Monday 25 April 2016

NUT call for full DfE investigation into 'Panama to Kilburn' free school provider with off-shore connections

Wembley Matters covered the links between the Panama Papers and the Kilburn Grange Free School several weeks ago 'From Panama to Kilburn - time for some questions to be asked'  LINK

The NUT has now taken up the issue, uncovering further information which leads them to state that there are serious questions to be answered on the connection between Mossack Fonseca, Bellevue Education and Bellevue Place Education Trust, which among others runs Kilburn Grange Free School in Brent.

The NUT call for a full investigation and report by the Department for Education.

This is their dossier.  It is longer than normal articles on this blog but it is a thorough investigation that repays close study.  Brent Council currently has a policy of encouraging free schools in order to provide additional school places. They should pay particular attention and press the DfE about its due diligence in the free school application process.

Click on 'read more' to read the dossier in full.

Information derived from the leaked “Panama Papers” shows that Bellevue Education is part owned by a company which was set up by the Panamanian law firm Mossack Fonseca. Bellevue Education is one of two companies behind Bellevue Place Education Trust (BPET) - a state-funded academy trust that runs free schools in London and the south east.
The Department for Education (DfE) and BPET deny that Bellevue Education has any influence over the running of the free schools. However, the NUT believes that there are still serious questions to be answered about connections between BPET and Bellevue Education. This NUT dossier outlines allegations made against Bellevue Education and provides evidence of the clear link between the company and the academy trust. The DfE must investigate and publish a full report as a matter of urgency.
1.   Bellevue Place Education Trust
Bellevue Place Education Trust (BPET) is a multi-academy sponsor which operates seven state-funded primary free schools in London and the south east. It was established in 2012 as a joint venture between two private companies:
  • Bellevue Education, which operates ten private schools in the UK and two boarding schools in Switzerland; and
  • Place Group, an education consultancy that sells project management services to academies and free schools.
BPET’s first free school, Rutherford House, opened in September 2013. It now runs the following free schools:

Local authority
Open date
Rutherford House School
Windsor and Maidenhead
Braywick Court School
Whitehall Park School
Halley House School
Kilburn Grange School
Richmond upon Thames
Deer Park School
Watling Park school

BPET’s Members are:
  • Claire Delaney (also Chair of Trustees) Managing Director of Place Group;
  • Mark Malley (also Vice Chair of Trustees), CEO of Bellevue Education;
  • Simon Rule, founder and CEO of Place Group (also a Trustee);
  • Marwan Naja, Chairman of Bellevue Education; and
  • Mervyn Douglas.
BPET’s full complement of current trustees is:
  • Claire Delaney (Chair of Trustees) Managing Director of Place Group;
  • Mark Malley (Vice Chair), CEO of Bellevue Education;
  • Steven Wade, Bellevue Education UK Schools Director;
  • Simon Rule, founder and CEO of Place Group;
  • Tom Legge, former New Schools Director at Place Group; and
  • Mark Greatrex (Chief Executive).

2.   Bellevue Education

CEO and former head teacher Mark Malley founded Bellevue as House Education in 2003. In that year Malley took over a “troubled” London preparatory school, Norfolk House School, which had previously failed two inspections by the Independent Schools Inspectorate. According to Bellevue’s website: “within a year Mark had turned the school around, achieving an Outstanding inspection report”.
In 2008 Norfolk House was joined by Weston Green School in Surrey as part of House Education. The same year the company changed its name to the Really Great Education Company.
In 2011 the company adopted the name Bellevue and began a period of rapid expansion, acquiring or establishing a further six schools within a year.
The period of Bellevue’s growth coincided with significant investment which was made through its new chairman, private equity investor Marwan Naja (appointed September 2010). Naja, who is a resident of Switzerland, had previously worked as private equity manager at the Swiss private Pictiet Bank. He left this position to set up his own private equity firm, Manixer, at around the same time that he joined Bellevue as chairman. Bellevue is listed on Manixer’s website as one of its investments.

3.   Allegations of tax avoidance and money laundering

It has now emerged that Bellevue Education is part owned via a company registered to the British Virgin Islands which was set up by the Panamanian law firm Mossack Fonseca. The name of the company is Maplehill Investments (BVI) and its owner is Tarek Obaid, the founder of Anglo-Saudi oil company PetroSaudi. Through a complex ownership structure he is in fact the biggest shareholder in Bellevue Education. The details of Bellevue’s ownership are as follows:
  • Since 2010 Bellevue Education Group has been a wholly owned subsidiary of Bellevue Education International Limited.
  • Bellevue Education International’s shares are held by three parties. The company’s most recent annual return shows that Bellevue founder Mark Malley owns 1,000 shares but the majority of the company is owned by two Hong Kong registered subsidiaries: Plato One Ltd (18,576 shares) and Plato Two Ltd (29,096 shares).[1]
  • The anti-corruption group the Sarawak Report has revealed that both Plato One and Plato Two are owned by Maplehill Property Limited and Patrick Mahony, who is also a director of Bellevue Education Group and Bellevue Education International (see below).
The Sarawak Report alleges that Bellevue chairman Marwan Naja set up this complex ownership structure in 2010 for tax avoidance purposes. They cite a document from 2010 in which Naja reported that he had:
“taken specific tax advice from a firm of internationally recognised accountants which has confirmed to him in writing that no Tax will be payable.. as a result of any dividends, distributions or other returns. whether during the Investment or following an exit from the Investment”
Furthermore, the Sarawak Report claims that Bellevue Education was also a vehicle to hide money which Mahony and Obaid had obtained in “illegal backhanders” from a Malaysian development fund. The allegations made by Sarawak are as follows:
“The re-structuring and re-branding of Bellevue took place in late 2010, after a major initial injection of five and a half million pounds from the new secret investors [Mahony and Obaid], who engaged Marwan Naja to represent their interests, according to documents obtained by Sarawak Report.
The two PetroSaudi directors [Mahony and Obaid] agreed to make available more cash when needed to expand the project and we have evidence they raised over £20 million (RM110 million) in share capital and lending over the course of the next few months.
The cash flow became available not long after both men received large sums of money directly into their private JP Morgan Suisse bank accounts from the now fugitive Malaysian businessmen Jho Low, which was termed as a payment for their role in “brokering” the billion dollar 1MDB PetroSaudi joint venture in September 2009 – from which Low siphoned out US$700 million into his private company Good Star Limited.”

4.   Reporting by the Sunday Times

On 10 April the Sunday Times published some of Sarawak Report’s findings, highlighting Tarek Obaid’s stake in Bellevue via Maplehill Investments.[2] However, the report left out all references to the alleged roles played by Marwan Naja and Patrick Mahony in setting up and investing in Bellevue Education.
Bellevue Place Education Trust’s (BPET) response to the Sunday Times piece was published on its website. It contained the following assertions (emphasis added):
·    “The Trust was established by two parties, Bellevue Education and Place Group.  The Trust’s governance structure is clear as to the structure and who the members and trustees are.
·    “The Trust is a separate, independent organisation from Bellevue Education that is solely focused on offering high quality education provision to its pupils.”
·    “Bellevue Place Education Trust wishes to be very clear that the Bellevue shareholder who made an investment in Bellevue Education via a company registered by Mossack Fonseca in the British Virgin Islands has no connection with the Trust.
·    “Bellevue Place Education Trust is an independent charitable organisation, with six trustees, of which one is Mark Malley.”
The DfE’s full statement in response to the Times story was also published on BPET’s website, it included the following assertions (emphasis added):
“We demand the highest moral and professional standards from anyone involved in educating our children and, in common with every free school proposal, Bellevue Place Educational Trust (BPET) was subject to detailed scrutiny. We are clear that no-one will be handed control of a school unless we are entirely happy with the result of the checks.
Bellevue Education and BPET are separate organisations. Our records show the individual named is not in any way involved in the governance of BTEP schools. There are strict rules that prevent free schools and academies being run as for-profit organisations.”
Both statements tacitly acknowledge that Tarek Obaid is a major shareholder in Bellevue, while simply denying his influence over the governance of BPET. However, neither statement seeks to address or deny the possibility, as claimed by the Sarawak Report, that Bellevue Education has been used as a vehicle for tax avoidance and that its chairman, Naja, and one of its directors, Mahony, are heavily implicated in this.
Furthermore, the statements make a series of assertions about the independence of the trust (BEPT) from Bellevue Education. On the basis of the evidence below we believe that it is not accurate to describe BPET as “a separate, independent organisation” from Bellevue. There are also serious questions to be asked about the potential influence of Bellevue Education and its directors over BPET.

5.   Connections between Bellevue Education and PetroSaudi International

Patrick Mahony – the individual identified by the Sarawak Report as co-owner of Plato One and Plato Two – is director and “Chief Investment Officer” at both Bellevue Education Group and Bellevue Education International. He is also a director, along with Tarek Obaid, of Petrosaudi Energy and Trading (UK) Ltd – a UK-based arm of PetroSaudi International, the oil company founded by Obaid.
Both Bellevue Education and Bellevue Education International have the same correspondence address as Petrosaudi Energy and Trading (UK) Ltd. This is also PetroSaudi’s UK address.[3] These details can be seen in the following screenshot (taken 12/04/16) from Companies House:


6.   Bellevue Education and Bellevue Place Education Trust

Bellevue Place Education Trust, the legal entity running state funded free schools, claims that it is “a separate, independent organisation from Bellevue Education”. However, there are strong reasons to question this.

6.1.               Evidence that Marwan Naja is a member of the academy  trust

Academy trusts comprise members and trustees and in some cases have local governing bodies for their schools. The role and rights of members is analogous to that of shareholders. The members can control changes in the constitution (subject to DfE approval) and other fundamental decisions relating to the academy trust. Members also have the right to remove a governor (also known as a director or trustee) by ordinary resolution (a vote passed by a simple majority of members).
According to Bellevue Place Education Trust’s own website, Marwan Naja is a member of the company, alongside Mark Malley.

This is also reflected in the trustees’ report and financial statements for the year ended August 2015 (p.1):
In fact Bellevue Place Education Trust’s Articles of Association (p. 14) require that the members of the company include both the Chairman and the Chief Executive of Bellevue Education. These two posts are currently occupied by Marwan Naja and Mark Malley respectively, and this was also the case when the articles were included in the Trust’s Master Funding Agreement signed on behalf of the Secretary of State for Education in June 2013.[4]

6.2.               Two of Bellevue Place Education Trust’s six trustees are part of Bellevue Education’s “leadership team”

Bellevue Place Education Trust’s six trustees include Mark Malley but he is not the only individual with strong links to Bellevue Education. Current trustees of BPET also include Steven Wade who is “Schools Director” of Bellevue Education. He is referred to on the Bellevue website as part of the company’s leadership team, along with Mark Malley and Marwan Naja (see Appendix).
It should further be noted that BPET’s Articles of Association state that both Bellevue Education and Place Group may each appoint up to five Directors (trustees) of BPET (p. 21):
This in effect guarantees Bellevue Education a degree of influence over the functioning of BPET. Since Bellevue Education is mostly owned by Tarek Obaid though a Mossack Fonseca formed company, this should be a matter of concern.

6.3.               Bellevue Place Education Trust and Bellevue Education – evidence of joint working

Until the recent revelations about Bellevue Education’s ownership, Bellevue Place Education Trust (BPET) has consistently emphasised the importance of the connections between BPET and Bellevue Education. This is particularly evident in the successful free school applications which BPET made to the DfE.
For example, BPET’s first free school application, for the school now known as Rutherford House in Balham (then known as Balham Free Primary School – BFPS), contained the following statements:
·      “Bellevue will make available its expertise in independent education to support the school. It will also seek to share resources and where appropriate, facilities with the school.” (p. 7)
·      “With input from Bellevue Education's expertise, and consultant leadership, we will combine the best from the independent and state sectors.” (p. 21)
·      “Arising from the involvement of Bellevue Education, there will be joint productions in the school calendars of BFPS and Wandsworth Prep, and collaboration regarding wider events. As mentioned elsewhere, shared CPD will take place across the staff teams as well as shared use of facilities at Wandsworth Prep. As part of Bellevue's corporate social responsibility programme, a suitable minibus will be available for BFPS use at agreed times.” (p. 39)
BPET’s application to open Whitehall Park School in Islington (opened in 2014) stated:
“In addition, there is direct school leadership experience of opening a state funded independent school, consultant leadership, expertise in school effectiveness and efficiency, and input from the Bellevue Group of successful independent schools.
BPET’s application for Braywick Court free school which also opened in 2014 said the following:
“Both Place Group and Bellevue employ highly experienced school financial management professionals who have taken key roles in the planning, pre-opening and post-opening operations of several free schools and academies.”

6.4.               Financial transactions between Bellevue Place Education Trust and Bellevue Education

BPET’s financial statements reveal a number of transactions between the trust and Bellevue Education. During the year ended 31 August 2014 the directors of Place and Bellevue Education contributed the following sums to BPET (p. 38):    
In the same year BPET paid £5,705 to Bellevue Education for the supply of “monitoring information” (p. 38):  

In 2015  BPET paid Bellevue Education £37,701 for the provision of school improvement services (p. 4):

APPENDIX: Bellevue Education Leadership Team

[2] Jon Ungoed-Thomas and Josh Boswell, ‘Saudi oil tycoon revealed as investor in schools company’, Sunday Times, 10.04.16.
[3] This can be seen on PetroSuadi’s website which, as noted by the Sarawak Report, also shows that Marwan Naja’s investment firm Manixer has the same address as PetroSaudi’s Geneva office.
[4] See pages 88-89 of the Master Funding Agreement. It can be downloaded here:


Anonymous said...

Does money-laundering count as a 'relevant skill' for the new Tory definition of what a school governor needs to bring to the table?
Mike Hine

Anonymous said...

Yes, it's on the governor exam.