Regulator finds trustee misconduct at educational charity
20 Aug 2019
Charity Commission regulatory intervention has seen the reopening of a London school which was sold and shut by a trustee, who was responsible for serious misconduct and governance failings
20 Aug 2019
Grangewood Educational Association was set up as a charity in 1989 to provide Christian education, and operates the Grangewood Independent School in Newham, London.
The Charity Commission opened a statutory inquiry in April 2018 and appointed interim managers from FRP Advisory to the charity in response to several serious concerns, including that significant decisions had been taken for the school by a sole trustee. These included the sale of the school building and the closure of the school.
This inquiry has now found that the charity was inquorate for several significant periods of time: it required three trustees, but one died in December 2017 and another resigned in February 2018. The charity had also been inquorate for periods of time prior to that and one such period had coincided with the charity undertaking a company voluntary arrangement in 2014 – the charity had experienced financial difficulty which resulted in the sale and lease back of the charity’s school building in 2015.
An educational advisor’s report had been commissioned by the sole trustee of the charity, which in February 2018 concluded that the charity would be insolvent by December 2018.
The sole trustee made the decision to sell the school and then lease it back. He then made the decision to close the school, without considering the consequences and families were given short notice of the closure with little time to find alternative arrangements.
Parents protested against the decision to close the school by occupying the school premises, a move which attracted significant media coverage. The sole trustee had instructed solicitors to instigate a possession order to remove the parents.
The inquiry also found a loan of £5,000 was paid to the sole trustee and then used to settle his own debts. The charity’s financial records show that the three trustees in post during 2016 and 2017 received £31,905 in expenses, but these were not recorded in the accounts.
The Charity Commission report said that the breakdown in communication between the sole trustee and the business manager led to conflict that had a negative effect on the running of the school. A problem with accessing the online banking led to money being paid directly into the trustee’s personal bank account, part of which was then used to settle debt of a personal nature. Charity funds were therefore misapplied.
As the charity did not have sufficient trustees to make quorate decisions, the trustee should not have sought a possession order against parents, and the Commission refused to grant permission to allow this action to go ahead.
The sole trustee formally ceased to be a trustee from 23 July 2018 when his directorship of the charitable company ended and he was not re-appointed. The trustee has undertaken to not accept a trusteeship for a charity or any charities for a period of ten years from this date.
The school continued to function throughout the period of the appointment of the interim managers and the statutory inquiry, and remains open.
Due to the appointment of new trustees on 29 August 2018 and their subsequent engagement with the interim manager, the Commission said there is now adequate due diligence, monitoring and risk management procedures in place and there appears to be no ongoing risk to the charity or its assets.
Amy Spiller, head of investigations team at the Charity Commission, said: ‘The Grangewood community were treated poorly, by the inadequate way this charity was managed and how decisions were taken. The sole trustee, who should not have made decisions alone, failed in his responsibilities to the charity and let the school community down.
‘We took action to support the reopening of the school and protect the charity from suffering further harm, and we’re satisfied it has now made the significant changes to its governance needed, but it should not have taken this level of disruption to pupils, families and staff for this to happen.’