Prince Andrew’s charity made unauthorised trustee payments

The Charity Commission has intervened at a charity set up by Prince Andrew, over financial concerns relating to a £355,297 payment to a trustee

The Prince Andrew Charitable Trust supported the Duke of York’s charitable work in the areas of education, entrepreneurship, science, technology and engineering. It had an income of around £1.3m a year.

The Commission identified concerns about a former trustee being paid by the charity’s three trading subsidiary companies as a director of those companies.

The former trustee was an employee of the Duke of York’s household, and from April 2015 to January 2020 undertook work for the trading subsidiaries.

The Duke of York’s Household was then reimbursed for a proportion of the trustee’s time by the subsidiaries after the year end. These payments totalled £355,297.

This issue came to light after the charity reported to the Commission a potential reputational risk arising from significant media coverage of an interview with the Duke of York, broadcast by the BBC, in November 2019.

While the Commission found that actions taken by the charity and its subsidiaries as a result of the Prince’s TV interview were appropriate, proactive examination of the charity’s accounts and records at the time identified other issues of concern that required further attention.

The watchdog found the charity could not show that conflicts of interest relating to the payments received by a trustee were managed adequately at trustee meetings, and there was no standalone conflicts of interest policy at the charity for trustees to refer to.

Open and fair competition was not conducted before the trustee was appointed to the roles at the charity’s subsidiaries, and no evidence was obtained to demonstrate that these payments to the trustee provided value for money for the charity.

The charity watchdog pointed out that trustees cannot be paid to act as directors of a subsidiary company, unless there is authority from the charity’s governing document or the payments are authorised by the Commission or the court, none of which were in place at Prince Andrew’s charity.

Trustees also have a duty to act with reasonable care and skill, taking account of any special knowledge, skill or professional status. The board of trustees, which included a lawyer, was expected to have had the knowledge and experience to act in accordance with charity law.

As a result of the Commission’s intervention, Prince Andrew has repaid the full amount to the charity, which it disclosed in its 2019 accounts. The charity also confirmed it was taking steps to ensure conflicts are now properly managed.

The charity has notified the Commission of its intention to wind up. The remaining charitable funds will be distributed to other charities with similar objects and the charity will request to be removed from the register once this is complete.

Helen Earner, director of operations at the Charity Commission, said: ‘By allowing the payment of a trustee via its subsidiaries the Prince Andrew Charitable Trust breached charity law and by insufficiently managing the resulting conflict of interest from this payment the trustees did not demonstrate the behaviour expected of them.

‘We’re glad that concerns we identified are now resolved, after the charity acted quickly and efficiently to rectify these matters. The recovered funds will now go towards the causes intended, and we will continue to work with the trustees as they wind up the charity.’

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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