Seven-year ban for boss over charity collapse
12 Jun 2019
The boss of a leading alcohol and drug addiction charity has been given a seven-year director disqualification for causing it to collapse by entering into financial contracts that set unachievable targets
12 Jun 2019
Ian Wardle, of Bolton, was the CEO and de facto director of the Lifeline Project, a registered £60m charity employing 1,300 employees across 90 sites throughout the country.
Incorporated in 1984, the charity provided drug and alcohol rehabilitation services to over 80,000 people across England and Scotland, including a number of prisoners.
However, it called in insolvency practitioners in March 2017 after being unable to pay its debts following a financial shortfall of £1.4m. Just over a year later, in June 2018, the charity was placed in voluntary liquidation by joint administrators from FRP Advisory.
The administrator’s report to the Insolvency Service, found the charity owed nearly £4m to unsecured creditors and an estimated £280,000 in pension contributions, and triggered an investigation. Insolvency Service enquiries revealed that, between August 2015 and January 2016, Wardle had entered the charity into three payments by results (PbR) contracts with various local authorities.
A PbR contract is common in the health services industry, where payment is only made for services if certain pre-agreed targets are met. Wardle, however, signed these contracts without undertaking the necessary due diligence and failed to realise that the targets set were unachievable.
This resulted in the non-payment of more than £1.4m – the shortfall that caused the charity to close. Robert Clarke, Chief Investigator for the Insolvency Service, said: ‘This case highlights the damage an irresponsible director can do even to longstanding charities and businesses that have served their communities well for decades.
‘The lengthy disqualification is a warning to other directors who handle charitable funds that the Insolvency Service stands ready to take action to prevent the infliction of further damage to the charity sector.’