An academy trust funnelled more than £1m to a private company which then paid a “second salary” to the trust’s “superhead”, a government investigation has revealed today.
Perry Beeches The Academy Trust – which runs five schools in Birmingham – has been issued with a financial notice to improve after an investigation revealed a string of “significant” financial oversight failures.
The trust, praised previously by both education secretary Nicky Morgan and Prime Minister David Cameron, who opened one of their schools in 2013, has now been ordered to make urgent improvements.
The findings of an investigation into financial mismanagement today reveals how the trust paid a private firm called Nexus for providing chief executive services.
Nexus then sub-contracted the role to another company called Liam Nolan Ltd, whose sole director is Liam Nolan, the “superhead” and accounting officer at the trust. He is also listed as a trust director and non-voting member, the investigation added.
The arrangement was found to breach Treasury guidance on tax avoidance.
The investigation also found:
– The trust had spent nearly £1.3m with Nexus over two years, “without a written contract or formal procurement”.
– Payments were not detailed in the trust’s 2013/14 financial statements.
– The trust’s chair of governors had “joint business interests” with a director of Nexus – which were not disclosed in a register of interests.
– The trust’s 2013/14 financial statements did not disclose the Nexus payments.
The findings breach a string of regulations, including the Academies Financial Handbook, Charity Commission and academies accounting rules, and trustee guidelines.
The investigation concludes there was a failure by trustees and Mr Nolan, as the trust’s accounting officer, to maintain “proper stewardship over public funds”.
It added: “Urgent action is required to strengthen governance, financial procedures and management arrangements and ensure trustees fully understand their obligations as company directors and trustees.”
The trust has also been ordered to pay back £118,291 of government funding after a separate investigation into allegations it had wrongly recorded pupils on the annual census as entitled to free school meals.
The investigation found the trust had failed to retain any form of free school meal eligibility evidence for a period of six years – breaching the Academies Financial Handbook.
The government has now handed the trust a financial notice to improve, with a long list of conditions it must meet.
They include an independent review of its membership and board of governors to prove Mr Nolan has the skills to carry out his role “effectively” and review payroll arrangements of all senior employees to ensure they fully meet their tax obligations.
The school did not respond immediately to requests for comment. However Mr Nolan (pictured above) told the BBC last night: “I’m not a business manager, I’m a headteacher.”
He added the trust was criticised for a lack of understanding to do with contract, services and tax law, which he said used to be handled by the local authority.
Mr Nolan was previously reported to have said he deserved a pay rise because his £120,000 salary was “low” compared with those in other industries.
He faced calls to resign last year after one of the Perry Beeches schools was put in special measures. The trust is due to open another free school next year.
A Department for Education spokesperson said: “The Trust has already put in place an action plan and is working with us to urgently fix the weaknesses we found. We will monitor progress closely, and if we don’t see significant improvement we will not hesitate to take further action.
“Academy trusts operate under a strict system of oversight and accountability – more robust than in council-run schools — which has enabled us to identify these issues and take swift action to address them.”
This story was updated to clarify that money was paid via an intermediary company from the trust to Mr Nolan.