Three are arrested amid claims of fraud at one of the Government's flagship academy schools

Among those understood to have been held is Eric Baker, founding principal of Glendene Arts Academy in Easington, Co Durham, and his wife. (Getty Images)

Police investigating allegations of fraud at one of the Government’s flagship academy schools have arrested three people.

Among those understood to have been held in a series of early morning raids by detectives is Eric Baker, founding principal of Glendene Arts Academy in Easington, Co Durham, and his wife.

Mr Baker has been on sick leave from the former community school for children with special needs, since an investigation was launched into allegations of serious financial mismanagement in the wake of whistleblower claims last year.

A Department for Education report published in February and revealed in The Independent highlighted concerns over the use of academy resources and payment of the salaries and expenses of staff used by a private company.

The chair of governors resigned in July following the claims by members of staff.

Police said a 57-year-old man and his wife, aged 56, were arrested at an address if Whitley Bay, North Tyneside at 7am this morning.

A 41-year-old man was arrested at premises in Darlington, and asearch at a property in the Kenton area of Newcastle was also carried out. Police said they expected to make a fourth arrest in connection with the inquiry.

All were arrested on suspicion of conspiracy to commit fraud, Co Durham police said in a statement.

Glendene Arts Academy caters for pupils aged two to 19, who all have a statement of special educational need.

It was previously managed by Durham County Council, receiving academy status in September 2012 and was officially opened by the Duke of Edinburgh in April last year.

Rob Wright, chairman of the academy who was one of the whistle-blowers said: “The trustees and I are keen to assure parents and the local community that we have a strong interim leadership team, excellent teaching and excellent provision for vulnerable and special children - as well as robust financial systems.”

A new acting principal and a deputy were appointed in November. The EFA investigation revealed that a private company financed by the school was set up when it was still maintained by the local authority.

It was meant to help in fundraising and training, as well as providing an annual dividend, although the report concluded the arrangement resulted in the loss of £162,000 “that should have been used for the benefit of academy pupils.”

The Glendene investigation comes in the wake of another police inquiry into a free school, which led to the arrest and bailing of its founder, the principal of the Kings Science Academy in West Yorkshire, one of the first free schools to be opened, and previously visited by Prime Minister David Cameron. Last year one of the biggest academy chains, E-ACT, was criticised over its spending.