As a former academy trust CEO is barred from school management, we look at the lessons that can be learned.
The Secretary of State has published a prohibition notice barring Nardeep Sharma, former CEO of The Thrive Partnership Academy Trust, from taking part in the management of an independent school (including an academy or free school), which also disqualifies him from being a governor of a maintained school. Nardeep Sharma has three months to appeal.
The prohibition notice follows an investigation report by the Education and Skills Funding Agency (ESFA) which identified 'failings and weaknesses in financial management and governance' including
- poor procurement practices, with one contract awarded to the most expensive of three suppliers with a personal connection to the Trust, in breach of the Academies Financial Handbook (AFH) 2017, advice from external auditors and Trust policy,
- irregular expenditure on hampers (some with wine) requested by the CEO as gifts for an employee, previous trustee and former chairs, in breach of the Trust's code of conduct,
- lack of governance oversight, with the CEO and Executive Principal making proposals to the finance and audit committee, including to override the external auditor, in breach of the committee's function of objective and independent assurance under AFH 2017,
- recruitment, which involved a change to the staffing structure, without board approval and in breach of Trust policy and standard practice
- severance payments to staff with capability or absence issues without formal approval or legal advice and in breach of special severance payment provisions of AFH 2017 and
- lack of transparency in reporting the Trust's governance arrangements on its website and on Get Information About Schools (GIAS) and inconsistency with Companies House.
So what lessons can be learned by current academy trusts and their CEOs?
It's not a one off
The prohibition notice is the third such notice published by the Secretary of State in relation to former academy trust leaders, with all three published this month. This marks a greater focus by the Secretary of State and the ESFA on holding academy trust leaders to account.
The prohibition notice is a stark reminder that CEOs, as accounting officers, are personally responsible to Parliament and ESFA's accounting officer, under AFH 2020, for their trust's financial resources. They are also personally responsible for assuring their board that there is compliance with their funding agreement and the handbook. This includes notifying the board in writing if the board is considering acting in breach of their articles or in breach of (or they fail to comply with) their funding agreement or the handbook. This personal responsibility for assuring the board of compliance must not be delegated and so presents a major challenge for CEOs with many other competing demands on their time.
That said, AFH 2020 is clear that the appointment of an accounting officer does not remove the trustees' responsibility for the proper conduct and financial operation of the trust. This highlights the vital importance of collective decision making and teamwork, alongside an effective scheme of delegation and clear reporting and communication, to ensure the board can function effectively. The Charity Governance Code identifies key outcomes and recommendations in these areas which trust boards will find invaluable.
It's all about you
The prohibition notice and investigation report highlight the dangers of blind spots and the importance therefore of knowing your strengths and weaknesses and having the support in place to help you do your job well, whether as CEO or as a board. Coaching and training as a CEO can be invaluable which is why Forum Strategy and their #BeingTheCEO Programme provide much needed support and insight. Similarly, governance reviews for boards provide deep insight into their relationships and effectiveness, which is where the governance review service provided by Wrigleys Solicitors and Satis Education can help.
It's about values
Unity of vision, purpose and strategic direction is fundamental to the future success of any trust, particularly so as we navigate the covid pandemic. This builds trust and confidence among those who work in and support the trust and among the public at large. Values are central which is why the breach of the Seven Principles of Public Life - selflessness, integrity, objectivity, accountability, openness, honesty and leadership - were cited in the prohibition notice. The prohibition notice specifically cites breach of these principles, particularly the failure to act with integrity and honesty. The Secretary of State and the ESFA will therefore take action where these principles are not followed to the detriment of the trust.
It's about compliance
Crucially, the Secretary of State and the ESFA will intervene where there is a breach of the Academies Financial Handbook including where internal procedures are non-compliant, contradictory or simply not followed and where information on the website, GIAS and/or Companies House is incomplete or in clear contradiction. The prohibition notice therefore serves as a stark warning to CEOs and boards of the consequences of non-compliance which can be easily avoided, particularly so when updating information available to the public.
The prohibition notice and investigation report detail circumstances and events which can make uncomfortable reading for trust leaders, whether as CEOs or trustees. They speak of the consequences of failing to act with integrity and honesty and in breach of the Academies Financial Handbook and what they must do to comply. However, they highlight the positive things that CEOs and boards can do to ensure their future success, including by setting their vision, purpose and strategic direction and working together effectively in a common cause.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.