The sacked boss of an awarding body fears bankruptcy after going “nuclear” over allegations his directors planned to defraud the company. In late 2024, former CEO of GQA Qualifications, Michael Clayton, accused five directors of scheming to plunder the non-profit company’s assets, which included £9 million in reserves. The board’s plans, dubbed “project gemini”, involved paying themselves £500,000 “backflush” bonuses based on retrospective performance measures, and transferring some of the company’s assets to a for-profit business under their ownership. Clayton attempted to suspend the directors and launch an independent investigation, but they seized control of the Sheffield-based firm and fired him. GQA Qualifications then took the former CEO to the High Court, hiring lawyers who accused him of taking the “nuclear course” by launching an “attempted coup” to unlawfully oust the entire board and hand control to his “close friends and acquaintances”. In a ruling issued in January, Mr Justice Sheldon said Clayton breached his duties as a director and employee by sharing confidential and legally privileged documents with two men he brought in to help run the company during his investigation. Clayton also breached his duties by disobeying instructions on how he should declare a sponsorship box at Barnsley football club for tax purposes and “deceptive” editing of an email about the issue, the judge found. ‘Reasonable and proper’ However, Mr Justice Sheldon found the former CEO had “reasonable and proper” grounds to suspend directors Shaun McAllister, James Ratcliffe, Anthony Parsell, Neil Ashley and John Ogilvie, and launch an investigation into their plans. He added: “It was reasonable for him, based on the correspondence and communications with the other directors, to act swiftly as he believed with good reason that he was about to be removed from GQA in the circumstances.” Sheldon did not rule on whether the directors’ plans or actions were fraudulent. Following a post-trial order to pay half of the company’s estimated £1 million in legal costs, Clayton – who received free legal representation due to lack of funds – now fears he will be made bankrupt. He told FE Week: “It’s affected my mental health and my family. It’s impacted my faith in ethics and morality, because I knew it was wrong to do what they wanted but I have ended up on the wrong end of it. “I’ve got four children in secondary school and college. It’s impacted them massively as it’s threatening me with personal bankruptcy.” Profitable non-profit GQA Qualifications, founded in 2001, offers more than 200 qualifications for the glass manufacturing and installation, nuclear, print and automotive industries, and issues CSCS cards. It had a turnover of £4.1 million in March 2023. Its non-profit purpose is enshrined in its status as a ‘company limited by guarantee’, meaning it is owned by “members”, has no owner or shareholders, cannot pay dividends, and must reinvest “surplus” income into qualifications delivery. Company limited by guarantee status is often used by membership bodies, associations or charities – with governing rules set out in a memorandum and articles of association. But unlike similar organisations such as Make UK, which is owned by other companies through the company limited by guarantee structure, GQA Qualifications’ only members appear to be its directors. Restructure and bonus battle Project gemini, which included the directors’ plans to pay themselves bonuses, appears to have stemmed from secretive plots to “acquire” or restructure the company that began in 2023. A review by newly appointed non-executive director Parsell, an accountant who joined that year, found the non-profit organisation was “highly profitable” but lacked proper controls and had outdated governing rules that were last updated in 2002. On the advice of KPMG consultants, plans to form a new director-owned for-profit company that would take over some of the business were shelved due to the potential for high tax costs. But McAllister, who is now CEO, was determined to change the company’s governing rules so £500,000 “backflush bonuses” could be paid. Parsell opposed the bonuses, saying they amounted to “feathering one’s own nest”, and external pay consultancy 3R advised they raised governance issues. Fraud fears crystallise Clayton became convinced the company was in “urgent danger” of fraud by the directors after falling out with company chair Ratcliffe over concerns about project gemini. Meanwhile, Neil Ashley, a barrister who joined as director to help “unlock” the project in September 2024, escalated concerns about Clayton’s company benefits that resulted in disciplinary action. McAllister had offered Ashley a financial incentive if project gemini succeeded, emails show. Clayton met with “confidante” Chris Globe and former solicitor Milton Firman, sharing confidential legal documents. In November 2024, Clayton told the other directors he had concluded fraud was “being committed or, at the very least, contemplated”, suspended them, and appointed Globe and Firman to help him run the company. He also shared concerns with Ofqual, the Scottish Qualifications Authority and CSCS, and tried to remove McAllister from the company’s banking mandate with Barclays. In a showdown on November 7, the directors were barred from entering the GQA Qualifications office, but later convened an urgent board meeting where they disqualified Clayton as director and forfeited his membership. Clayton had refused to attend. Legal proceedings which led to the judgment were launched later that month. Clayton also has an unfair dismissal and whistleblowing claim filed at the Employment Tribunal, but this is yet to be heard. GQA Qualifications, its new CEO McAllister, and other directors, did not respond to requests for comment. Exam regulator Ofqual told FE Week it followed up on aspects of the case relevant to GQA Qualifications’ conditions of recognition. ‘Serious legal risk’ Commenting on the case, Nirav Patel, a partner at Bates Wells, said that while the judgment made clear Clayton’s actions “exceeded his powers”, it did not say he was wrong to be concerned about governance risks. He added: “Unfortunately, good motives don’t give you a magic wand to ignore following the proper process. “Even where the CEO believed the directors were acting improperly, taking confidential material, briefing third parties and attempting to ‘outmanoeuvre’ the board carries serious legal risk. “The case outcome shows how quickly a governance dispute without following due process can lead to personal financial exposure.” Patel said safer options for the CEO could have included raising concerns internally, making protected whistleblowing disclosures, applying to the court for relief, or resigning while documenting the reasons. Companies limited by guarantee should also regularly review their governing rules, he added.