Vocational training provider Site Group International (ASX: SIT) has entered voluntary administration after failing to reach a compromise over $11 million in penalties being sought by the consumer watchdog after an adverse finding against the company’s former Captain Cook College subsidiary four years ago.

Site Group had made a $1.1 million provision in its books for the penalty, which was imposed after the Federal Court ruled in 2021 that Captain Cook College had engaged in “a system of unconscionable conduct and made false or misleading representations to prospective students in relation to online diploma courses”.

However, the Australian Competition and Consumer Commission (ACCCC) proposed penalties of more than $11 million in a recent mediation following a failed High Court challenge by Site Group last year to the 2021 Federal Court ruling.

Site Group, which provides vocational training services for the oil and gas, construction, mining, hospitality and industrial sectors, says it was unable to reach agreement with the ACCC at the court-ordered mediation which was aimed at finding common ground on the penalty.

“As highlighted in the company’s request for voluntary suspension on 26 February 2025, the company was hoping to gain clarity in advance of the hearing in relation to the size of penalties it will likely need to pay,” says the company.

“As noted, the ACCC submission proposed penalties (that) are of a multiple greater than 10 times higher than the expectation previously provided for in the accounts of the company being $1.1 million.

“The mediation was concluded with the company making an offer to the ACCC for them to consider in line with provisions made by the company.”

Site Group says an adverse outcome on the penalties proposed by the ACCC “will have a material negative impact on the company’s financial performance and position”.

“Due to the inherent uncertainty around the penalty and resulting cash outflow, the directors are unlikely to be able to finalise and sign the half-year accounts on Friday, which will result in the ASX suspension of trading until this is resolved,” the company says.

“The company is continuing to critically evaluate the situation and impact for the group and will advise the market.”

After the ASX lifted the temporary suspension of Site Group's shares on 27 February 2025, the securities exchange suspended them again on 3 March after the company failed to lodge its FY25 half-year result.

Site Group’s shares last traded at .001c each, valuing the company at $3.25 million. Site Group raised $800,000 via a share placement in September last year at .002c a share to help expand its training services business in Saudi Arabia and the Middle East region while also providing working capital.

The company posted a $4 million loss in FY24, despite a 30 per cent surge in total income to $9.06 million for the year.

Site Group’s woes stem from its now discontinued Captain Cook College business in Brisbane which was acquired in 2014 and closed in 2016.

The vocational college initially benefitted from the federal government’s VET FEE-Help funding scheme, which has since been replaced by VET student loans.

The Federal Court found that Captain Cook College had engaged in “unconscionable conduct” from 7 September 2015 after removing "consumer safeguards" from its enrolment and withdrawal processes for online courses.

This led to Captain Cook College hiring recruiters who worked for commissions and who were found to have used high-pressure sales tactics and incentives to entice consumers to vocational courses being offered.

In the three months after these safeguards were removed, Captain Cook College enrolled more than 7,000 students in online courses studying subjects such as business, project management and human resource management.

During the period, Site Group claimed more than $50 million from the commonwealth under the VET FEE-HELP program for about 6,000 of these students.

The Federal Court found that Site Group and its former chief operating officer Blake Wills were “knowingly concerned in Captain Cook College’s system of unconscionable conduct”.

The ACCC says that as part of a settlement in June 2020, former Captain Cook College CEO Ian Cook “admitted that he was knowingly concerned in Captain Cook College’s system of unconscionable conduct”.

Cook was disqualified from managing corporations for three years and ordered to pay $250,000 in penalties.

The federal government has since cancelled the debts of eligible students enrolled with Captain Cook College between 1 January 2015 and 31 January 2016 under the VET FEE-HELP Student Redress Measures.

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