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Star academy group misspent public money on lavish expenses

Report condemns a charity running 35 schools for ‘procedural irregularities’ and ‘weak’ controls

One of the country's biggest academies chains has been censured in an official government report for endorsing extravagant expenses claims, first-class rail travel and "a culture of prestige venues" for meetings.

An official investigation by the government's Education Funding Agency into the E-ACT chain, which runs 35 of the Government's flagship schools, revealed it was also spending hundreds of thousands of pounds worth of taxpayers' money on "procedural irregularities" - including unapproved consultancy fees. 

The chain's director general and head of finance plus two trustees have all quit after concern was first expressed over its finances.

The report's findings - the second time within 18 months that an academy chain has been criticised for extravagant overspending - are an embarrassment for Education Secretary Michael Gove as he seeks to persuade growing numbers of schools to join his academies crusade and adopt their financial model.

In particular, the EFA report is critical of:  *monthly lunches at the prestigious Reform Club - a private club in London.

*first-class rail travel for senior executives in defiance of a rule that employees should go standard class.

*£16,000 spent on an annual strategy meeting in a hotel - £1,000 of which was spent on drinks and paying for the room.

*expenses claims and use of corporate credit cards indicating a cultural of hiring prestigious venues for meetings.

*a "governance workshop" for ten people at London's Bloomsbury Hotel costing £5, 406.

*spending £393,000 on "procedural irregularities" including paying a significant number of its trustees (E-ACT is a charity) as chairs of governors or trustees in contravention of guidelines by the charity Commission which state that trustees should not have a financial interest in the organisation.

The report goes on to criticise Sir Bruce Liddington, the chain's former director general executive who resigned in April after E-Act was given a "notice to improve" its financial controls, over the lavish expenses claims.  He had been the government's Schools Commissioner - responsible for promoting the academies programme - before taking up the E-ACT post.

It describes E-ACT's systems of internal financial control and controls over expenses for trustees as "weak".

"Expenses claims and use of corporate credit cards indicate a culture involving prestigious venues, large drinks bills, business lunches and first-class travel- all funded from public monies," it adds.

"Whilst we find no evidence of deliberate wrong-doing, we are unable to state that processes are consistently robust or offer good value for money.

"Expenses claims and card payments by senior managers in E-ACT have occasionally stretched the concepts of propriety and value for money."

It added that some payments "have tended to extravagance".

The report comes a year after an academy chain in Lincolnshire was also criticised for spending money on a French chalet which was then used by senior members of it rather than for field trips for pupils - the original intention.

Mary Bousted, general secretary of the Association of Teachers and Lecturers,  said the report posed "serious questions" about the Government's ability to police academy chains and described E-ACT's actions as "immoral".

"It was money that should have been spent on improving the education of our very poor kids," she added.

A spokeswoman for the Department for Education said: "Any misuse of public money meant for schools is completely unacceptable.

"Academies cannot hide from their responsibilities - all their accounts must be externally audited and they are held to account by the EFA so any issues of impropriety are immediately investigated.

"That is exactly why the EFA has written to E-ACT requiring them to take swift action to improve financial management.  We are monitoring the situation closely and will take any further action necessary."

Ann Limb, who chairs E-ACT, said:  "We have overhauled both the governance and culture of E-ACT to ensure that this can never happen again.

"As well as the departure of the Director General, the Finance Director and two trustees have also left the organisation.  E-ACT is about educational excellence and the changes we have made will ensure we have operational excellence to support that."

Dr Limb added: "We are implementing a robust action plan which addresses all concerns raised and are working closely with the EFA to ensure these changes are embedded throughout the organisation."