Factions battle for soul of the Royal Academy

When Brendan Neiland swept in to run the Royal Academy's historic art school, he was intent on turning a moribund institution on its head. Instead of returning the school to its glorious past, his passion has dragged the Royal Academy into a mire of financial irregularities.

When Brendan Neiland swept in to run the Royal Academy's historic art school, he was intent on turning a moribund institution on its head. Instead of returning the school to its glorious past, his passion has dragged the Royal Academy into a mire of financial irregularities.

He resigned two weeks ago after the discovery of an unauthorised bank account and a pattern of transactions involving £80,000 that were not properly documented. Specialist auditors are investigating.

His departure after six years has not only ended his tenure as Keeper of the Schools but resurrected a ferocious debate about the way the institution is run. Established in 1768 by the portrait painter Sir Joshua Reynolds with the backing of King George III, many argue that it remains stuck in the 18th century.

David Gordon, the former chief executive of The Economist and former secretary (effectively chief executive) of the Royal Academy, left after clashing with its president, Philip King. "The bottom line is that the RA is an institution suffering from a chronic case of poor governance and will therefore go from crisis to crisis until there is a fundamental reform and modernisation of its constitution," he said yesterday.

Insiders say there is a tension between the Academy's artistic ideals and the realities of mounting its expensive programme of exhibitions as well as running the Schools.

The Academy is controlled by its members - the elected Royal Academicians (RAs), all artists. "The members are supposed to run it themselves but it's got rather big so now they're trying to run it as a business. But are the businesspeople running it any better?" one artist asked.

The "businesspeople" include Simon Robertson, a former managing director of Goldman Sachs Europe, who is the chairman of the Royal Academy Trust, a fundraising arm, and Lawton Fitt, a former senior partner at the City investment bank Goldman Sachs, who succeeded Mr Gordon as secretary.

A Royal Academy spokeswoman stresses it is "well and tightly run". She said: "Brendan did admit he opened an unauthorised bank account. All the Royal Academy accounting is centralised and therefore he was operating completely outside the financial system." Financial controls were supposed to have been overhauled after Trevor Clark, the RA's bursar, was jailed for five years in 1997 after stealing almost £400,000.

Friends of Professor Neiland insist his only crime was his passion for the Schools. He raised its profile and made it a popular place to study again. He banned drinking and pets, both previous features, removed the intimidating copies of Old Masters and casts of classical sculptures, and personally raised thousands of pounds to pay for change.

Professor Bryan Kneale, an RA who taught at the Schools, said : "He brought a real discipline to the place. And it all came from his energy and passion.

"But he's got into trouble not keeping proper records. He felt that he was raising money for the Schools and he wanted to keep it. If it went to the general funds, he would then have to extract whatever he wanted with great difficulty."

Professor Kneale insisted his colleague did not need to be taking any money for himself. "He's a hugely successful artist in his own right. His prices are high. Financially, he's perhaps one of the most successful artists in the place."

The Royal Academy is saying little more than when Professor Neiland tendered his resignation two weeks ago. It is still an internal, not a police investigation. Some RAs clearly hope to keep it that way and are worried at the damage the perceived chaos is causing to the Royal Academy's reputation.

Professor Neiland has keen supporters among some fellow academicians who appear unwilling to see his membership - based on his artistic not administrative prowess - torn up, which could happen at next month's council meeting over the affair. "He's a marvellous keeper," one source said. "It's a great pity he's not a marvellous everything else."