A controversial multi-academy trust has paid more than £680,000 to firms owned or controlled by a board member who runs its sponsor company.

Bright Tribe Trust, which runs 10 schools in the North West and South East, was last year investigated by the Education Skills and Funding Agency over “related party transactions” made by the trust to companies run by Michael Dwan, a venture capitalist.

Mr Dwan is the founding trustee of Helping Hands Trust - which set up the MAT with one other company - and sits as its representative on the Bright Tribe Trust board.

He is also a director of three other businesses that have been paid a total of £681,000 from Bright Tribe in the year until 31 August 2017 - down from £3.9 million the previous year.

The latest accounts filed by Bright Tribe, for 2016-17, state that purchases were made at “cost or less” from the companies.

The £681,000, the accounts state, “can be analysed as £342k cost of staff TUPE’d from the trust/other recharges, £339,000 secondments the trust and nil services provided to the trust”.

It document adds: “The costs attributed to TUPE and other associated recharges are not discretionary and are fixed by law in the case of TUPE and the other recharges relate to elements such as utilities, which are also not discretionary. To be clear, no charge has been made for any additional services provided by any party connected to Dr Dwan.”

Tes has asked the trust for further clarifications.

The accounts say that the relationships with the companies concerned will not continue.

The three companies that received payments were:

• North Consulting Ltd, a business and management consultancy service. During the year purchases were made from this company of £339,000.
• Blue Support Services, a facilities management company. During the year purchases of £308,000 were made from this company relating to the cost of staff transferred from the trust or other recharges.
• North and Partners Technical Ltd, a construction company. Purchases of £34,000 were made, all relating to secondments from the company to Bright Tribe Trust.

A Bright Tribe spokesperson said: “This relates in the main to staffing secondment arrangements that were in place previously - they ended in March 2017.”

Related-party transactions involve payments from an academy trust to an organisation or person connected to the trust.

They are permitted under the Academies Financial Handbook, provided that open and transparent procurement procedures have been followed, and any potential conflicts of interest are adequately and appropriately managed.

But at the Hosue of Commons public accounts committee yesterday, MPs raised concerns that the system was “open to abuse”.

A review of financial governance at both Bright Tribe and Adventure Learning Academies Trust published in November 2016 revealed that in July 2015 the ESFA had received allegations centred on “procurement practices and related party transactions” and the trusts were required to put a new procurement model in place.

A follow-up review in September 2016 said the trust had proposed the provision of in-house services, via a new facilities management subsidiary.

The review said that “if this model is successfully implemented as described it should address the connected / related party issues”.

The trust also became embroiled in controversy last year after staff at Whitehaven Academy, in Cumbria, wrote a letter asking for the school to be removed from the trust, complaining of crumbling buildings. 

The chief operating officer Mary McKeeman resigned, just six months after the resignation of the previous COO, Kathy Kirkham. Two days later, Bright Tribe announced that it was giving up the academy.

Mr Dwan is also the founding sponsor of another MAT, the Adventure Learning Academy Trust (ALAT), which has five schools in the South West.

ALAT’s 2016-17 financial accounts also reveal a number of related-party transactions.

It made purchases from North Consulting of £7,000 and £30,000 from Bright Tribe Trust.

ALAT also made purchases of £126,000 from Mounts Bay Academy, a secondary school in Penzance, whose headteacher Sara Davey was a trustee with ALAT until 5 December 2016.

It also spent £11,000 with Commando Joe’s, a physical education company, whose director Terrence Flanagan was a trustee at ALAT until 5 May 2017.

In its financial statement, ALAT states: “When this trust was founded, the sponsors set out their intention to provide support, both financial and resource, to assist the trust during the first period of intensive growth. The board of trustees wish to express their gratitude for this support which has often, sometimes deliberately, been misunderstood.

“The board of trustees is drawn from local public and private sector organisations, these individuals are either executive officers of the trust or are volunteers who wish to make a difference. In making a difference trustees will often offer their services or support. In making this offer they are not seeking to make a profit but they are hoping to enhance the trust’s ability to make a difference.

“All transactions involving such individuals or their connected organisations are conducted at cost, more often less than cost, and in accordance with the academies financial regulations and normal procurement procedures.”

Want to keep up with the latest education news and opinion? Follow Tes on Twitter and Instagram, and like Tes on Facebook