Conflicts of Interest?

Chairs of boards of trustees and accounting officers must recognise the higher standard of public accountability resting with them, and must avoid real and perceived conflicts of interests in any connected party relationships. (Academies Financial Handbook 2014)

November 2015

2

Introduction

Building 1000, Kings Reach, Stockport, Cheshire SK4 2HD is the registered office for E S Management

Services Ltd, Equity Solutions Asset Management Ltd, Equity Solutions and Partners Ltd, North

Consulting Limited, Professor David Hopkins Publishing Limited, Blue Support Services Limited and a

host of other companies.

E S Management Services Ltd

E S Management Services Ltd is the ultimate parent of the following companies.

Level Company Name Registration Number Trading Status

1 E S MANAGEMENT SERVICES LIMITED 8159130 Active

2 EQUITY SOLUTIONS PROPERTY SERVICES LIMITED 4361726 Active

2 BLUE SUPPORT SERVICES LIMITED 7065599 Active

2 NORTH & PARTNERS TECHNICAL LIMITED 8384888 Active

3 EQUITY SOLUTIONS & PARTNERS LIMITED 5197900 Active

4 EQUITY SOLUTIONS (MOORLAND ROAD) LIMITED 5699438 Active

4 EQUITY SOLUTIONS DEVELOPMENT SERVICES LIMITED 5989598 Active

4 BLUE SKY EQUITY VENTURES LIMITED 6775980 Active

5 PURE CREATIVE LIMITED 4387745 Active

5 GREEN2GO LIMITED 6234285 Active

5 BLUE SKY DESIGN SERVICES LIMITED 6235182 Active

According to the Annual Return to Companies House dated 27 July 2014, all 10,000 shares in E S

Management Services Ltd are owned by Michael Dwan.

Equity Solutions Asset Management Ltd

Equity Solutions Asset Management Ltd is the ultimate parent of a host of companies including North

Consulting.

Level Company Name Registration Number Trading Status

1 EQUITY SOLUTIONS ASSET MANAGEMENT LIMITED 7974362 Active

2 NORTH CONSULTING LIMITED 3277334 Active

According to the Annual Return to Companies House dated 3 March 2015 the shareholding in Equity

Solutions Asset Management Ltd is as follows.

Name Type Shares

John Connolly Ordinary 500

Andrew Dwan Ordinary 500

Olivia Dwan Ordinary 500

Jessica Dwan Ordinary 500

Michael Dwan Ordinary 7500

Amanda Dwan Ordinary 500

3

According to the Equity Solutions website, the Equity Solutions Group board members are:

Michael Dwan – Managing Partner (NB Alfred Michael Dwan)

Amanda Dwan – Director

Andrew Dwan – Managing Director, Infrastructure

John Connolly – Director of Finance

Anna Sarginson – Managing Director, Business Services

The website also says ‚Equity Solutions has a number of group companies which deliver a range of

services for our partners.‛ These companies include:

Bluesky Blue Support Services Equity Solutions Property Services North Consulting North & Partners Technical Pure Creative

Building 1000, Kings Reach, Stockport, Cheshire SK4 2HD is also the principal and registered office of

Helping Hands Trust Limited, Adventure Learning Schools and the Bright Tribe multi-academy trust.

4

Bright Tribe Trust

Bright Tribe (multi-academy) Trust is a company limited by guarantee. It was incorporated on 16 July 2012 and the Memorandum and Articles of Association were amended on 19 December 2013.

Company Number 8144578

Company Bright Tribe Trust

Date of Financial Statement

31 August 2014

Member Helping Hand Trust

Member My World Trust

Member Mr A Elson

Trustee Helping Hand Trust

(represented by Mr A M Dwan)

Trustee My World Trust

(represented by Mr A Mawla)

Trustee Mr A Elson

Trustee Prof D Hopkins

Trustee Mr J Smith

Trustee Miss A Sarginson

Trustee Mrs K Kirkham

Trustee Mr T Flanagan

Trustee Mr S Moore

The trustees of Bright Tribe Trust are also directors of the charitable company for the purposes of company law. The charitable company is known as Bright Tribe Trust.

5

Bright Tribe’s founders were the Helping Hands Trust and the My World Trust.

Company Number 06768956 08139668

Company Helping Hands Trust My World Trust

Date of Financial Statement

31 March 2014 31 March 2014

Member Mr A M Dwan Mr A M Dwan

Member R P Parkinson Mr T Flanagan

(appointed 13/02/2014)

Member Mr C Howell (resigned

24/03/2014)

Trustee Mr A M Dwan Mr A M Dwan

Trustee Mrs A J Dwan A Mawla

Trustee Miss J P Dwan

Trustee Miss O Dwan

Trustee Miss A Sarginson

Trustee Mr T Flanagan (joined

13/02 2014)

Mr T Flanagan (appointed

13/02/2014)

Trustee Mr C Howell (resigned

24/03/2014) Mr C Howell (resigned

24/03/2014)

There are now 8 schools that have converted to academies with Bright Tribe Trust.

Date Local Authority School

1 January 2014 Cumbria Whitehaven Academy

1 February 2014 Oldham Werneth Primary

1 December 2014 Suffolk Castle Hill Infant

1 December 2014 Suffolk Castle Hill Junior

1 December 2014 Suffolk Cliff Lane Primary

1 January 2015 Suffolk Alde Vale Academy

13 April 2015 Essex Colchester Academy

It appears that when schools join the Bright Tribe Trust some staffing is restructured.

The accounts to 31 August 2014 show that severance costs of £238,745 were incurred and they also

show that £462,000 was spent on secondments.

6

The Bright Tribe website says that

‚Being part of the Bright Tribe community means that schools are entitled to, and have access to, a range of school management and administrative support services. These functions and services are provided either directly by Bright Tribe or through a rigorously procured and performance measured supply chain.‛

These services are managed centrally to enable our academies to focus on delivering the very best education for their pupils and their communities. This also ensures consistent quality of service provision, provides operational efficiencies and cost savings and ensures best value.‛

The Bright Tribe Value for Money statement (2014) says that

‚Contracts have been reviewed and where better value or service could be achieved, contracts have been awarded to alternative providers‛

Paragraph 2.5.2 of the Academies Financial Handbook 2013 (Paragraph 3.1.3 Academies Financial

Handbook 2014) says that ‚Academy Trusts must ensure that…. a competitive tendering policy is in

place and applied’.

Bright Tribe has established a wholly owned subsidiary company called Bright Tribe Education Services

Ltd. The accounts for the year to 31 August 2014 show turnover of £534,000 and cost of sales of

£30,000 resulting in a gross profit of £504,000. But the net profit is shown as £nil as administrative

expenses are also shown as £504,000.

Bright Tribe Trust is connected to another multi-academy trust, the Adventure Learning Academy Trust,

via Helping Hands Trust which is a member of both charities. Both multi-academy trusts say that they

‘ensure that value for money is achieved by working collaboratively together across all areas of

operations.’

7

Adventure Learning Academy Trust

Adventure Learning Academy Trust is a company limited by guarantee. It was incorporated on 18 July 2013 and the Memorandum and Articles of Association were amended on 30 May 2013.

Company Number 08614382

Company Adventure Learning

Academies Trust

Date of Financial Statement

31 August 2014

Member Helping Hand Trust

Member Adventure Learning

Schools

Member Mr A Elson

Trustee Helping Hand Trust

(represented by Miss A Sarginson)

Trustee Adventure Learning

Schools (represented by Mr A M Dwan)

Trustee Mr A Elson

Trustee Prof D Hopkins

Trustee Mr J Smith

Trustee Miss A Sarginson

Trustee Mrs K Kirkham

Trustee Mr T Flanagan

Trustee Mr S Moore

Trustee Mrs S Davey

According to the website the founding partners are Adventure Learning Schools (formed in 2009), Helping Hands Trust (formed in 2009) and My World Trust is a supporting partner.

There are now 5 schools that have converted to academies with Adventure Learning Academies Trust.

Date Local Authority School

1 June 2014 Cornwall Fowey River Academy

1 June 2014 Cornwall Liskeard Hillfort Primary

1 June 2014 Cornwall Alternan Primary

1 June 2014 Cornwall Gulval Primary School

1 January 2015 Cornwall Tywardreath Primary School

It also appears that when schools join the Adventure Learning Academy Trust some staffing is

restructured.

8

The accounts to 31 August 2014 show that severance costs of £24,550 were incurred and they also

show that £319,000 was spent on secondments.

The Adventure Learning Academy Trust (ALAT) website says

Being part of the ALAT community means that schools are entitled to, and have access to, a range of school management and administrative support services. These functions and services are provided either directly by ALAT or through a rigorously procured and performance managed supply chain.

These services are managed centrally to enable our academies to focus on delivering the very best education for their students and their communities. This also ensures consistent quality of service provision, provides operational efficiencies and cost savings and ensures best value.

The Adventure Learning Academy Trust Value for Money statement (2014) says that

‚Contracts have been reviewed and where better value or service could be achieved, contracts have been awarded to alternative providers‛

‚The academy trust promotes fair competition through quotations and tenders (where necessary) in accordance with its Financial Regulations, to ensure that goods and services are secured in the most economic, efficient and effective way. The trust also collaborates with other academy trusts, single academies and other education providers to widen shared activity and procurement, ensuring value for money for the academy trust.‛

The address for Adventure Learning Academies Trust is given as CMA House, Ground Floor, Newham Road, Truro, TR1 2SU

The address for a company called Community 1st Cornwall Ltd is also given as CMA House,

Ground Floor, Newham Road, Truro, TR1 2SU. Community 1st Cornwall Ltd is a subsidiary of Equity

Solutions Asset Management Ltd.

9

Bright Tribe Trust and Adventure Learning Trust

Governance

The Boards and Trustees of both multi-academy trusts are almost identical

Company No 8144578 08614382

Bright Tribe Trust Adventure Learning

Academies Trust

Date of Acounts 31 August 2014 31 August 2014

Member Helping Hand Trust

(represented by Mr A M Dwan)

Helping Hand Trust (represented by Miss

A Sarginson)

Member My World Trust

(represented by Mr A Mawla)

Adventure Learning Schools (represented

by Mr A M Dwan)

Member Mr A Elson Mr A Elson

Trustee Helping Hand Trust

(represented by Mr A M Dwan)

Helping Hand Trust (represented by Miss

A Sarginson)

Trustee My World Trust

(represented by Mr A Mawla)

Adventure Learning Schools (represented

by Mr A M Dwan)

Trustee Mr A Elson Mr A Elson

Trustee Prof D Hopkins Prof D Hopkins

Trustee Mr J Smith Mr J Smith

Trustee Miss A Sarginson Miss A Sarginson

Trustee Mrs K Kirkham Mrs K Kirkham

Trustee Mr T Flanagan Mr T Flanagan

Trustee Mr S Moore Mr S Moore

Trustee Mrs S Davey

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2014

record that Helping Hand Trust was represented by Mr A M Dwan and My World Trust by Mr A Mawla.

The Annual Report and Financial Statements of Adventure Learning Academies Trust state that Helping

Hand Trust was represented by Miss A Sarginson and Adventure Learning Schools by Mr A M Dwan.

10

Central Services

The Bright Tribe Financial Statements (to 31 August 2014) say ‘Bright Tribe’s Head Office is charged to

Academies on a flat percentage of recurrent GAG income and includes personnel working in the

following areas; Governance Services, Educational management and support services, Human

Resources, Financial services, Communications and Marketing, Community Services and Executive

Leadership. Also included within the percentage is a range of fixed costs which are absorbed at head

office, such as audit and legal costs.’

The Adventure Learning Academy Trust Financial Statements (to 31 August 2014) say ‘Adventure

Learning’s Head Office is charged to Academies on a flat percentage of recurrent GAG income and

includes personnel working in the following areas; Governance Services, Educational management and

support services, Human Resources, Financial services, Communications and Marketing, Community

Services and Executive Leadership. Also included within the percentage is a range of fixed costs which

are absorbed at head office, such as audit and legal costs.’

Central Services

Bright Tribe

£’000

The Whitehaven Academy 184

Werneth Primary School 65

Sub Total 249

Adventure Learning

Academy Trust

£’000

Fowey River Academy 4

Liskeard Hillfort Primary 49

Alternan Primary 10

Gulval Primary School 18

Sub Total 81

Total 330

11

Core Team

The Core Teams at Bright Tribe and Adventure Learning multi-academy trusts are almost identical.

Bright Tribe Trust Adventure Learning

Academies Trust

Core Team Core Team

Director of Education Prof David Hopkins Director of Education Prof David Hopkins

Chief Operating Officer Joe Smith Chief Operating Officer Joe Smith

Director of Schools Kathy Kirkham Director of Schools Kathy Kirkham

Senior Regional Director Gary Kelly Senior Regional Director Gary Kelly

Director of Business Services Anna Sarginson Director of Business Services Anna Sarginson

Finance Director David Watson Finance Director David Watson

Regional Director Andrew Fell Regional Director Andrew Fell

Education Adviser post 16 Craig Ivison Education Adviser post 16 Craig Ivison

Senior Education Adviser primary Sonja Butterworth Senior Education Adviser primary Sonja Butterworth

Education Adviser Gail Kemp Education Adviser Gail Kemp

Education Adviser Yvonne Sharples Education Adviser Yvonne Sharples

Education Adviser Callum Jones Education Adviser Callum Jones

Learning Mentor David Watts Learning Mentor David Watts

Partnerships and Procedures Director

Anne-Marie Winter Partnerships and Procedures

Director Anne-Marie Winter

School Relationships Manager Val Oakwell School Relationships Manager Val Oakwell

Communications and Marketing Manager

Wendy Singleton Communications and Marketing

Manager Wendy Singleton

Communications and Marketing

Officer Rebecca Fice-Thomson

HR Manager Jane Davies HR Manager Jane Davies

HR Administrator Laura Bradbury

Procurement Manager Simon Evans Procurement Manager Simon Evans

Regional Business Manager Stuart Robinson Regional Business Manager Victoria Welch

Business Manager Tony Graham Business Manager

Management Accountant Russell Davis

PA Andrea Moore-Kelly PA

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Related Party Transactions

Bright Tribe and Adventure Learning Academy Trust both have the following statements under the heading Related Party Transactions in the Annual Report and Financial Statements (to 31 August 2014)

Owing to the nature of the Academies operations and the composition of the board of trustees being drawn from local public and private sector organisations, it is inevitable that transactions will take place with organisations in which a member of the board of trustees may have an interest.

All transactions involving such organisations are conducted at cost and in accordance with the Academies financial regulations and normal procurement procedures.

Bright Tribe Trust also includes the following

Adventure Learning Academy Trust is a charity in which Helping hands Trust, J Smith, A Elson, k Kirkham, A Sarginson and T Flanagan are trustees. Bright Tribe Trust works closely with Adventure Learning Academy Trust sharing appropriate resources and supply chain services. Included within debtors is a balance of £50,591 (2013 - £nil) due to this company. During the year sales were made to this company of £535,146 (2013 - £nil)

Adventure Learning Academies Trust also includes the following

Bright Tribe Trust is a charity in which Helping hands Trust, J Smith, A Elson, k Kirkham, A Sarginson and T Flanagan are trustees. Adventure Learning Academies Trust works closely with Bright Tribe Trust sharing appropriate resources and supply chain services. Included within creditors is a balance of £15,394 (2013 - £nil) due to this company. During the year purchases were made to this company of £285,358 (2013 - £nil)

Bright Tribe Education Services Limited is a wholly owned subsidiary of Bright Tribe Trust and a company in which J Smith and D Hopkins are directors. Included within creditors is a balance of £35,197 (2013 - £nil) due to this company. During the year purchases were made from this company of £208,157 (2013 - £nil).

The £50,591 included within debtors in the Bright Tribe Financial Statements appears to be the sum of

the balance of £15,394 due to Bright Tribe Trust and the £35,197 due to Bright Tribe Education

Services Ltd.

However the Bright Tribe Trust Financial Statements say that during the year sales of £535,146 were

made to Adventure Learning Academy Trust but the Adventure Learning Academy Trust Financial

Statement only reports purchases of £285,358 from Bright Tribe Trust and purchases of £208,157 from

Bright Tribe Education Services Limited. There is a difference of £41,361 between the two financial

statements.

Professor David Hopkins Publishing Limited

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2014

state that Professor David Hopkins Publishing Limited is a company in which D Hopkins is a director.

Included within creditors is a balance of £12,500 (2013 - £nil). During the year purchases were made

from this company of £25,000 (2013 - £64,195).

13

According to the Professor David Hopkins Publishing Limited Annual Return to Companies House

dated 27 November 2014 the two Directors are Michael Dwan and Professor David Hopkins and the

shareholding is split between David Hopkins and Michael Dwan.

Name Type Shares Percentage Holding Value

David Hopkins Ordinary 50 50% 50 Michael Dwan Ordinary 50 50% 50

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2014

do not record that Michael Dwan is either a shareholder or a Director of Professor David Hopkins

Publishing Ltd in the statement of related party transactions.

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2013

make no reference to the purchases that were made with Professor David Hopkins Publishing Limited,

nor is there any statement of this related party transaction.

North Consulting Limited

According to the Annual Report for the year ended 30 April 2014 the Directors of are A M Dwan, J

Connolly, J Dwan and O Dwan.

Equity Solutions Asset Management Ltd own all 300 shares in North Consulting Ltd.

North Consulting Limited is Company Secretary for Bright Tribe Trust and its subsidiary Bright Tribe

Education Services Ltd.

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2013

and 31 August 2014 do not record any purchases from North Consulting Limited nor is there any

statement of a related party transaction in either Annual Report and Financial Statement.

E S Management Services Ltd

All 10,000 shares in E S Management Services are owned by Michael Dwan.

E S Management Services Ltd owns all 100 shares in Blue Support Services Limited.

The Directors Report for the year ended 30 April 2013 says

‚In terms of expansion, one area of particular interest is the education sector. There appears to be great opportunity in this field which the procurement team are currently exploring.‛

The Directors Report and Financial Statements for the year ended 30 April 2014 records

‚In addition, as an interim arrangement, property advice and reporting is also being delivered to two Academy trusts. This brings the total number of properties fully maintained and managed to twenty one and the total where some form of management is in place to thirty four‛

14

Blue Support Services Ltd

Blue Support Services is wholly owned by E S Management Services Ltd. The Directors Report and

Financial Statements of Blue Support Services Limited for the year ended 30 April 2014 state that the

Directors are A M Dwan and A Dwan.

The Annual Report and Financial Statements of Bright Tribe Trust for the year ended 31 August 2013

and 31 August 2014 and Adventure Learning Academy Trust for the year to 31 August 2014 make no

reference to purchases from either E S Management Services Ltd (or its subsidiary Blue Support

Services Limited) nor is there any statement of this related party transaction in either Annual Report

and Financial Statement.

Commando Joe’s Fun and Fitness Ltd

Commando Joe’s was established in 2009. It describes itself as ‚a leading provider of educational and

personal development activities to children and young people within a school environment.‛ Swansea

University have validated its results.

According to the Annual return dated 19 February 2015 Mr Terence Flanagan is one of the three

Directors of Commando Joe’s.

The Bright Tribe Value for Money statement (2014) says that

Commando Joe's programme implemented in Year 6, focussing on developing positive attitudes to learning and engaging hard to reach boys. Achieved big impact and is now being implemented in Years 4 and 5 in preparation for transition. Commando Joe’s also run the breakfast club and wake and shake sessions involving parents

The Annual Report and Financial Statement (Year to 31 August 2014) makes no reference to Mr T

Flanagan being a Director of Commando Joe’s nor is there any statement of this related party

transaction in the Annual Report and Financial Statement.

Pure Creative Ltd

The Annual Report for Pure Creative Ltd for the year ended 30 April 2014 says that the Directors were

A M Dwan, R J Miller and A Sarginson. The website says

Pure Creative provides a wide range of graphic design and web design solutions for all kinds of companies and organisations.

15

Equity Solutions Asset Management Ltd

According to the Directors Report and Financial Statements of Equity Solutions Asset Management

Limited for the year to 30 April 2014 (Registered 07974362)

‚At the year and the ultimate controlling party of the company and therefore the group was A M Dwan.‛

The Directors are listed as A Dwan and M Dwan with 500 and 7,500 ordinary £1 shares respectively.

The Directors Report and Financial Statements also state that

‚The Equity Solutions Management Services Group, Equity Solutions and Partners Limited, Educational Assets Limited and Green2Go Limited are connected through common control‛

The website says that the Equity Solutions Group board members are:

Michael Dwan – Managing Partner

Amanda Dwan – Director

Andrew Dwan – Managing Director, Infrastructure

John Connolly – Director of Finance

Anna Sarginson – Managing Director, Business Services

According to the website, Michael Dwan is the Managing Partner of Equity Solutions & Partners

Limited, a leading multi-disciplined infrastructure business.

According to the website Equity Solutions has a number of group companies which deliver a range of

services for our partners. They are listed as follows:

Bluesky

Blue Support Services

Community 1st Cornwall

Community 1st Oldham

Community 1st Sheffield

Community 1st Stockport

Equity Solutions Property Services

North Consulting

North & Partners Technical

Pure Creative

16

Conflict of Interests?

On 17 May 2015, Nicky Morgan, Secretary of State for Education told the BBC’s Andrew Marr show:

‚I don't think there's a place for profit-making schools in this country,‛

These arrangements create a perception that Bright Tribe Trust and Adventure Learning Academies

Trust appear to be developing as little more than undisclosed subsidiaries of E S Management Services

Ltd.

The governance arrangements are almost identical and appear to be significantly influenced

by Equity Solutions Board members

The core teams are almost identical and given the £462,000 and £319,000 was spent on

secondments by Bright Tribe and Adventure Learning Academies Trust respectively in the year

to 31 August 2014, it is not clear who the ultimate employer is for each member of the core

team

The business address of Adventure Learning Academies Trust appears to be the same as the

business address of Community 1st Cornwall, a subsidiary company of Equity Solutions Asset

Management Limited

There is evidence that relevant interests have not been disclosed, there appear to be

discrepancies between the two sets of financial statements in relation to the value of

transactions taking place between the two Multi Academy Trusts and there is evidence that

suggests that transactions may be taking place between companies that are owned by E S

Management Services Limited and the Multi Academy Trusts

It appears that other companies within the group may be being paid for goods and services

that they provide to the academies

There are various ways in which E S Management Services could be profiting from the Bright Tribe Trust

and Adventure Learning Academies Trust

1. The basis on which staff that form part of the core team or elsewhere are being ‘seconded’ or

‘charged for’ by companies within the Equity Solutions Group and whether any ‘overheads’ form

part of the charge.

Equity Solutions Asset Management Ltd has established subsidiaries that have developed Local

Improvement Finance Trust (LIFT) schemes for the NHS in Cornwall, Oldham and Sheffield. The

company structure consists is shown below

Equity Solutions Asset Management Ltd

Equity Solutions Lift Investments Cornwall Ltd

Community 1st Cornwall Ltd

Community 1st Cornwall

Holdco Ltd

COMMUNITY 1ST CORNWALL

(FOSTER BLOCK) LIMITED

COMMUNITY 1ST CORNWALL

(TORPOINT) LIMITED

COMMUNITY 1ST CORNWALL (CFPU) LIMITED

17

Each Community 1st company website says ‚The local Community 1st … team is available to discuss

how its supply chain can provide relevant partnering services to meet the bespoke requirements of its

local partners.‛ But the local teams appear to be identical in Cornwall, Sheffield and Oldham

Community 1

st

Cornwall Oldham Sheffield

Director Neil Charlesworth Neil Charlesworth Neil Charlesworth

Managing Director Infrastructure Andrew Dwan Andrew Dwan Andrew Dwan

Deputy Managing Director Infrastructure Neil Charlesworth Neil Charlesworth Neil Charlesworth

Senior Engineer Richard Scott Richard Scott Richard Scott

Community Engagement Team Anna Sarginson Anna Sarginson Anna Sarginson

Community Engagement Team Wendy Singleton Wendy Singleton Wendy Singleton

The website says Anna Sarginson and Wendy Singleton ‘both work with our public sector partners to

develop and deliver community based projects alongside our estate activities and developments, which

meet Community 1st …….. community programme objectives.’ Both Anna Sarginson and Wendy

Singleton are also part of the ‘core team’ for Bright Tribe Trust and Adventure Learning Academies

Trust.

2. Goods and services being purchased from companies with the Equity Solutions Group

3. Contracts being placed by the multi-academy trust with companies that form part of the Equity

Solutions Group

The Academies Financial Handbook 2013 makes it clear that

2.4.40 Novel payments or other transactions are those in which the academy trust has no experience, or are outside the range of normal business activity for the trust. 23 Contentious transactions are those which might give rise to criticism of the trust by the public or the media. It is difficult to be specific about what might constitute novel or contentious payments; it is for trusts to use their judgement about when they should seek the prior advice of the EFA. Public money must always be spent prudently and in ways that command broad public support.

It is not known whether the trusts ‘sought prior advice of the EFA’.

The Academies Financial Handbook 2014 makes it clear that

Chairs of boards of trustees and accounting officers must recognise the higher standard of public accountability resting with them, and must avoid real and perceived conflicts of interests in any connected party relationships.

It also says

3.1.19 Trusts must publish on their websites relevant business and pecuniary interests of trustees and members.

Neither website publishes this information.

18

The National Audit Office report on related party transactions (HC782) highlights the fact that

‚in May 2014, the Chief Executive of the Agency wrote to all academy trust accounting officers to remind them of their responsibilities for managing public money. In his letter he reminded academy trusts of the expectations set out for reducing the risks from connected parties, by avoiding conflicts of interest (our emphasis) and by meeting the ‘at cost’ principles and the expectations for transparent reporting‛

The ‘at cost’ principles that are set out in the Academies Financial Handbook state:

2.6.2 Academy trusts must pay no more than ‘cost’ for goods or services provided to it by the following persons (‘services’ do not include services provided under a contract of employment):

any member or trustee of the academy trust;

any individual or organisation connected to a member or trustee of the academy trust. For these purposes the following persons are connected to a member or trustee:

a relative of the member or trustee. A relative is defined as a close member of the family, or member of the same household, who may be expected to influence, or be influenced by, the person. This includes, but may not be limited to, a child, parent, spouse or civil partner;

an individual or organisation carrying on business in partnership with the member, trustee or a relative of the member or trustee;

a company in which a member or the relative of a member (taken separately or together), and/or a trustee or the relative of a trustee (taken separately or together), holds more than 20% of the share capital or is entitled to exercise more than 20% of the voting power at any general meeting of that company;

an organisation which is controlled by a member or the relative of a member (acting separately or together), and/or a trustee or the relative of a trustee (acting separately or together). For these purposes an organisation is controlled by an individual or organisation if that individual or organisation is able to secure that the affairs of the body are conducted in accordance with the individual’s or organisation’s wishes;

any individual or organisation that is given the right under the trust’s articles of association to appoint a member or trustee of the academy trust; or any body related to such individual or organisation;

any individual or organisation recognised by the Secretary of State as a sponsor of the academy trust; or any body related to such individual or organisation.

2.6.4 Academy trusts must ensure that any agreement with the individuals or organisations referred to in section 2.6.2 to supply goods or services to the trust is properly procured and is:

supported by a statement of assurance from that individual or organisation to the trust confirming that their charges do not exceed the cost of the goods or services; and

on the basis of an open book agreement including a requirement for the supplier to demonstrate clearly, if requested, that their charges do not exceed the cost of supply.

The ‘at cost’ approach raises questions about ‘contestability’, provides no assurance about service

‘quality’ and does not mean that best value is being secured.

19

Recent Developments – Transfer of Staff to ‘The Knowledge Network (UK) Ltd’

Colchester Academy joined the Bright Tribe Multi Academy Trust on 13 April 2015.

Just two months later, on 15 June 2015, Bright Tribe notified the trade unions of its intention to transfer

some staff to Blue Support Services Limited on 1 August 2015.

The letter dated 15 June 2015 stated

‘as discussed during the transfer of staff to the Bright Tribe Trust, it was always the Trust’s intention to review the provision of support functions, including cleaning, catering and maintenance. Having completed this, the proposal is to outsource these services to a provider with the resources and infrastructure to develop provision further....’

Subsequently, Bright Tribe Trust notified the trade unions on 1 July that it proposed to transfer IT

management staff to a company called The Knowledge Network (UK) Ltd.

The Directors of The Knowledge Network (UK) Ltd are listed in the Annual Return (2 February 2015) as

Neil Charlesworth

Michael Dwan

Richard Parkinson

Anna Sarginson

Michael Dwan and Anna Sarginson are also trustees of the Bright Tribe Trust.

According to the Annual Return to Companies House, Intelligent Investments (UK) Ltd owns all 100

shares in The Knowledge Network (UK) Ltd. According to the Annual Return (1 February 2015), all 100

shares in Intelligent Investments (UK) Ltd are owned by Michael Dwan.

Proposed transfer of staff to Blue Support Services

This letter dated 15 June 2015 was the first time that the trade unions learnt that a ‘review’ had been

undertaken.

UNISON wrote to Bright Tribe on 7 July 2015 advising that

‘UNISON would expect that all options are considered, including an in-house service option, and that UNISON would be involved and consulted as part of that review‛

UNISON also sought clarification about the procurement process that had led to the selection of Blue

Support Services Limited and asked Bright Tribe to withdraw the proposals to provide time for

discussions with the trade unions about the procurement processes with a view to reaching agreement

about the processes that should be followed and the role of trade unions within that process.

Specifically UNISON asked

1. When was the contract advertised?

2. What was the nature of the procurement exercise (e.g. open, restricted)?

3. What was the closing date for tender submissions?

4. Is there a pre-qualification questionnaire and can UNISON be supplied with a copy?

5. What are the workforce requirements in the tender specification, and can UNISON be

supplied with a copy?

20

6. How many contractors tendered?

7. When was shortlisting undertaken?

On 13 July 2015 Bright Tribe responded to UNISON. The questions posed by UNISON about the procurement process were not answered. Instead Bright Tribe advised that

The Trust benefits from the support of a range of organisations who are able to provide interim services on a cost or less basis, pending longer term arrangements being put in place, which will be possible when both the precise nature and technical requirements of the required services are clear and when the Trust's position in relation to Public Contract Regulations 2015 compliance in relation to the ongoing provision of those services can be determined.

The Trust takes regular Legal and compliance advice and takes all appropriate steps to see that it remains at all times compliant. We are committed to proceeding with the consultation and you will have the opportunity to raise relevant questions as part of that process.

Bright Tribe declined to withdraw the proposed transfer proposals. UNISON replied on 14 July advising Bright Tribe that the Public Contract Regulations had come into force on 26 February 2015 and drawing attention to Procurement Policy Note 3 issued by the Crown Commercial Service, the Academies Financial Handbook (para 3.1.3) and the DfE Academies procurement resource which states:

‚Your Academy Trust must apply the basic rules of procurement whenever it spends public money. These rules aim to ensure that public funds are spent openly and fairly, and make the most of every budget, while protecting you against legal challenges, financial penalties and damage to your Academy’s reputation‛

UNISON concluded by advising Bright Tribe that it would now be taking ‘more formal steps’ and again

urged Bright Tribe to withdraw the transfer proposal.

Bright Tribe replied on 15 July 2015

Bright Tribe now categorically confirmed ‚that the procurement activity of Bright Tribe Trust (in its capacity as a Contracting Authority) is indeed governed by the Public Contracts Regulations 2015.‛

Advised that UNISON’s ‚...analysis of PPN03 and the Academies Financial Handbook para 3.1.3 (with which I am very familiar) is accurate but, in the circumstances, is also irrelevant as are the conclusions you reach based upon it.‛

The letter then concluded

‚Once you have had an opportunity to consider what I have said, I hope you will agree with me that embarking on the kind of action envisaged by the last paragraph of your letter would not, in any sense, be in the best interests of Unison's members. The consultation procedures are continuing and this will give the opportunity for relevant concerns to be addressed.‛

By the time this response was received, UNISON had already written to the Education Funding Agency

drawing their attention to the fact that the letter dated 15 June ‚makes no reference to the fact that

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the company that it is proposed to provide these support functions is owned by one of the trustees (via

Helping Hands Trust).‛

On 30 July the Education Funding Agency notified UNISON that officials ‚would investigate as a

matter of urgency‛.

UNISON pressed the EFA to advise Bright Tribe Trust to put the transfer ‘on hold’ pending the outcome

of their investigation. The EFA advised that it could not require Bright Tribe to put the transfer ‘on hold’

but that UNISON could request that Bright Tribe Trust place the transfer ‘on hold’ having been advised

by the EFA that it would be investigating the matter.

UNISON followed the advice of the EFA advised Bright Tribe Trust accordingly.

Bright Tribe responded as follows

‚I have not received any correspondence from the EFA in relation to the matter of the TUPE

transfer at Colchester Academy and therefore we shall be proceeding with the transfer as

planned.‛

Proposed transfer of staff to ‘The Knowledge Network (UK) Ltd’

This proposal was initially withdrawn but in September 2015 the proposed transfer of staff was re-

activated.

Adventure Learning Academies Trust

It further appears that catering, cleaning and facilities management services in some of the academies

that have joined Adventure Learning Academies Trust are now also being delivered by Blue Support

Services Limited. Precise details of how these services were procured are not known.

Freedom of Information requests

On 14 August 2015 UNISON made Freedom of Information requests to Bright Tribe Trust and to

Adventure Learning Academies Trust. The information sought by those requests is described in

Appendix 3.

On 11 September Bright Tribe and ALAT replied confirming receipt, that a response was being

prepared and the deadline that was being worked to.

‚I write further to our email of 14th August acknowledging your request of the same date. I confirm that we are preparing a response in accordance with our obligations under the legislation. However, in light of the final paragraph of your letter, I feel it is appropriate to clarify that, as an academy proprietor, in accordance with The Freedom of Information (Time for Compliance with Request) Regulations 2010, the statutory time scale for compliance is twenty school days from the date of receipt of your request. For your information we are working to a deadline of 30th September. We will be in touch with you in due course. Yours sincerely, Kathy Kirkham‛

On 18 September Bright Tribe and ALAT wrote again advising that payment would be required for each Trust to continue to proceed in order to be able to respond to the request.

‚We write further to your letter of 14th August 2015 and our subsequent correspondence.

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Section 12 of the Freedom of Information Act 2000 (FOIA) makes provision for public authorities to refuse requests for information where the cost of dealing with them would exceed the appropriate limit which, in our case, is £450. We have estimated that it will cost more than the 'appropriate limit' to deal with your request. To proceed with your request we will require payment of a fee of £875.00. This charge has been calculated in accordance with section 13 of FOIA and the Freedom of Information and Data Protection (Appropriate Limit and Fees) Regulations 2004. We will continue with the search on receipt of payment. However, if we have not received a reply within three months we will cancel the request. If you wish to narrow the scope of your request, we may be able to reconsider the position. Any reformulated request we receive from you will be treated as a fresh request. If you are dissatisfied with the handling of your request, you have the right to ask for an

internal review.‛

Conclusion

The NAO has already identified some of the difficulties associated with this ‘at cost’ policy

‚The measurement of ‘cost’ or ‘no profit’ is subjective and will be difficult to evidence and audit. For example, different suppliers will absorb their overheads at different rates, making it difficult for an academy to demonstrate whether goods and services it has obtained from a related party were provided ‘at cost’‛

The complex arrangements and the lack of transparency described earlier raise important questions about how the public purse is being protected. At the time, Margaret Hodge, the then Chair of the Public Accounts Committee, said

‚Related party transactions are a big issue … I am very concerned that the agency’s reliance on whistleblowers and ad hoc reports means that many more questionable business relationships could exist and have gone unchallenged, putting public money at risk.‛

The matters identified in this report contribute new evidence for an important public debate. At the

very least they need to be investigated and the questions that are prompted by the earlier analysis in

Appendix 3 need clear answers.

UNISON sought answers to those questions by making requests under the Freedom of Information Act.

Both Bright Tribe Trust and Adventure Learning Academies Trust have used the regulations to first

delay and subsequently require payment for information that UNISON believes should properly be in

the public domain.

UNISON therefore requests that answers to these questions are now sought by either the EFA, the

NAO or the Education Select Committee.

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Appendix 1

E S Management Services Limited Corporate Tree

Level Company Name Registration

Number Trading Status

1 E S MANAGEMENT SERVICES LIMITED 8159130 Active

2 EQUITY SOLUTIONS PROPERTY SERVICES LIMITED 4361726 Active

2 BLUE SUPPORT SERVICES LIMITED 7065599 Active

2 NORTH & PARTNERS TECHNICAL LIMITED 8384888 Active

3 EQUITY SOLUTIONS & PARTNERS LIMITED 5197900 Active

4 EQUITY SOLUTIONS (MOORLAND ROAD) LIMITED 5699438 Active

4 EQUITY SOLUTIONS DEVELOPMENT SERVICES LIMITED 5989598 Active

4 BLUE SKY EQUITY VENTURES LIMITED 6775980 Active

5 PURE CREATIVE LIMITED 4387745 Active

5 GREEN2GO LIMITED 6234285 Active

5 BLUE SKY DESIGN SERVICES LIMITED 6235182 Active

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Appendix 2

Equity Solutions Asset Management Limited Corporate Tree

Level Company Name Registration

Number Trading Status

1 EQUITY SOLUTIONS ASSET MANAGEMENT LIMITED 7974362 Active

2 NORTH CONSULTING LIMITED 3277334 Active

2 EQUITY SOLUTIONS LIFT INVESTMENTS LIMITED 4638170 Active

3 EQUITY SOLUTIONS LIFT INVESTMENTS CORNWALL LIMITED 5039648 Active

3 EQUITY SOLUTIONS LIFT INVESTMENTS OLDHAM LIMITED 5128177 Active

3 EQUITY SOLUTIONS LIFT INVESTMENTS SHEFFIELD LIMITED 5128311 Active

3 EQUITY SOLUTIONS LIFT INVESTMENTS STOCKPORT LIMITED 6109673 Active

4 COMMUNITY 1ST CORNWALL LIMITED 5039650 Active

4 COMMUNITY 1ST OLDHAM LIMITED 5128155 Active

4 COMMUNITY 1ST SHEFFIELD LIMITED 5128325 Active

4 COMMUNITY 1ST STOCKPORT LIMITED 6109740 Active

5 COMMUNITY 1ST CORNWALL (FOSTER BLOCK) LIMITED 5716936 Active

5 COMMUNITY 1ST CORNWALL (CFPU) LIMITED 6063196 Active

5 COMMUNITY 1ST CORNWALL (HOLDCO) LIMITED 8286865 Active

5 COMMUNITY 1ST OLDHAM (BLOCK LANE) LIMITED 5806797 Active

5 COMMUNITY 1ST OLDHAM (CHEW VALE) LIMITED 5848048 Active

5 COMMUNITY 1ST OLDHAM (CHADDERTON) LIMITED 6548550 Active

5 COMMUNITY 1ST OLDHAM TRANCHE 2 LIMITED 7098566 Active

5 COMMUNITY 1ST SHEFFIELD (HOLDCO) LIMITED 7717392 Active

6 COMMUNITY 1ST CORNWALL (TORPOINT) LIMITED 8288061 Active

6 COMMUNITY 1ST OLDHAM (WERNETH AND SHAW) LIMITED 7059656 Active

6 COMMUNITY 1ST SHEFFIELD (TRANCHE 2) LIMITED 7719049 Active

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Appendix 3

Initial questions prompted by the preceding analysis

Bright Tribe Trust

1. The Bright Tribe Value for Money statement (2014) states that

‚Contracts have been reviewed and where better value or service could be achieved, contracts have been awarded to alternative providers‛

What contracts have been reviewed, what was the date on which the review was started and

completed, what was the procurement process, what is the name of the company or other organisation

that provided the service and where the contract has been awarded to an alternative provider, what is

the name of that alternative provider and how many staff were transferred?

In each financial year, how much expenditure has been incurred by either Bright Tribe Trust or Bright

Tribe Education Services Ltd with companies that are owned by E S Management Services Ltd, Equity

Solutions Asset Management Limited or other companies owned or controlled by Michael Dwan?

2. The Bright Tribe Annual Report and Financial Statements record expenditure on secondments of

£246,000 in the year to 31 August 2013 and £462,000 in the year to 31 August 2014

For each year, for each person seconded which organisation seconded them and what was the payment

made to that organisation for the secondment?

3. Bright Tribe Trust has established a wholly owned subsidiary company called Bright Tribe Education

Services Ltd. The accounts for the year to 31 August 2014 show turnover of £534,000 and cost of

sales of £30,000 resulting in a gross profit of £504,000. But the net profit is shown as £nil as

administrative expenses are also shown as £504,000.

What is the detailed breakdown of the administrative expenses that are shown as totalling £504,000 in

the accounts for the year to 31 August 2014?

4. Register of Business Interests

What does the Register of Business Interests say and what are the measures that have been put in place

to manage any conflict of interests?

5. Statements of Assurance Are there supporting statements of assurance from the companies that are subsidiaries of E.S Management Services or Equity Solutions Asset Management Ltd to the trust confirming that their charges do not exceed the cost of the goods or services; and how does that sit with the statements in the E S Management Services Limited Directors Report for the year ended 30 April 2013 which says:

‚In terms of expansion, one area of particular interest is the education sector. There appears to be great opportunity in this field which the procurement team are currently exploring.‛

And how does that sit with the E S Management Services Limited Directors Report and Financial

Statements for the year ended 30 April 2014 which records

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‚In addition, as an interim arrangement, property advice and reporting is also being delivered to two Academy trusts. This brings the total number of properties fully maintained and managed to twenty one and the total where some form of management is in place to thirty four‛

6. Open Book Agreement Is there an open book agreement with the companies that are subsidiaries of E.S Management Services or Equity Solutions Asset Management Ltd and how has the requirement to demonstrate clearly that charges do not exceed the cost of supply been demonstrated? Has it been independently audited?

Adventure Learning Academy Trust

1. The Adventure Learning Academy Trust Value for Money statement (2014) says that

‚Contracts have been reviewed and where better value or service could be achieved, contracts have been awarded to alternative providers‛

What contracts have been reviewed, what is the date on which the review was started and completed,

what was the procurement process, what is the name of the company or other organisation that

provided the service and where the contract has been awarded to an alternative provider, what is the

name of that alternative provider and how many staff have transferred?

In each financial year, how much expenditure has been incurred by Adventure Learning Academy Trust

with companies that are owned by E S Management Services Ltd, Equity Solutions Asset Management

Limited or other companies owned or controlled by Michael Dwan?

2. The Adventure Learning Academy Trust Annual Report and Financial Statements record

expenditure on secondments of £319,000 in the year to 31 August 2014

For each person seconded which organisation seconded them and what was the payment made to that

organisation for the secondment?

3. Register of Business Interests

What does the Register of Business Interests say and what are the measures that have been put in place

to manage any conflict of interests?

4. Statements of Assurance Are there supporting statements of assurance from the companies that are subsidiaries of E.S Management Services or Equity Solutions Asset Management Ltd to the trust confirming that their charges do not exceed the cost of the goods or services; and how does that sit with the statements in the E S Management Services Limited Directors Report for the year ended 30 April 2013 which says:

‚In terms of expansion, one area of particular interest is the education sector. There appears to be great opportunity in this field which the procurement team are currently exploring.‛

And how does that sit with the E S Management Services Limited Directors Report and Financial

Statements for the year ended 30 April 2014 which records

27

‚In addition, as an interim arrangement, property advice and reporting is also being delivered to two Academy trusts. This brings the total number of properties fully maintained and managed to twenty one and the total where some form of management is in place to thirty four‛

5. Open Book agreement Is there an open book agreement with the companies that are subsidiaries of E.S Management Services or Equity Solutions Asset Management Ltd and how has the requirement to demonstrate clearly that charges do not exceed the cost of supply been demonstrated? Has it been independently audited?