AN Oxford University College is prepared to offer places to students in return for cash donations, a Sunday Times investigation has found. An undercover reporter, posing as a wealthy banker, was offered preferential treatment for his son in return for a substantial donation to one of the university's oldest colleges.

The "banker" was told by senior staff at Pembroke college they could create an extra place on a law degree course for his son. To avoid leaks to the press, a senior member of staff advised that the donation be paid through a secret trust. In a covertly taped interview, the Reverend John Platt, a senior fellow at the college, revealed that similar deals had been struck in the past. He said Pembroke needed the money because it was "poor as shit".

He said: "Normally there is a quota for the course, which is a decided depending on the teaching resources of the college... so let's say there are 10 places. Now those 10 places go only to the very best students. Additional to that, if we agreed it is for the good of the college... then it may be that we could go over that quota."

The revelation threatens to undermine Oxford's claim to award places solely on merit. Yesterday Dr Colin Lucas, the vice-chancellor, announced an inquiry into the college's behaviour, which he feared could "contravene all the principles on which our admissions process is based".

Estelle Morris, the Education Secretary, said: "admissions are a matter for the university, but this is unacceptable. It flies in the face of what we are all trying to achieve, which is a higher education system where access is gained through ability and achievement, rather than background."

The Sunday Times investigation began after a tip-off from a businessman who claimed an unnamed Oxford college tried to solicit a large donation. "It was clear from the conversation a donation would secure a place," said the businessman, who did not wish to be named. The revelation contradicts Oxford's claims that it never gives preferential treatment on the grounds of wealth or background. It was stung by criticism of elitism by Gordon Brown, the chancellor, over its rejection of Laura Spence, a comprehensive schoolgirl later accepted by Harvard.

Last week a reporter approached four colleges posing as a banker prepared to donate £300,000 to help his son get a place to study law. On Thursday he met two representatives from Pembroke College: Platt, a former admissions tutor who is the student liaison officer, and Mary-Jane Hilton, who is in charge of fundraising.

At the meeting Platt made it clear that an application by the banker's son would be looked upon "extremely favourably" if a donation were made. He said pressure could be applied on tutors to create an extra place. He later said he had reason to believe that tutors in the law faculty were "open to this possibility", continuing "and they [the tutors] would know very quickly if he were to fit in... then there they could do a one-off and the tutor would be aware of giving him preferential treatment."

He later added: "We know the Law tutors, and shall we say law tutors understand. They see the bigger picture..." The Sunday Times has no evidence that any Pembroke law tutor has actually discussed or participated in preferential treatment for potential students. Platt confirmed that similar arrangements had been made for other aspiring undergraduates: "If you're going to keep it absolutely, totally confidential," he said, "the answer is: in the past it has been done, okay?"

The Reverend John Platt leant back on the sofa in the common room at Pembroke College, Oxford, and cautioned the man in the Hugo Boss suit sitting opposite. "You must understand that this is absolutely confidential. If this story gets out, we'd all be blown away," he said.

He and Mary-Jane Hilton, the college's chief fundraiser, were discussing a proposition from the man in the suit who described himself as a British banker based in America. The man was offering to donate £300,000 to the college and wanted something in return. The banker claimed that he had a son who wished to go to Oxford but was not sure whether his A-level grades would be good enough. "He's a bright lad but there's no guarantee that he would be able to get in. If I were to give the money, would it help?" he inquired.

The answer was yes, it was a "distinct possibility". Later Platt, a former admissions tutor of the college, admitted this was not the first time such an arrangement had been made: "If you're going to keep it absolutely, totally confidential,the answer is: in the past it has been done, okay?" The banker was, in fact, an undercover Sunday Times reporter.

Yesterday the university authorities launched an investigation into the potential sale of degree-course places after extracts from taped conversations were passed to them. The banker had begun his inquiries at some of the less academically successful colleges. But Queen's, St Peter's and Mansfield had made it clear that they would not countenance such an arrangement. However, at Pembroke, a college known as poorer than many others, it was a different story. Hilton, whose title is college development director, was happy to meet the banker last Thursday morning.

She took him to the common room in Broadgate Hall. The banker explained he was willing to make a £300,000 donation and that he had a son studying for his A-levels at a Quaker school in Yorkshire, who was anxious to get a place at Oxford.

Hilton, who has returned recently to Oxford after a spell fundraising in New Zealand, appeared delighted by the offer. "Can I just say," she said, "that £300,000 would be a huge thing for Pembroke." The college is looking to raise £12 million to refurbish a hall of residence and provide Internet access in students' rooms." She felt the matter could be dealt with quietly. "We wouldn't even mention this to the Fellowship [the academics who run the college]," she said. But she needed some advice. "Let me just get the chaplain, John Platt," she said, "he has done admissions and I'm sure we could talk about it. Can I ask you to keep it confidential though."

Platt, a Yorkshireman who teaches theology, was the admissions tutor for six years and is now the student liaison officer. He later explained that he was the person in the college who is delegated to deal with "this sort of thing" and described it as "little things around the edges". The banker explained that his fictional son seemed to be doing well at school and went on: "I would be prepared to make a donation to the college, and I wondered whether the donation could help his chances of getting in. He is a bright lad but there is no guarantee that he will get his grades."

Platt said it was a very "delicate area". After pausing to allow a passer-by to go out of earshot, he added: "Let's put it this way: there are possibilities. It is possible, with his grades, but we can't make at this stage any promises because absolutely we need to know how he did in his exams." Under the college admissions system, the tutors make the final decision on which students are awarded a place. But Platt said this was not necessarily insurmountable as "influence can be brought to bear on the subject tutor" by others.

Platt: "We would look at all the issues... say we are sympathetic and we would like to do things for our mutual benefit. It always depends on being able to persuade the subject tutor, because, as you are well aware, in normal circumstances it would be on a different basis... Normally there is a quota for the course which is decided depending on the teaching resources of the college. So let's say there are 10 places, those 10 places can only go to the very best students. Additional to that, if we agreed it is for the good of the college, then it may be that we could go over that quota... You can't be in a position of turning away a good candidate because someone else is prepared to pay for it. What we try to do here is we say that's over and above the quota."

Oxford turned away 6,000 applicants last year, many of whom would have had three grade As at A-level. Yet Platt seemed to say that an extra space could be found for a donor's child provided he was academically suitable. He and Hilton made it clear that the banker's son would have to be capable of obtaining a 2:1 at degree level, but they were still offering a considerable advantage over other students. One of the crucial points where the banker's son might be given help was at the interview stage.

Platt: "It is that at that point where we are at an advantage. At that point, well, if the tutor is on your side there might be something we can do. Providing the tutor can see with sense that he feels this person could get a 2:1... Then there is the other arrangement we have talked about... You know, this person may well not be in my top 10 and I wouldn't normally but... If he [the son] is interested in law, we do know which tutors are sympathetic... We know the law tutors and, shall we say, law tutors understand. They see the bigger picture. You've got to understand that tutors vary. Some see it purely academically and they can't see any more than that. That's fair enough, that's their job. But there are other tutors, while still maintaining the highest of standards, who can see a way. They keep the high standards but they do understand that there's a wider picture and they would be prepared to help us with that."

Depending on exam performance and interview, a judgment would be made. "Quite apart from any arrangement, they would know very quickly if he were to fit in," said Platt. "Then they would do a one-off and the tutor would be aware of giving him preferential treatment."

The Sunday Times has no evidence that any Pembroke law tutor has actually discussed or participated in preferential treatment for prospective students. The banker said he would get his son's headmaster to send a letter in support of his son's application. Platt was again concerned about secrecy: "I'm not teaching my grandmother to suck eggs," he said, "but obviously in the headmaster's eyes this is just an application. Nobody outside must hear a whisper of this because this is absolutely confidential. It is, as far as anybody is concerned, just a late application."

Both Platt and Hilton repeatedly insisted that the plan should be kept secret. "We would ask for total confidentiality," said Hilton. She suggested the banker make it look as if he was not directly connected with the donation, adding that he might set up a trust to channel funds. "Well, you can pay it through your name," she said, "but I just thought it would be so much easier if your name was never mentioned."

That afternoon the banker phoned the college to clarify a few points. He asked Platt again about the possibility of his son and getting a place. The conversation went as follows:

Platt: "Well I can't at this moment offer you any guarantees. You do understand that. I did explain to you the situation that we have to persuade tutors. Now I think it is possible. I think is that it is a distinct possibility... But I can't go beyond that."

Banker: "Given that he gets the right sort of grades?"

Platt: "Oh yes. Well, two things. Providing I get acceptance in principle that tutors are prepared to do this. I have good reason for thinking they are open to this possibility."

Banker: "have they done this before?"

Platt: "Well, I'm in rather a difficult position if you ask me that, but if you are going to keep it absolutely, totally confidential, the answer is: in the past it has been done. Okay? But, of course, each case is a special circumstance and in each case they have been persuaded the person they were taking was capable of getting a 2:1. I have to tell you that in the case involved, the cases involved, the person always - well, it has happened very infrequently - and in every case they did actually get a 2:1."

Banker: "But in the normal course of things they may not have."

Platt: "Well, in the normal course of things, whether they otherwise would have got in, well, no, probably not. On the borderline, that sort of thing."

Banker: "So my donation would make a difference in that case?"

Platt: "Oh yes, oh good Lord, yes. Of course. No question about that... But I can't at this time make a binding promise because it does, as I say, depend on an tutor's assessment of a student. Whereas they would be very sympathetic..."

Banker: "I think he is in the right ball park as far as I can see. I'm sort of reasonably confident. For instance, if he got three Bs, say, would that still be a possibility?

Platt: "Well, at that point it's getting a bit far down the line, I think, because I think the tutors would want to see at least one touch of an A in there probably."

Banker: "So an A and two Bs?"

Platt: "That might just do. But, really, we should be trying to look for two A's and a B but, as you know, this isn't an absolute. But I think for him, he's got to be prepared if I may say so for his own pride to know that if he gets it he gets it at least to a fair degree on his own merit. He isn't just walking in. He's not. He will have to go through an assessment process which is a real assessment, you know. Obviously though, he will be looked at extremely favourably."

Banker: "Will the tutor or have to be told that I am making a substantial donation?"

Platt: "yes, oh yes, yes, yes, yes, of course."

Later during the telephone conversation Platt, who graduated from the college in the 1950s, appeared to become suspicious and changed his tone. "I don't want us to get into a false position on this," he said. "We must always have the best interests of the candidates, a whole range of candidates, come to think of it, at heart." He handed the telephone to Hilton, who was also starting to get worried. She said she had consulted colleagues who had been appalled at the idea of the plan. "There were strong feelings," she said, "they said that because of the standards of Oxford there couldn't be games played."

Dr Colin Lucas, vice-chancellor of Oxford University

"I am appalled by these allegations. Such actions would contravene all the principles on which our admissions process is based. There must be only one criterion for winning a place at Oxford, and that is individual excellence. I expect Pembroke College to conduct an immediate and thorough investigation into these events. If there is any truth in these allegations, then the college, which is responsible for undergraduate admissions, must take the strongest measures to restore its good name and that of the university. We cannot allow the commitment to merit in Oxford to be undermined by the totally unacceptable behaviour alleged in the article."

Ken Mayhew, Deputy Master of Pembroke College

"I am shocked by these allegations. The college will immediately launch a full and rigorous investigation and act decisively on its findings. Admissions decisions are made by the tutor or for admissions and individual subject tutors. The two college fellows named in the article have no authority in this regard. Like the University of Oxford, Pembroke College is totally committed to selecting its students solely on the basis of academic merit and potential."

Sunday Times leader comment

Oxford's begging bowl

Many parents who have failed to get their children into Oxford will be appalled by the story we publish today of one college prepared to bend the rules in exchange for a large cash contribution. While Pembroke College officials emphasised they were not lowering standards nor excluding other bright pupils, they were in effect saying that money would buy a place on an Oxford law course for a borderline candidate.

These statements combined with their desire to keep the donations secret and an acknowledgement that it has happened before, will give valuable ammunition to critics. Gordon Brown made much of the Laura Spence affair when he argued that Oxford was elitist and prejudiced against state school pupils. The university, which takes almost as many students from independent schools as state ones, has sought to redress that by more actively recruiting from comprehensive schools and very publicly turning down the privately educated son of a fundraiser to Trinity College. So what lies behind this sudden avariciousness? One reason is that Pembroke feels "poor" in comparison with other immensely wealthy colleges. This is relative. It is rich in comparison with many excellent new universities elsewhere in Britain.

A deep underlying concern is that Oxford is falling behind other universities, especially in the United States, because it does not have enough money to attract the best scholars and facilities. US universities have raised vast sums from former students and used that cash to fund bursaries and pursue academic excellence. Oxford, partially dependent on the state, is thus under pressure on two fronts: to raise more cash and to take more students from the state sector.

Many within the university argue that it is ultimately an impossible conundrum: standards will fall and it will slip further down the league table. But if it is to maintain its integrity it must now eradicate any hint of "cash for courses". While it grapples with its financial future, it has to be seen as an institution that takes only the brightest pupils, whatever their wealth and background.