Academy payments to companies linked to their directors revealed
- Credit: PA
Academy trusts that run dozens of schools in our region have defended buying thousands of pounds of services from companies with links to their directors or trustees.
The payments, revealed by an EDP analysis of the accounts of dozens of academy chains, have sparked calls from Norwich South MP Clive Lewis for all so-called 'related party transactions' to be banned.
Academies are taxpayer-funded schools that have been given greater freedom after breaking away from the local authority, and are directly accountable to the Department for Education.
There have been growing concerns about how some academies spend their money, and this week Neil Carmichael, the Conservative chairman of the Education Select Committee said: 'Ministers must get a grip and ensure that the autonomy afforded to academies is matched in government by the highest levels of transparency and accountability.'
The accounts for the local academy trusts all said the transactions were in line with the academy financial regulations and normal procurement procedures, and there is no suggestion any rules or laws were broken.
The Department for Education (DfE) said academy trusts must apply its 'no-profit rules', and these transactions must be published in their accounts. It added that the vast majority of these transactions 'have shown no reason for concern'.
But Mr Lewis, a former member of the Public Accounts Committee, said: 'These academies and the people they've bought services off using our money may well be sticking to the rules. But as I said recently, that doesn't make it right.
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'Does anyone really expect us to believe that time and time again an academy's best option is to buy from or employ someone that is already related to their organisation? It's wrong that this is an option at all.
'There's a very simple solution to all of this – ban all related interest transactions in academies.
'That way we can be sure that money intended for the education of our children is used correctly.'
Kevin Courtney, general secretary of the NUT, said it could not comment on individual cases, but renewed calls for related party transactions to be outlawed.
He said: 'That would remove any suspicion or concern about the manner in which such contracts are awarded. Academies receive public money and no one but the pupils in academies should be benefiting from it. The DfE must act now. It is in everyone's interests that they do so as a matter of urgency.'
A DfE spokesman said: 'Trusts must apply our no-profit rules and publish interests of members and trustees, so that conflicts of interest are avoided.
'All related-party transactions must be disclosed in their audited accounts which are published – this is not the case for local authority schools.
'Where concerns are raised we will investigate, however the vast majority of academy transactions have shown no reason for concern.'
The academy trust and the IT company
An academy trust that runs eight schools in Norfolk and Suffolk bought IT services and hardware worth more than £1m from a company whose managing director was also a senior figure in the trust.
The Academy Transformation Trust's (ATT) schools include the Nicholas Hamond Academy in Swaffham, and until June 2015 one of its members, who have ultimate control of the trust, was Anas Abdul Mawla, who was also managing director of Gaia Technologies Plc.
According to ATT's accounts, its transactions with Gaia were worth £482,298 in 2013-14, and £695,324 in 2014-15.
The trust's accounts said Mr Abdul Mawla 'played absolutely no part in the decision making process', and the trust had taken legal advice about avoiding a conflict of interest.
The trust's accounts added that 'the trust made the purchase at arms' length following a competitive tendering exercise in accordance with its financial regulations, which Mr Anas Abdul Mawla neither participated in, nor influenced'.
Mike Giddings, director of finance for ATT, said: 'I can confirm that the monies paid to Gaia Technologies in the year complied with the regulations and guidelines published by the Education Funding Agency.'
The chief executive's daughter
The chief executive of a growing multi-academy trust has defended the appointment of her daughter to a senior role at the organisation.
Hazel Cubbage became business and operations executive for the Heart Education Trust, based at Heartsease Primary Academy, on July 6, 2015.
She is the daughter of the trust's chief executive, Christina Kenna.
On the same day she was appointed, she resigned as a director of Heart, a position which documents filed at Companies House say she had held for the previous eight months.
According to the trust's 2014-15 accounts, Ms Cubbage was paid between £5,000 and £10,000 up to August 31, 2015.
They said the board of trustees ensured 'a full and fair recruitment process was carried out'.
It added the appointment was not a 'contentious transaction', which would have required prior approval from the Education Funding Agency, and said the 'documentation relating to the appointment was subsequently shared directly with the Department for Education'.
Mrs Kenna said the post was advertised nationally, a number of people applied, and all were shortlisted, and she was not involved in the appointment process.
She said: 'They made the decision based on the things that people could bring, and Hazel's CV and presentation and interview showed she had the most skills for the post.'
She added that she plays no part in Ms Cubbage's performance management or decisions about her salary, and she and her daughter cannot sign cheques for the trust together.
The church academy trust and the law firm
A Church of England academy trust that runs 12 primary schools in Norfolk, and nine in Cambridgeshire, spent more than £230,000 on services from a law firm where one of its trustees is a partner.
The Diocese of Ely Multi-Academy Trust's (Demat) accounts showed it incurred £128,336 with Lee Bolton Monier-Williams in 2013-14, and a further £107,726 in 2014-15. The firm's partners include Howard Dellar, who is also a trustee of the academy trust.
The trust's accounts said all such related party transactions 'are conducted at arm's length and in accordance with the academy's financial regulations and normal procurement procedures'.
A spokesman for Demat said: 'Lee Bolton Monier-Williams (LBMW) have been the Diocese of Ely's Solicitors for a number of years.
'In 2012, the diocese re-tendered for this service in an open process, which was shortlisted to three firms. LBMW were among the three firms shortlisted and were the eventual preferred bidder, so were subsequently retained.'
The college academy trust and the IT company
A primary school governor resigned 'to avoid any further potential conflict of interest' after his academy paid £41,000 to an IT company that he was a director of.
Guy Pyle was a governor of Eastgate Academy in King's Lynn, which joined the College of West Anglia (CWA) Academy Trust in April 2014, and he is also a director of King's Lynn-based IT firm Uptech Limited.
According to the trust's accounts, the school's transaction with Uptech amounted to £41,000 in 2014-15.
The CWA Academy Trust said: 'In 2015, the trust identified a potential conflict of interest in relation to payments to Uptech Ltd by Eastgate Academy for IT services, as the director of Uptech Ltd was also a governor of the academy.
'Following advice from the trust's auditors, this was investigated by the trust's audit committee, who were satisfied that proper procurement procedures had been followed, there was clear evidence of value for money and that the governor in question had made the necessary declaration of interest.
'Uptech's relationship as an IT supplier to Eastgate predated the director becoming a governor by several years.
'However, to avoid any further potential conflict of interest, he resigned as a governor of the academy in May 2016.'