Academy trust boss was paid second salary
An academy and free school trust praised by the Prime Minister has paid its chief executive a second salary passed through two separate companies, a government report says.
It raises serious concerns about financial management and governance at Perry Beeches Academy Trust.
The trust has been issued with a financial notice to improve following a probe prompted by a whistleblower.
Labour accused the government of having "snuck out" the report.
The trust, which runs five secondary schools in Birmingham, and has been praised by senior government ministers, has been ordered to improve financial management and governance.
The Education Funding Agency investigation followed whistleblower allegations that the trust's chief executive, Liam Nolan, was paid an additional salary through a supply company, Nexus Schools Ltd.
The findings confirmed the trust paid £1.2m over two years to Nexus, which then passed some of the money to Mr Nolan through a company of which he was sole director.
There was no written contract for the payment and no alternative tenders for the services were considered, said the report.
"The trust pays Nexus for providing the services of a CEO for Perry Beeches multi academy trust.
"Nexus then sub contracts this role to Liam Nolan Ltd," says the report.
These payments, of at least £160,000 over two years, were not disclosed in financial statements, it says.
They are on top of Mr Nolan's annual payroll salary of £120,000 for his executive head teacher role.
It concludes that the trust was therefore in breach of the Academies Official handbook, the Charities Commission Statement of Recommended Practice and the Academies Accounts Direction.
Not only was there no written contract but there was no formal procurement exercise to demonstrate value for money, the investigators found.
In the past the trust has drawn praise from Prime Minister David Cameron. education secretary Nicky Morgan and the former education secretary, Michael Gove.
Last year, Mrs Morgan cited Perry Beeches as an example of schools achieving "truly extraordinary outcomes for young people".
Mr Cameron opened one of its new schools in 2013, describing the chain as "a real success story" while Mr Gove said the trust ran two of the best schools in the city.
A Department for Education spokeswoman confirmed the trust had been issued with a financial notice to improve following an investigation.
"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."
The spokeswoman maintained that the strict system of oversight and accountability under which trusts operate is "more robust than in council-run schools, which has enabled us to identify these issues and take swift action to address them."
But Labour's shadow minister for schools, Nic Dakin, said the findings were evidence that the government had "completely failed to put in place the appropriate checks over academy chain funding decisions.
Instead it had prioritised converting schools into academies over school standards and the protection of public money.
"It is extremely concerning that so much taxpayer money is ending up in the pockets of academy chain directors and trustees.
"Labour will fiercely oppose this top-down, costly reorganisation of our schools, which nobody wants and schools don't need, ensure there is proper oversight of all our schools, and put local parents and communities at the heart of decisions when it comes to their children's schools."
Liam Nolan Ltd is appointing a voluntary liquidator according to the Companies House website.
Notices posted relating to the company also include a special resolution to wind up and a declaration of solvency.