Academy school group allegedly strips its assets before transfer

“Wakefield City Academies Trust now stands accused of “asset stripping” after it transferred millions of pounds of the schools’ savings to its own accounts before collapsing. On 8 September it released a statement announcing it would divest itself of its 21 schools as it could not undertake the “rapid improvement our academies need”. It said that new sponsors would be found to take them over.

… Hemsworth Arts and Community Academy, a mixed secondary school in Pontefract, had £220,000 of funds, raised by volunteers at Christmas markets and other school events, transferred to the trust’s accounts earlier this year. It also saw a further £216,000, which had been held back for capital investment, moved over. “It’s not the trust’s money. It’s our money,” said a former governor at the school, who did not want to be named. “It’s money for the people in the area, their children and their grandchildren. It wasn’t for them to take.”

Heath View primary school in Wakefield had £300,000 transferred to the trust in September 2016. Another school, Wakefield City Academy, had more than £800,000 transferred towards the end of 2015. In both cases the trust told the schools’ governors that the transfer was a loan. Wakefield City Academy even received a number of small repayments. However, since the trust’s collapse both schools have been told that it no longer acknowledges the transactions as loans.

For Wakefield City Academy, the money had been held back to provide a financial cushion for when a particularly large cohort of children – born during the early 2000s baby boom – arrive in the secondary school system. “This money was our rainy day money,” said Kevin Swift, chair of the school’s local governing body. “It wasn’t just left under the mattress. It was money that we had anticipated we would have a very definite need for.”

High Crags Academy primary school in Shipley was instructed by the DfE to join the trust in April 2016 after being put into special measures the previous year. When it joined it had a surplus of £178,000, which was immediately moved to centralised accounts….

… Parents, teachers and governors say the financial problems at the Wakefield City Academies Trust had been clear for nearly a year before it collapsed. In November 2016 a draft DfE report leaked to the Times Education Supplement stated that the trust was in an “extremely vulnerable position as a result of inadequate governance, leadership and overall financial management”.

The draft raised concerns that the chief executive, Mike Ramsay, had been paid more than £82,000 for 15 weeks’ work, despite the fact that the trust was facing a large budget deficit. The DfE has so far refused freedom of information requests to see the final report.

The previous month, it had emerged that the trust had paid almost £440,000 to IT and clerking companies owned by Ramsay and his daughter. In a statement at the time, the trust said internal vetting procedures had found that the contracts represented the best value.

Although serious questions have been raised about financial managment, there is no suggestion of fraudulent activity….

While a spokesman for the Wakefield City Academies Trust declined to comment, the DfE said a failing academy trust could never profit from the transfer of its schools to new sponsors. A spokesman said: “We are working with the trust to ensure that there is minimal disruption for pupils.

“We are also working with the preferred trusts and schools to ensure they have the right support and resources they need to improve the outcomes for pupils as quickly as possible, which will include the necessary pupil funding.” … “

https://www.theguardian.com/education/2017/oct/21/collapsing-wakefield-city-academies-trust-asset-stripped-schools-millions-say-furious-parents

2 thoughts on “Academy school group allegedly strips its assets before transfer

  1. “Heath View primary school in Wakefield had £300,000 transferred to the trust in September 2016. Another school, Wakefield City Academy, had more than £800,000 transferred towards the end of 2015. In both cases the trust told the schools’ governors that the transfer was a loan. Wakefield City Academy even received a number of small repayments. However, since the trust’s collapse both schools have been told that it no longer acknowledges the transactions as loans.”

    vs.

    “Although serious questions have been raised about financial management, there is no suggestion of fraudulent activity…”

    I am not a lawyer, and I don’t know about the legal definitions of fraud. But when a company transfers funds and tells the governors that it is a loan, and then later refuses to pay it back and says it wasn’t a loan, that certainly sounds like fraud to me.

    Academy Schools are an invention of the Conservative Government, and it is their responsibility to ensure that the law clearly defines what companies running Academy Schools can and can’t do with public money and to prevent them from being able legally to transfer public funds to themselves. In this regard (as indeed in many others) they appear to have failed completely to do this.

    Once again, we have to wonder whether there is a conflict of interest if companies running Academy Schools are themselves (or via shareholders or executives) donors (or sponsors) of the party in government.

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    • And in case people think that the money that has disappeared is not relevant to them, remember that this money originates from YOUR taxes. It is YOUR money that has been transferred without proper justification to a private company. Money that you worked hard to earn and then paid in taxes – at a time when your own finances have been squeezed for seven years in the name of austerity by the current government – the same government who has apparently let them get away with transferring it.

      Next time there is an election, think carefully about whether you want to support a political party that (either deliberately or through incompetence or negligence) allows this to happen.

      Like

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