Multiple rule breaches found in Dunham Trust ESFA investigation

An academy trust that paid out tens of thousands of pounds to related parties, spent over £1,000 for staff to attend a summit in Jordan and paid an employee’s parking ticket broke academy funding rules, an investigation has found.

The Education and Skills Funding Agency investigated the Dunham Trust last June after receiving “allegations around financial management, regularity and personnel issues”.

The investigation report, published today, revealed that the trust made multiple breaches of the academies financial handbook through a lack of oversight of financial operations, misuse of public funds and internal control weaknesses.

It was revealed last year that the trust had paid £22,632 to legal firm Eversheds Sutherland for advice which was not provided at cost, while a senior partner at the firm was married to the head of one of Dunham’s primary schools. Payments of thousands of pounds to a trustee to provide IT services, again not at cost, was also raised.

The trust, which runs five primary schools in Trafford, Greater Manchester, also paid £1,100 for two staff to attend a “compassion summit conference course” in Amman, Jordan. A £40 parking fine was paid for one staff member and the trust spent hundreds of pounds on flowers for staff.

It was also revealed that the trust had spent £100,000 meant for building repairs on staff salaries. However, this expenditure was seemingly not investigated by the ESFA, which was approached for comment about the omission.

However, the investigation report does reveal more information about other misuses of public funding and conflicts of interest.

For example, the trust breached the AFH in its use of Michael Appleyard, the husband of former CEO Jo Appleyard, as a consultant between 2014 and 2017, for which he was paid £40,877.

Dunham was unable to provide a contract or confirm his services were delivered at-cost and under an open-book agreement. There was also no evidence of a formal procurement exercise.

The investigation also named the trustee paid £3,377 for web hosting and other services to the trust as Philip Welch, who started working for the trust when he was a governor at Lime Tree primary school in 2017. He became a trustee in October 2018 and continued to provide his services.

But concerns were raised by new chief financial officer Nicola Toop, and Welch resigned as a trustee in June 2019, shortly before submitting an invoice in advance for £2,950 for work due to take place the following year.

 

Benefits of summit trip ‘indistinct’

In March 2018, two teachers from Lime Tree Primary Academy participated in the Jordan Study Tour. Although they self-funded their accommodation and travel, the trust paid £1,100 for the training package and for the teachers to attend the summit in Amman.

The ESFA found the trust could not provide a “clear documentary record” of the evaluation and value for money assessment of the attendance on the study tour. The circumstances of authorisation for the expenditure were “unclear, disputed and potentially contentious”.

The board was unaware of the tour and the cost of the trust at the time, and the chair told the ESFA he “did not consider the expenditure to be appropriate”.

The ESFA found there was “no evidence of consideration of alternatives available”, and that the benefits to the trust of attendance were “indistinct”.

The investigation also found £479 was spent by three schools buying flowers for staff, and that academy funds had also been used to pay a £40 car parking ticket incurred by a staff member at Lime Tree primary in September 2017 whilst attending a safeguarding meeting in Wythenshawe. All were labelled incorrect use of public funds.

 

No record of approval for £153k severance payments

The investigation revealed that 15 payments were made to departing staff totalling £153,758 over three years.

The trust was “unable to provide a policy in relation to authorising severance for this period”.

Although the majority of payments were recorded as payments in lieu of notice, the investigation “was not able to confirm the existence of formal board approval or documented business cases for any of the payments made”.

Particular concern was raised about £23,799 paid to six staff who left following investigations into concerns of a safeguarding nature, although only three were clearly declared as safeguarding issues. All of the staff had attended disciplinary interviews with the executive principal, and although there were records of the interviews, there were “no documented findings or outcomes available”.

As a result, the ESFA was “unable to ascertain whether the departure of each staff member and the related payment made to each was justified”. However, they did find there was “no evidence that the six ex-employees presented a safeguarding concern”.

The trust also broke the rules with its governance arrangements, the ESFA found. All three of its members were also trustees, which conflicts with AFH guidance. Poor attendance at trustee meetings was a factor for several years, with decisions often deferred as a result.

The ESFA also found the chair Paul Reilly had “failed to ensure the effective functioning of the board at a time of challenge for the trust”, with difficulties relating to expansion and the unexpected loss of the former CEO. Reilly left the trust in September 2019.

Jayne Carmichael, the trust’s interim CEO, said the trust had “worked closely with the ESFA to ensure a rigorous investigation into historic issues from 2017”.

“The recommendations that arose were quickly implemented with a stronger management structure put in place that included a new chief executive officer, finance director and chair of the trustees.”

She added that the changes had an “immediate impact” and that accounts for 2018-19 had been approved “without qualification”.