An academy trust chief executive whose family business made almost £1.5 million in consultancy fees in two years has defended the deal, claiming it has been “instrumental” in improving schools.
Janet Marshall, the founder and chief executive of the EMLC Academies Trust, which runs seven schools, is also director and a shareholder of Third Wave Enterprises Ltd.
The trust’s accounts reveal that service-level agreements between the trust and the consultancy have been in place since the trust was established in 2012, and EMLC is a 14-per-cent shareholder of Third Wave.
In 2015 the trust strengthened its relationship with the company, appointing it to provide support with school improvement on a “non-profit basis”, after carrying out a “competitive” tender process.
After this, the amount paid out to Third Wave by the trust increased more than fourfold – leaping from £93,439 in 2014 to £404,380 in 2015.
Between 2015 and 2017, the trust paid Third Wave £1.44 million for its services. This was on top of payments for professional services of £198,735 in 2013 and £278,255 in 2014.
Related-party transactions between academy trusts and private businesses linked to trust officials have come under increasing scrutiny in recent years.
But Marshall defended the set-up at her trust, telling Schools Week that the work Third Wave has done for EMLC “has been instrumental in securing improved outcomes for pupils across all the trust schools”.
“The trust has a policy of being open and transparent in all of its dealings,” she said. “Matters involving connected parties are disclosed in the trust’s annual accounts and on our website.”
The trust’s accounts also show that Third Wave pays £13,500 in annual rent to EMLC, although it is not clear what this payment is for.
Several members of Marshall’s family have links to the trust and Third Wave. Her daughter Kerry Batten is also a director of the consultancy, while her daughter-in-law Kelly Marshall is an employee. Marshall’s husband Keith Marshall also serves on the academy trust’s board.
According to Third Wave’s most recent financial statements, the company paid £57,362 in dividends to its directors in 2016-17. Marshall holds 28 per cent of the shares, while her daughter holds 30 per cent.
EMLC Academies Trust runs Shepherdswell Academy in Milton Keynes, Castle Academy, Hardingstone Academy, Stimpson Avenue Academy and Northampton International Academy in Northampton, and Prince William School in Oundle.
Stimpson Avenue Academy is rated ‘requires improvement’ by Ofsted, while Castle and Hardingstone Academies are both rated ‘good’. Shepherdswell has not been inspected by Ofsted since converting to an academy in 2012 and Northampton International Academy, which opened in 2016, is also yet to be visited by inspectors.
Whilst not necessarily problematic, this doesn’t exactly smell good. This level of payment is so high that it almost demands the background and details are investigated objectively.
It could be, however unlikely this report makes it seem, that everything is above board. The services provided by Third Wave could have been (a) very good, and (b) less costly to the MAT than could possibly have been provided by any unconnected third party. The dividends paid to the shareholders could have been only linked to the work Third Wave did with other clients.
But that’s an awful lot of “coulds” and we’ve seen enough examples of bad behaviour for suspicion to be justified.
To repeat what I’ve said before, if I was a Trustee of EMLC, and I knew we were paying £1.5 million to a company so closely linked to our CEO, I would insist that the MAT goes way beyond what is ‘required’ by the Academies Financial Handbook and ensure that there was independent and objective evidence supporting the decision (showing that (a) it provided best value, and (b) the CEO and any connected person did not personally profit) which would be put into the public domain.
EMLC and EMLC Academies Trust are two separate organisations. EMLC is the Trust’s sponsor. Janet Marshal is named as CEO of EMLC in accounts for y/e 31 March 2017 but not named as a director in Company House records. She is CEO and director of EMLC Academies Trust and director at Third Wave Enterprises (TWE), the academy trust’s ‘procured school improvement contractor’.
It appears, then, that the academy trust’s sponsor is a 14% shareholder of the trust’s school improvement contractor. At the same time, members of Janet Marshall’s family are involved at some stage.
While there’s no suggestion that the Trust hasn’t complied with the Academies Handbook (related party transactions are allowed as long as they’re at cost and properly procured), the National Audit Office said in 2014 that complex structures adopted by academy trusts could ‘increase the perception of any wrongdoing.’
http://www.localschoolsnetwork.org.uk/2014/11/complex-structures-could-increase-perception-of-wrongdoing-warns-chief-auditor-in-durand-academy-report
If ESFA banned related-party transactions as former Public Accounts Committee Margaret Hodge suggested, the perception that academy trustees and connected organisation were profiting from involvement in academies would be greatly reduced.
In 2015, the Education and Funding Agency investigated EMLC academies trust. The report expressed concern about the ‘triangular arrangement’ between the sponsor EMLC, the academy trust and TWE which could lead to potential conflicts of interest. Despite thes concerns, EMLC Academy Trust was not issued with a Financial Notice to Improve.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418510/Financial_management_and_governance_review_EMLC.pdf