Charity Commission investigates seven linked charities over financial concerns

The Charity Commission has announced a class statutory inquiry into seven charities linked by two common trustees due to serious concerns over potential misconduct and mismanagement.

The class action will examine wrongdoing at IPAD, Friends of African Organisation, British Africa Connexions, Kono District Development Association UK, Hope Direct, Social Action and Poverty Alleviation, and Action for Community Transformation.

During a proactive exercise, the commission said it identified a series of discrepancies across the charities’ accounts.

After examining IPAD’s annual return, the commission found discrepancies of over £83,000 income and £39,000 expenditure between the information submitted in the charity’s annual return and what was shown in its bank statements. The issues indicate a potential misapplication of charitable funds and possible personal benefit.

“The commission is also concerned that the trustees have knowingly acted against their legal duty by providing false and misleading information to the commission,” the charities watchdog revealed.

“The accounts held by the commission for IPAD for FYE 2014 contain identical financial information to three other sets of accounts submitted by two other connected charities included in the class inquiry.”

It noted that, with the exception of one charity, there is no evidence of charitable activity, which raises concern that there may have been a potential misuse of funds.

The commission said it has therefore frozen the bank accounts held in the names of six of the charities in order to protect charitable funds.

Its inquiry will now examine whether the linked charities have been operating for exclusively charitable purposes for public benefit; whether their financial controls are adequate and their funds have been properly expended and accounted for; and whether their trustees have complied with their legal duties.

Moreover, the Charity Commission will look at the trustees’ compliance with legal obligations for the content and preparation of the charities accounts and other information or returns is in line with the statutory requirements.