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Inquiry finds over £1m of charity funds not properly accounted for

The Charity Commission has taken action against five trustees after uncovering over £1 million in the Orphan Relief Fund and Charitable Trust’s funds that could not be properly accounted for.

Inquiry finds over £1m of charity funds not properly accounted for
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  • Staff Reporter
  • March 22, 2021
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The inquiry found failings by five of the charity’s trustees, including failing to:

  • provide any records that demonstrated how over £1 million had been expended, purportedly in Iraq, in response to a commission direction requiring information;
  • demonstrate proper financial controls and accountability over the charity’s funds;
  • set up sufficiently robust governance measures to prevent decision-making being controlled by its chair; and
  • protect over £10,315.15 of the charity’s funds which were paid to the chair of trustees for his own personal expenditure. Despite assertions that this money had been repaid to the Iraqi based charity, no evidence was offered to support this claim.

The five trustees have been removed or disqualified for their actions and the charity has been wound-up by order of the commission and removed from the register.

The charity was established to support young people suffering after the loss of one or more of their parents. It operated exclusively in Iraq.

In 2017, the commission opened a statutory inquiry into the charity after it identified several serious regulatory concerns about its governance and financial management.

This includes £998,746.13 being transferred from the charity’s bank account purportedly for use in Iraq, but without the trustees being able to provide the commission with evidence of how this was spent.

Further concerns included that payments had been made from the charity to the chair of trustees for personal expenditure.

After the inquiry opened, the commission learnt that the charity had transferred a further £88,515.63 purportedly to Iraq for its charitable work, and immediately froze the charity’s bank accounts to protect its remaining funds.

Action was also taken to suspend and then remove the chair of trustees from the charity.

Four trustees resigned after the inquiry opened and were disqualified by orders of the commission for a period of eight years. Four trustees were appointed during the inquiry but three left before its conclusion.

Since January 2019, there was one trustee left at the charity. The inquiry ordered this trustee to wind up and dissolve the charity and it was removed from the charity register on 16 September 2020.

Assistant director of investigations and inquiries at the Charity Commission, Tim Hopkins, said the public expect charities to make a real positive difference for the people they help or the cause they pursue.

“Charities must use their resources efficiently and effectively and be accountable to those that support them and to the commission as regulator. Former trustees of this charity failed to meet these expectations,” Mr Hopkins said.

“I hope other trustees consider this case carefully and note particularly their shared responsibilities to ensure that their charity’s funds are applied solely for its charitable purposes and are fully accounted for.”

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