A controversial academy trust broke rules on the use of public money by using £5,000 to indirectly sponsor the Labour Party, an investigation has found.
It spent a further £1,990 for its staff and directors to attend political party fundraising dinners or events between September 2013 and February 2015, the report said.
The Education Funding Agency (EFA) report on the Perry Beeches Academy Trust, published today, also found that a separate £5,000 payment to a firm controlled by the wife of a director of the trust breached financial rules.
The report found that the now former executive headteacher and chief executive Liam Nolan may have influenced the starting salary of his nephew, who was working at the trust, although it could not say if a breach of the rules had occurred.
The EFA launched the investigation into the Birmingham trust, which runs five academies – including four free schools – after receiving allegations in March 2016 that it had “used public funds for irregular purposes”.
It also examined claims about its whistleblowing policies, and alleged inconsistencies about permanent exclusions and managed moves of pupils.
The allegations were separate to those previously investigated by the EFA, which in October 2015 reached damning conclusions over the way finances were run at the chain.
It found that official rules had been breached through the payment of an "additional second salary" to Liam Nolan, who has since left the trust.
Today’s report said the trust broke Charity Commission regulations by providing £5,000 of sponsorship to the Labour Finance and Industry Group, affiliated to the Labour Party, in January 2014.
It said: “The expenditure on political sponsorship and dinners is irregular and breaches Charity Commission guidance and the Academies Financial Handbook as it is considered an inappropriate and contentious use of public funds.”
It said the money had since been refunded to the trust.
The investigation also found that a £5,000 payment made for consultancy to Lampsato Limited, a company controlled by the wife of a director of the trust, was in breach of official rules.
The report said the trust “must immediately cease to provide any form of support for political events/fundraisers”. The trust should repay the EFA "remaining irregular expenditure" of £2,227, it added.
The document also said the trust “must confirm with the EFA whether the transactions with Lampsato Limited were ‘at cost’”, as required.
It also emerged that Perry Beeches paid a PR company £450 a day, initially for four days a month, to help with media attention during the 2015 investigation.
The report said that, while there was no irregularity in using a PR firm, there was “no evidence” that the trust followed its procurement process, and told it to stop using the company, undertake a procurement exercise, and agree the spending with the EFA.
It said the trust has a whistleblowing procedure, but not all staff were aware of it, and it did not say what they should do if their concerns were about the chief executive.
The report found there was “no evidence” of irregularity across the trust about exam process or procedures, or that excluded pupils are being home educated instead of being permanently excluded.
In response to the report, Pam Garrington, chair of trustees, and Paul Wheeler, acting chief executive officer at Perry Beeches, released this statement: "The EFA report relates to historical allegations. Since the investigations, the chief executive officer Liam Nolan has left the trust and the then board of trustees resigned in April 2016.
"Perry Beeches has a new management structure in place with Paul Wheeler as acting chief executive officer and a new board of trustees appointed in May 2016. Volunteering their services, this new Board has been working very closely with the EFA and DfE to move Perry Beeches and its schools forward to a better future.
"All recommendations in the report have been adopted by the trust."
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