A DAMNING report into the financial management of West Exe Technology College has revealed that significant failings of governance created a culture described as 'unacceptable' and 'ethically not sound' which brought the reputation of the city's largest school into disrepute.
The audit carried out by Devon County Council into the running of West Exe criticises the close relationship between former executive headteacher Steve Maddern and former chair of governors Paul Smith.
The report paints a picture of years of mismanagement at the school, characterised by a lack of transparency in decisions made. Procedures were not followed, records were not kept, and school governors – even members of the self-styled 'executive governors' group – were effectively kept in the dark by Mr Maddern and Mr Smith.
The report is critical of many aspects of Mr Maddern and Mr Smith's management of the school. Unjustifiably high salaries, employment and promotion of family members, perceived favouritism, foreign trips, spending on hotels, travel, food and even expenditure alcohol are all examined.
It states that Mr Maddern's inflated salary of £156,000 came about after he, at the request of Mr Smith, produced what is described as 'misleading' information with regard to national pay scales and potential pay rises. The extensive 28-page report showed how Mr Maddern and Mr Smith would frequently make key decisions – such as those relating to both Mr Maddern's salary and that of his wife Beverley, the school's former senior deputy headteacher – without informing the other governors.
The governing body had become dysfunctional, with Mr Smith and two other governors, Peter Scott – now the acting chair of governors – and Chris Harris-Deans, who remains a governor, forming a senior group of 'executive governors' which also acted as the salary review committee, working with Mr Maddern. Other members of the governing body appear to have had little input into, or knowledge of, key decisions.
While it is clear that the report attributes responsibility to Mr Maddern and Mr Smith, the other executive governors are described as 'naive' in allowing themselves to be led by the former head and chair of governors.
The report concludes:
Mr Maddern's £156,000 salary was unjustifiably high.
There was "insufficient professional distance" between Mr Maddern and Mr Smith.
Other governors were excluded from decision making and minutes evidence of key decision making were missing, including documents being shredded.
Mr Maddern's wife Beverley, who was the school's senior deputy headteacher, was also on a salary which appears to have been unjustifiably high.
Mr Maddern made "inappropriate" expense claims.
Mr and Mrs Maddern took holiday during term time, verbally agreed by Mr Smith, without following procedures to ensure adequate cover was in place.
There was no justification for Mr Maddern's company car lease being extended in 2009.
Enhanced salaries for additional duties, which should have reverted to former levels once those duties had ended in fact remained at the higher level.
Mr Maddern being closely involved in the performance management, remuneration and appointment of family members – his wife and her daughter – resulting in "public concerns suggesting corruption".
The report's summary states: "The culmination of this decision structure and in some circumstances misuse of position by the executive headteacher has established a culture which ethically is not sound and publicly is unacceptable to the extent that it has compromised professional standards expected of school leaders, trust of the staff and public and brought the reputation of the college into disrepute."
The report was ordered by the local education authority (LEA) after the Echo's revelation in March that Mr Maddern was earning almost triple the national average salary for a headteacher.
As a result of the auditors' findings the school's board of governors suspended Mr Maddern in April and his resignation came a few days later. Three days after that, Mrs Maddern resigned.
The report, which highlights issues that occurred "mainly over the last six years", frequently refers to decisions being made by the Executive Governors led by Mr Maddern and Mr Smith, who was Lord Mayor of Exeter in 2008.
In November governor Peter Scott called for a review into senior salaries at the school and its application for academy status was put on hold.
When Mr Smith resigned in February, Mr Scott became chair of governors.
Mr Harris-Deans is still a community governor and the chairman of the school's management services committee.
Frequent reference is made in the report to instances where Mr Maddern and Mr Smith have not involved the other executive governors, committee governors or remaining governing body, in decision making.
A spokesperson for the LEA has confirmed that it is not standard practice for schools to split up its governing body into a hierarchical structure and nominate executive governors.
However, the authority confirmed that whereas there is no legal definition of executive governors, governing bodies are free to set up arrangements to suit their needs.
The governors are accused of allowing themselves to be "led too greatly by the executive headteacher and executive governors".
Auditors criticised Mr Maddern and Mr Smith for not following correct procedures when presenting decisions back to the rest of the governors.
Mr Maddern was condemned for failing to provide the minutes of meetings between the executive governors or committee, to the governors as "legally required".
He was also accused of being "too closely involved in key decision making processes including the appointment of and remuneration of family members and selective developmental roles of key staff".
And evidence of a number of key decisions could not be found by auditors.
The report also revealed that the recently nominated clerk was not invited to meetings.
As a result of this lack of communication and transparency, auditors said that governors were unable to make sound decisions about senior leadership performance and pay resulting in "significantly higher than normal" pay structure of the senior leadership team and particularly that of Mr Maddern himself.
The report accused the other committee governors of being "naive" in regard to Mr Maddern's salary.
Other shortcomings revealed in the report included that the staff structure had not been formerly approved for seven years, performance and salary review had not been properly established exposing the college to "significant risk".
The report states that the whole process has been "fundamentally flawed" where Mr Maddern and Mr Smith had not ensured that the governors of the Salary Review Committee were adequately trained in order to make informed decisions.
It said there were "no minutes produced of the Salary Review Committee meetings" and "no records of decisions made" and "most of the documentation for their consideration had been shredded".
It is understood that Mr Maddern received a significant pay rise in 2006 when he was given the title of executive headteacher when he took on an extended role supporting St James School and Honiton Community College. But when this additional commitment ceased, his salary stayed the same.
The report revealed that Mr Maddern's pay increase was signed off by Mr Smith.
Auditors said the information that was provided by Mr Maddern at the request of Mr Smith regarding incremental salary increases was "insufficient and misleading" and not nationally recognised resulting in salary levels being "incorrectly established".
Auditors said it was clear that Mr Smith was "fully aware" of pay structure guidelines which stipulate that temporary salary increases should revert to the former salary on cessation of the temporary remit – but he did not ensure this happened.
As a result, future increases of Mr Maddern's pay packet were made on top "further compounding the problem".
The report said that pay was "considerably in excess" of the standard scale with "little evidence available to justify why" and no evidence of approval by the governing body. Auditors added that "the pay structure of the whole leadership group was flawed".
In addition, Mr Maddern was criticised for how he went about appointing family members.
Additional concern was raised about his involvement in the remuneration of Mrs Maddern and the fact he led her performance appraisal.
The report states that there was a lack of professional distance between Mr Maddern, Mrs Maddern and Mr Smith.
Auditors said that contrary to correct procedure, at the decision of Mr Maddern, there were instances where staff were "slotted into developmental roles without any selection process, sometimes with or without advance payment".
Mr Maddern was accused of being involved "inappropriately" in the appointment of Mrs Maddern's daughter as MAT manager in 2009.
Auditors deemed his actions suggestive of "favouritism".
Auditors said Mr and Mrs Maddern took family holiday during term time failing to adhere to the school's proper absence procedure, but for which Mr Smith gave verbal approval.
Auditors also ruled that there was a "lack of openness and transparency" in the need and approval for Mr and Mrs Maddern's trips to China and South Africa as well as who should attend and the benefits.
However, the trips were supported by the Specialist Schools and Academy Trust and only expenditure relating to the costs of the conference came out of the school budget. The report also accused Mr Maddern of misusing resources with some expenses "not considered appropriate when paid for by the public purse".
For example, auditors said that meal expenses relating to senior leadership conferences had on occasions been "notably above normal subsistence rates" including alcohol and the nature and location of the conferences, which included hotel establishments did not equate to "eating on a budget".
Auditors highlighted termly extended senior leadership meetings held at a local hostelry and "several instances of overseas business travel by Mr and Mrs Maddern, Mr Smith and other members of the senior leadership team which were not "wholly transparent". Auditors also said that they saw no reason for Mr Maddern's use of a company car to be extended in 2009. They said that use of a company car by Mr Maddern, which was initially agreed in 2006 in support of his extended role at the other schools for a few months, should not have been extended. In addition, the report revealed that Mr Maddern used school computer equipment held at his home, for private purposes.
Auditors said both Mr Maddern and other family members had used the equipment to support his former computer company, "compromising the security of the college assets and contrary to school policy".
The report also examined questions over procurement of school equipment, into which Mr Maddern intervened as he was entitled to do, to 'little apparent benefit' to the college, although there was no evidence or suggestion of loss or wrongdoing.
A police spokesman confirmed that officers have been in discussions with county council chiefs – but so far no action has been taken.