Ministers face writing off a sizeable chunk of a £2.8 million debt owed by the SchoolsCompany academy trust after a four-year legal battle ended in secret settlement deals.
In 2021, the SchoolsCompany Trust launched legal action with backing from the Department for Education to recoup £2.8 million in alleged “losses” from six former trustees.
The chain gave up its three Devon alternative provision schools and mainstream Kent secondary school in 2018 amid allegations of financial mismanagement.
But the list of defendants narrowed over time, and the trust has now settled with Elias Achilleos, its former chief executive, his company SchoolsCompany Limited and Everton Wilson, the trust’s former finance director.
However, under confidentiality agreements thrashed out behind closed doors at the High Court on Monday, the deals will not be disclosed to the court and the former trustees are banned from discussing them.
The settlements raise the prospect the DfE will recoup only a fraction of the £2.8 million it is owed by the trust, despite bankrolling the case.
Spending on legal battle runs to £1.6m and counting
Accounts for SchoolsCompany Trust, whose sole function now is to oversee the legal action, show it received about £1.6 million from the government between 2020 and 2023.
The total spend is likely to be much higher, given that a number of High Court hearings have taken place over the past 18 months, with the trust forced to resubmit its claims last year.
Andy Jolley, an academy transparency campaigner, said it was a “true scandal”.
He questioned the behaviour of the directors, and said it was “ridiculous that millions have gone into pursuing these people”.
He said the case highlighted how much those accused of wrongdoing in the early academy expansion days could “could away with” under a “lax regulation regime”.
Four-year saga ends with chaotic day in court
The settlements were reached during a chaotic day in which lawyers had been due to discuss a settlement reached last year with Patrick Eames, another former trustee.
Judge Master Dagnall had ordered the trust to reveal to the remaining defendants the value of that settlement. Its confidentiality would have been waived had it been discussed in open court this week.
However, lawyers for the trust asked for repeated adjournments while they negotiated with Achilleos, who has represented himself, and Wilson’s lawyer John Meredith-Hardy.
Court documents also reveal how the trust was ordered last year to submit an updated set of claims against the defendants, following criticism of its “convoluted” allegations.
Business trips around the world, thousands spent on consultants, holiday cottages, luxury hotels and a £380 meal in an upmarket steak house were among 120 “losses” set out in the trust’s original claim, which ran to 83 pages.
A defence filed on behalf of Eames before he reached a settlement said the trust’s claim was “exceptionally long, convoluted and, at times, difficult to understand”.
Trust was ordered to clarify claim
Master Dagnall ordered the trust to amend the claim document, including a “summary of no more than four pages” setting out the “basis for the claim for the £2,793,000”.
He also told the trust to be clearer about how it was calculating individual losses and which defendant each allegation related to. The updated document has not been made available by the court.
Since giving up its schools in 2018, the SchoolsCompany Trust has existed as a shell charity to preside over the legal battle. The debt of £2.8 million remains on its balance sheet.
The DfE has been handing the trust money annually in amounts ranging from £220,000 to £604,000, both to fund the legal battle and to keep it functioning.
It is expected to be wound up once the case is fully settled.
Labour ministers may now face writing off much of the trust’s debt, seven years after the schools were removed and after the public purse potentially spent millions on legal fees.
Leora Cruddas, the chief executive of the Confederation of School Trusts, said only those involved in the case had seen all the evidence. “But in principle it is crucial for the sector that we adhere to the highest standards in governance and, on the rare occasions where that falls short, it should be fully investigated.
“Over the years the academy trust handbook has been strengthened to encourage stronger financial controls and prevent conflicts of interests, protecting both public funds, and trustees and employees.”
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