A TRAINING college in Melbourne that collapsed last month owing almost $700,000 to staff, agents and Indian students had probably been trading while insolvent for nine months, leaving behind a trail of unexplained payments.

Angry staff owed $200,000 are calling for the administrators, BDO Kendalls, to pursue the assets of the alleged shadow owner of Melbourne International College, who they claim is Navaratnam Nadarajamoorthy, a 51-year-old Sri Lankan who owns a blinds manufacturing business in Dandenong.

MIC's only director was his 21-year-old daughter, Yarlini.

"He was the real director and his daughter was there to protect his assets," a former teacher at the college, Margarita Windisch, said. "We feel completely cheated."

In a report to creditors obtained by The Australian, BDO Kendalls said it had identified an unnamed related party involved in the business who could possibly be deemed a director and so pursued for damages for allowing the college to trade while insolvent.

When administrators were called in last month, MIC had only $1465 left in the bank, and about $30,000 in student payments held in trust that have to be repaid. In all, students are owed $58,476, but their fees are protected by legislation. The administrator is not expecting a return to unsecured creditors.

When questioned by The Australian yesterday about MIC, Mr Nadarajamoorthy said "it has nothing to do with me, my friend".

BDO Kendalls said it appeared that weak financial controls and poor management contributed to the collapse, but that early investigations indicate MIC was probably insolvent as early as October. It also wants to investigate a series of possible "uncommercial transactions" and some suspicious payments worth $65,000.

Whether the administrator pursues the owner depends on further investigations and creditors agreeing to liquidate the college at a meeting on Monday.

The scandal will put increased pressure on state and federal governments to tighten college regulation, especially the fitness of individuals running them.

A former MIC director was Thulasitharan Santhirarajah, who last year was arrested by the Australian Federal Police at the request of the FBI over alleged terrorism offences linked to fundraising for the Tamil Tigers.

"Anybody who fancies opening up one of these shops can jump into the business and there is little regulation about how it is done," said Deb James, secretary of the Victorian Independent Education Union.