A “superhead” accused of having a conflict of interest over payments of nearly £1.3m received from the academy chain that he runs, has admitted a takeover may be on the cards.
Liam Nolan is both executive headteacher and chief executive of the Perry Beeches Academy Trust in Birmingham, which has been accused of serious financial failures following an investigation by the government's Education Funding Agency. It found financial official rules had been breached through the payment of Mr Nolan's "additional second salary".
Mr Nolan he has told TES that he will now take a £100,000 pay cut and step aside from his chief executive role. A senior business leader will be appointed to sit above Mr Nolan and oversee areas such as procurement, compliance and human resources. The trust will also replace trustees with a “business board”, which could involve takeover by another multi-academy trust, he said.
The new board could be a “ready-made team” put together by the Department for Education, or a multi-academy trust (MAT) board looking for new schools, Mr Nolan said, adding: “Possibly we could be taken over by a different MAT.”
He claimed the changes had not resulted from the EFA warning. “This is not something that’s being imposed," Mr Nolan said. "This is about recognising our own limitations.”
But the EFA report reached damning conclusions over the way finances were run at the Perry Beeches chain. "Urgent action is required to strengthen governance, financial procedures and management arrangements and ensure trustees fully understand their obligations as company directors and charity trustees,” it stated.
The agency's report, published today, reveals the trust made undisclosed payments to Nexus Schools Ltd for Mr Nolan’s chief executive officer role, which he then reclaimed through a private company, Liam Nolan Ltd.
The trust paid Nexus for “providing the services of a CEO” for Perry Beeches. Nexus then subcontracted this role to Liam Nolan Ltd. The EFA found: “This arrangement was approved by directors of the trust and represents a breach of the Academies Financial Handbook.”
The EFA report said the trust made £1.297 million in payments with Nexus over two years, “without a written contract or a formal procurement exercise to demonstrate value for money resulting in a number of breaches”.
The investigation found the arrangement continued for two years without a written contract or formal procurement exercise and was not disclosed in the trust’s 2013-14 accounts.
The agency issued a financial notice to improve earlier this month. It found:
· significant weaknesses in financial management and governance
· breaches of the Academies Financial Handbook relating to a lack of independent financial checks, risk identification and internal controls
· breaches of the handbook by not retaining sufficient evidence of funding eligibility for the required period
· inadequate free school meal and census quality assurance processes.
The trust has previously been praised by education secretary Nicky Morgan, prime minister David Cameron and former education secretary Michael Gove. In 2014, there were reports that Mr Nolan was being lined up by the government to take over a school embroiled in the “Trojan Horse” affair. He later opened a free school near one of the troubled schools.
Mr Nolan told TES that his private company, Liam Nolan Ltd, had been set up to manage payments received as speaker's fees associated with his role as a national education leader, he said. The trust's 2014-15 accounts show £74,000 of trust funds was transferred into the company, which was flagged up by auditors as potentially non-compliant with accounting rules.
Mr Nolan said that the arrangement resulted from his CEO salary being treated as a consultancy payment, which had come about because he had taken on extra responsibilities as the trust had grown, and was therefore a "temporary arrangement".
He said that recruiting a chief executive officer from the business world to oversee the organisation’s commercial side would allow him to focus on education. The trust also appointed a finance director in December.
The trust had been in talks with the DfE, EFA and regional schools commissioner about this for the past year, and hoped to be able to recruit the CEO by September, although the vacancy is not yet being advertised, he added.
Perry Beeches runs five schools and is due to open two more by 2017. Two of the three schools that have been inspected by Ofsted are rated “outstanding” and one was placed in special measures last May.