Charity Commission bars trustees over failure to account for £90k

The Charity Commission has removed two trustees and disqualified an individual from trusteeship after uncovering a series of failings at the charity Peacetrail, including a failure to account for at least £92,110 – nearly 50% of the charity’s total expenditure

The Commission opened an investigation in the Manchester-based charity on 31 March 2016 and found self-authorised salary payments totalling £46,500 to the charity’s CEO, unmanaged conflicts of interest and a lack of due diligence or monitoring of those the charity worked with.

According to the regulator’s report, an initial inspection of the bank account used by the charity found that between 1 November 2013 and 5 June 2015 there was total expenditure of £203,000 which could not be supported by evidence.

Between 29 November 2013 and 19 October 2015 the charity transferred £70,149 to an individual acting as the charity’s agent in Occupied Palestinian Territories but it did not have any evidence of the end use of this expenditure.

In addition, £18,812 had been withdrawn via ATMs and by cashing cheques and the charity did not have any paperwork to evidence that this money had been used for charitable expenditure.

Based on the analysis of all information provided to the inquiry, the Commission said at least £92,110 of charitable expenditure remained completely unaccounted for.

In addition, on expenditure for which receipts had been provided, these did not clearly evidence that the expenditure was for charitable purposes and some of the expenditure may have been unauthorised benefits to the trustees and/or the CEO, including food from supermarkets and restaurants; petrol; travel (including first class train travel) and accommodation (in the UK and overseas, including Turkey, Bahrain and Qatar); magazines; TV license payments; and household goods.

The CEO had stated that paperwork for the charity was held by its accountants, however when the commission contacted the accountants they stated that they did not hold any paperwork in relation to the charity.

The inquiry concluded that the trustees had failed to exercise control over the charity’s finances or oversee the CEO; and the Commission made orders to remove two individuals as trustees of the charity. These individuals are now disqualified from acting as trustee of any other charity unless they obtain a waiver from the Commission or the courts.

The Commission has also disqualified the charity’s CEO from being a charity trustee or holding a senior management position within a charity for four years and six months.

Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: ‘The trustees of Peacetrail clearly failed to discharge their legal duties which is why we exercised our powers to remove them.

‘Charity trustees have an important legal duty to ensure that their charity’s funds are spent on the charity’s objects. This includes keeping clear accounting records that can evidence exactly where charity money has gone. Transparent reporting in this way is vital for maintaining public trust and confidence in charities.’

The charity, which was a charitable incorporated organisation, has been dissolved and ceased to exist when it was removed from the Register of Charities on 31 October 2017. 

Peacetrail was established in November 2013. Its objects were to advance the Islamic faith and relieve poverty by supporting women and children who face financial hardship in the UK and abroad.

Charity Commision Inquiry: Peacetrail

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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