members of the remuneration committee not receiving the information they needed to make their decision, and not receiving the concerns that had been raised by the SFC.

"My professional judgement is that it was very unlikely to be an oversight.

"It was a deliberate withholding of information, as far as I am able to draw a conclusion from the evidence that is there.

"I understand New College Lanarkshire, when it took responsibility for the affairs of Coatbridge College, took legal advice on what action was possible to recover the funds and other action and were advised that that wasn't possible."

Ms Gardner said the SFC should monitor future remuneration packages closely.

"If that leaves a gap it would be worth exploring whether other remedies, including legal remedies, are needed," she said.

"I hope they wouldn't be. Most public servants don't behave like this most of the time, but occasionally a case like this comes along where the normal controls simply fail to have the effect intended.

"The new arrangements should mean that it couldn't happen, with the SFC now needing to approve severance packages before they are paid.

"I don't know whether it would be possible for that sort of collusion to prevent that control.

"I would like to be able to give the committee that assurance but I don't feel I can."

Fraser McKinlay, Audit Scotland's director of performance audit and best value, said: "One of the reasons this feels like it is in a whole different league in terms of the seriousness is that they had all of that information and traffic from the SFC saying, 'We have serious concerns about this and it would not be in line with good practice', and yet they still went ahead with it.

"At that point, when you have got some people intent on doing a particular thing, then every internal control in the world makes that quite difficult to stop.

"So we would never say to you this could never happen again."