The former financial controller of a British private school in Hong Kong that struggled to pay its staff and rent this year has been arrested on suspicion of stealing nearly HK$600,000 (US$77,100) from the institution after being fired last month, a police source has said.

The source said on Wednesday that the suspect was picked up by crime squad officers outside the campus of Mount Kelly School in Austin Road in Tsim Sha Tsui on Saturday. The 34-year-old, who joined the school in 2016, was understood to have been sacked on July 7 for poor financial management.

Police launched an investigation after receiving a report from the school about the alleged theft in mid-July.

“A preliminary investigation suggested HK$599,000 was transferred from the bank account of the school to the suspect’s personal bank account,” the source said.

The transfer was made days after the man was let go in July, with the money involved coming from students’ school fees.

The suspect has been released on bail pending further investigation. Detectives from the Yau Tsim criminal investigation unit are handling the case.

In June, the co-founder of the school, Edward Wong Pak-yin, blamed its financial woes on “messy” management and a loss of more than 30 per cent of its pupils amid the coronavirus pandemic.

He admitted Mount Kelly had failed to break even for the past year, and had been falling behind on its expenses “by millions of Hong Kong dollars” for months.

But he denied that the school, which offers a British curriculum and charges parents between HK$154,990 and HK$195,000 annually, would be forced to close, pledging to keep it open while restructuring took place.

Mount Kelly confirmed in a statement that the financial controller and his wife had been fired from the school, and accused them of financial misconduct.

The school confirmed in a statement on Wednesday that its financial controller and his wife, who worked in the institution’s human resources department, were sacked on July 7, and a report of the alleged theft was made to police on July 15.

According to the statement, the school first noticed its financial issues earlier this year, and found the couple unwilling to provide relevant fiscal and human resources information. It then recruited a team in May to review its financial situation and operations.

Mount Kelly accused the financial controller of transferring a large amount of its funds to his personal bank account, and his wife of collecting a hefty sum through her consulting firm without the school’s knowledge.

It also alleged that the couple’s actions left the institution with insufficient funds to pay its staff and creditors.

The late wage payments and unpaid rents for the Tsim Sha Tsui campus were first reported by local media earlier this year.

Mount Kelly has since formed a new team to take over the school’s operations and obtain fresh capital from its investors, according to the statement.

“The school has now restarted with sufficient funds and successfully recruited enough teaching staff to prepare for the new academic year,” the statement said.

The school, which has a sister institution in Devon, Britain, is run by Mount Kelly International (MKI).

Since revealing its plans to open a school in Hong Kong in 2016, MKI has been hit by multiple controversies.

It received a warning from the Education Bureau in November 2016 after it was found to have started recruiting pupils before completing its registration. The school also took months to find a campus before it could formally open in 2017.