A Bradford free school has been criticised for informing parents that its principal had been exonerated as a police investigation into fraud continues.

Bradford East MP David Ward has called for the claim – that Sajid Hussain Raza was “released without charge” after being arrested on suspicion of fraud last Thursday – to be corrected.

Mr Raza, principal and founder of Kings Science Academy at Lidge Green, was released on bail pending further inquiries several hours after being arrested at the school on January 9.

It followed a two-month police investigation into the school finances, itself spurred on by a Department for Education report, released in October, that revealed that tens of thousands of pounds in start-up money had been improperly used.

Education Secretary Michael Gove has now released a timetable of action relating to Kings, which confirms that the flagship free school was without a chairman of governors for over a year after its opening.

It also details how the damning report was released weeks early after it leaked to the press, and that fraud investigation group Action Fraud apologised to ministers after it emerged they had wrongly classified the report – leading to no police probe until the details went public.

Over the weekend current chairman of governors John Bowers made the first public statement on the arrest via the school website.

Under the title “Message for parents” he said: “You will be aware from the press that Mr Raza, our Principal, has been arrested in relation to the continuing police investigation about the financial management of the Academy up to August 2012. He has been released without charge.”

It said Mr Raza would not return to the school until the investigation was over, and that Haroon Hussain would be interim principal till then.

The phrase “released without charge” is used if police release a suspect when no further action will take place. A police spokesman confirmed that Mr Raza had been bailed pending further inquiries, rather than being released without charge.

Mr Ward, who wants the DfE to be more transparent over the school, said: “This statement is incorrect and it needs to be corrected. This is an ongoing investigation.”

A spokesman for Bradford West MP George Galloway said: “He has not been exonerated. He is on bail, and we have yet to see if he will be charged.”

The Telegraph & Argus asked for a response from Mr Bowers and the school, but did not receive one.