Charity ex-trustees disqualified over financial mismanagement

Two former trustees, one of whom was an accountant, have been disqualified following a joint agency investigation and a Charity Commission inquiry which found serious misconduct and mismanagement in the charities they were running

Families for Survival and Save the Age Ltd, based in London, were respectively set up to provide support to disabled people and orphaned children, and relieve the elderly of poverty, sickness and social inclusion. However the Commission’s inquiry found limited evidence of charitable activity being carried out by either organisation.

The Commission had been monitoring Families for Survival since February 2014 after concerns were raised about the charity’s fundraising practices. Further probes established that it was linked to Save the Age through shared founding trustees and a shared correspondence address.

The Commission supported investigations by the Metropolitan Police Service, Redbridge Council and the Department for Work and Pensions into suspected housing benefit and social security benefit fraud involving the charities. The founding trustees were both arrested in May 2015.

The Commission had further concerns about misuse of the charities, potential unauthorised trustee payments, lack of evidence of charitable expenditure, and dubious fundraising activities, so it opened inquiries into the charities and issued a protective order to freeze the bank account of Save the Age.

The joint agency investigation identified that a number of the names listed as trustees of the charities, apart from the two founding trustees, had been ‘hijacked’ from individuals who did not have any connection with the charities. Prior to the opening of the inquiry one of the founding trustees had resigned and was working as an employee of Families for Survival.

In January 2016 the inquiry issued an order to suspend the sole remaining founding trustee of Families for Survival. Both founding trustees were convicted of charges brought against them by Redbridge Council in March 2016 which disqualifies them from serving as trustees of any charity.

Further investigations by the Commission found that the trustees were self-dealing by instructing their own accountancy firms to review the charities’ accounts. The trustees benefitted financially from this arrangement, meaning there was serious unmanaged conflict of interest.

The inquiry also found up to £14,000 in unauthorised private benefit was paid to the trustees, and annual accounts were submitted containing false information. Both sets of accounts were reviewed by the same accounting company. However one of the independent examiners signing off accounts was untraceable and the other was in fact an alias for one of the founding trustees.

Despite assertions that they were carrying out charitable activity at local nursing homes and campaigning in support of the elderly, scrutiny of accounts and a review of records held by Redbridge Council brought up no corroborating evidence. The trustees were therefore failing to further their charitable objects or operate for the public benefit.

The Commission concluded that there had been serious misconduct and mismanagement in the administration of both charities. As well as using the charities to facilitate unlawful activity, the individuals failed in their fundamental duties and responsibilities as charity trustees.

Following dissolution, the charities have now both been removed from the register of charities.

Harvey Grenville, head of investigations and enforcement at the Charity Commission said: ‘This case highlights a cynical abuse of trusteeship by two individuals who used the good name of charity to further unlawful personal motives. They have proven themselves wholly unfit to serve as trustees.’

Charity Commission report, Families for Survival UK & Save the Age Ltd is here.

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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