Regulator investigates charity for second time

The Charity Commission has opened a second statutory inquiry into The Mohiuddin Trust to look into concerns over potential misconduct and mismanagement, including continuing problems with poor financial controls identified in an earlier investigation

The charity’s objects include the relief of poverty and the advancement of education and training for the public benefit, with a focus on Kashmir and Pakistan. Its income for the financial year ended 31 March 2016 was £519,432 and spending was recorded as £1,444,692. The accounts for the following financial year were received by the Commission 133 days late and both the most recent sets of accounts have been qualified.

An earlier inquiry, which resulted in a report published in 2010, examined the potential for misapplication of the charity’s funds, including possible payments to a connected company, potential conflicts of interest relating to a loan to a company connected to one of the trustees and unauthorised payments to trustees.

The report censured the charity for serious breaches of financial controls, having found evidence of a blank cheque being signed and misleading record keeping relating to cheques and other payments.

At the time, the Charity Commission said the trustees had taken steps to address the problems, including improvements in the charity’s administration and management and agreeing an action plan for securing more effective governance.

Subsequently, in August 2017, the Commission wrote to the charity setting out that it wished to meet with the charity’s trustees following a review of the charity’s accounts which identified statements in its auditor’s report for year ending 31 March 2016 which indicated a financial risk to the charity.

Upon writing to the trustees to organise a meeting, it soon became apparent that there was an ongoing internal dispute between competing parties claiming to be the charity’s trustees and, as a result, it was unclear whether the charity had any validly appointed trustees.

The Commission advised the parties to the dispute that they were required to mediate or engage in dispute resolution with each other to address the substantive issues in the dispute.

However, the competing parties have failed to do so satisfactorily, and the Commission is concerned that the dispute is now impacting upon the day-to-day running of the charity and says there are indications of mismanagement by those in control of the charity.

As a result of these regulatory concerns and failure to comply with regulatory advice and guidance provided, the Commission has opened a second statutory inquiry.

This will look at the ongoing dispute and how to regularise the concern that charity has no validly appointed trustees. It will also consider whether those in control of the charity have properly exercised their legal duties and responsibilities under charity law in the administration of the charity and assess the financial management of the charity.

The Commission will consider whether there has been misconduct and/or mismanagement by those in control of the charity. Once the inquiry has been concluded it will publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were.

Inquiry report on The Mohiuddin Trust published 16 June 2010 is here

New charity inquiry: The Mohiuddin Trust is here

Report by Pat Sweet

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