According to minutes from a Highbury College audit committee meeting, the money is owed by the Cross River State Government in Southern Nigeria.
Highbury College has confirmed legal action has started. A spokeswoman said: '˜We cannot comment on any claims about the Nigeria project because the matter is subject to legal proceedings.'Â
In 2012 Highbury revealed it would partner the Federal Government of Nigeria to establish 10 new vocational skills centres toÂ provide training and employment opportunities for the country's young people.
The college's financial records show it set up a subsidiary company called Highbury College Nigeria Ltd.Â
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At the time, the thenÂ Minister of State for Education in Nigeria, Chief Ezenwo Nyesom Wike, said: '˜The new vocational training centres would be used as practical platforms to grow a viable workforce to develop the economy of the nation.'
Revelations of the debt come at a time when the college's 2018 accounts have highlightedÂ the status of Highbury'sÂ subsidiary companies. In particular, the accounts highlight that associate company, New Work Training Ltd, a 70 per cent share of which was purchased in April 2016 for Â£200,000, hasÂ '˜ceased operations'Â after recording a deficit of Â£160,000, of which Highbury's share is Â£130,000.Â
Additionally,Â Nigeria Ltd '˜did not trade during the year 2017 to 2018'.
However,Â a finance committeeÂ report in 2017 showed that a contract in Jeddah in Saudi Arabia '˜continued to make a reasonable surplus'.Â
The audit committee minutesÂ also confirmed an additional Â£400,000 is being held inÂ the college's Nigerian bank account.
The college's finances show an improved picture compared to the 2017 accounts. The 2017 report stated: '˜The college's financial health has declined over the last three years'. ItÂ highlighted a '˜long-term bank debt of Â£5.5m'. Â
However, the reports filed in July 2018 say: '˜The college's financial health improved in 2017/18 as a result of savings on staff and non-staff costs, a total reduction in cost of cÂ£1m was taken out of the business in time for the 2017/18 financial year.'
The collegeÂ now has a financial rating of 'good'Â Â and expects to be '˜outstanding' by the end of the financial year.
Last summer HighburyÂ sold the City of Portsmouth Centre for Â£5.7m to the University of Portsmouth, which as well as providing a cash windfall will also save about Â£600,000 a year in overheads.Â Â Â
A spokesperson said: '˜The sale of the Highbury City of Portsmouth Centre wasÂ identified as an action arising fromÂ theÂ college'sÂ Strategic Review of College Property.Â The move, which was welcomed by students, has enhanced the student experience, provided easier access to enrichment activities whilst reducing excess college overheads.'Â
Despite the sale, the college is expecting a financially difficult spring.Â
The 2018 report predicted: '˜Cash flow for the college UK banks during the year will at times be tight, particularly around the February to March period,Â but the college has Â£400,000Â of funds held in Nigeria that could be repatriated and is planning to acquire a short-term loan facility with a bank for Â£250,000.'Â Â
Highbury's most recent Ofsted report saw the college rated as '˜requiring improvement', after having been rated '˜outstanding' in its previous inspection. The report highlighted an issue with '˜low attendance' andÂ leadership and management. The report stated: '˜Leaders have been slow to reverse the college's decline in performance and have not improved the quality of teaching, learning and assessment.'