Mystery of the missing millions . . . and a vicious family feud at ‘Fame’ school for stars
IT’S the oldest stage school in the country and launched the careers of some of the biggest names in showbusiness, from Noel Coward and Naomi Campbell to Russell Brand and Emma Bunton.
But the famous Italia Conti fame academy faces questions about its future amid a furious family feud, allegations of blackmail and troubling claims about use of public money.
The school’s prestigious headquarters near the Barbican in Central London is on the market for £16 million as it struggles under the weight of a multi-million-pound loan – and there is no new building for the school to move to.
The sale comes after a damning financial audit revealed:
Up to £3 million was unaccounted for, as financial experts discovered mystery employees and companies which did not exist;
More than £1million was spent as ‘petty cash’ over two years;
At one point, the school was unable to pay staff salaries;
Published accounts warn about the school’s lack of financial controls.
Italia Conti was founded in 1911 and its reputation as a proving ground for a showbusiness career sees students, who are charged £16,000 a year, flock to it. It is rated as ‘outstanding’ by Ofsted and receives a £750,000-a-year dance and drama Government award.
For decades it ran with an annual surplus of £750,000 to £1million but profits dried up years ago.
Graham Sheward, a member of the family that owns and runs the school, says he is deeply concerned about its future. ‘My mother was the principal for decades – she loved it,’ he said. ‘She would be heartbroken to see what is happening.’
Concerns have also been raised by Chris Pritchard, the school’s former finance director, and a qualified accountant. In October 2016, he brought in forensic accountants to examine the company’s books.
Mr Pritchard said: ‘They found contractors were employed to do at least £1million of building work and then paid in cash.’
They also found VAT paid to companies that were not VAT registered and unexplained employees on the payroll.
He said: ‘It was shocking that a school that was evidently failing financially doubled the salary of the previous principal, Anne Sheward, to £140,000, and paid two staff in charge of the finances plus the caretaker more than £250,000 a year between them.’
The school points to its latest published accounts, showing it was on target to make a small profit. But the accounts include a worrying caveat, known as an ‘emphasis of matter’, which draws attention to ‘weaknesses and failures in internal control procedures’. It adds: ‘Certain expenditure included in the financial statements… may have been excessive.’
Mr Pritchard said that by June 2016 the school’s bank was saying there was no money to pay staff, and he arranged a £7million loan.
He then tried to sell the school’s Barbican building for £19million in August 2017 – and was suspended, accused of ‘making deals without keeping the directors informed’.
Mr Sheward has fallen out with his three sisters Gaynor Sheward, and Anne Sheward – the former principal – and Samantha Newton, the current principal. The sisters are the company’s three directors.
The Shewards’ parents bought the school in 1964 and it is overseen by the trustees of their father’s estate, which is the majority shareholder.
Mr Sheward is angry at his sisters for pulling out of a plan for relocation to Egham, Surrey, which, he says, would have secured the school’s future. The sisters say the relocation was unaffordable.
Gaynor Sheward accuses Mr Sheward of attempting to blackmail them by threatening to ‘go to the papers’, claiming he has private reasons for seeking to damage the reputation of the school. The Mail on Sunday has not paid Mr Sheward.
Ms Newton said: ‘It’s true, we are looking for new premises. We are expanding, not closing.’
‘Builders did £1m of work …and were paid in cash’