The Department for Education has refused to say whether officials are happy with an academy chain spending almost £440,000 on firms belonging to its chief executive and his daughter.
Wakefield City Academies Trust (WCAT) came under the spotlight this week after it was revealed that it had paid £316,489 to an IT firm belonging to its boss, Mike Ramsay.
The academy chain's accounts also revealed that a two-year contract worth £123,012 has been awarded to HDR Services, a company owned by the chief executive’s daughter, for clerking work.
WCAT, which sponsors 21 primary and secondary schools across Yorkshire, has insisted that both contracts were scrutinised through an Education Funding Agency (EFA) inspection.
A spokesman for the trust said: “The other two contracts with HDR and Hi-Tech Group were put out to tender. Both were the subject of internal and external audits and scrutiny from an Education Funding Agency’s Governance and Financial Compliance focussed inspection.
"Any inference that proper processes were not followed would be wholly inaccurate."
But the Department for Education (DfE) refused to comment directly on whether it thought the related-party transactions were sound and whether it had found any wrongdoing at the trust.
'It's time for action now'
Following the disclosure, Chris Keates, general secretary of the NASUWT teaching union, said: “It is the government's policy of deregulation and excessive freedoms and flexibilities for schools which have created the climate in which these practices can flourish. Hardly a week goes by without another example being uncovered."
She added: “It is time for action now. The freedoms and flexibilities have to be curtailed and a rigorous system of scrutiny, monitoring and oversight, which is democratically accountable and acting in the public interest, introduced without delay.”
Earlier this week, Sir Amyas Morse, the head of the government’s spending watchdog, raised concerns over conflicts of interest within school chains and the oversight of the academies programme as a whole.
Sir Amyas, comptroller and auditor general of the National Audit Office (NAO), said: “The main areas to watch are ones around propriety and conflicts of interest. I would make sure that where there are concerns there are quick interventions."
The DfE is understood to be working with WCAT to ensure that improvements to financial management and governance are made.
Earlier this year, Sir Michael Wilshaw, the Ofsted chief inspector, attacked the performance of seven large academy chains – including WCAT – in a damning letter to then education secretary Nicky Morgan.
He stressed that the high salaries of chief executives at some of the trusts did not match performance, and highlighted the fact that the average pay of the bosses across the seven chains was higher than the prime minister’s salary.
Sir Michael said: “This poor use of public money is compounded by some trusts holding very large cash reserves that are not being spent on raising standards. For example, at the end of August 2015, these seven trusts had total cash in the bank of £111 million."