The Charity Commission, the independent regulator of charities in England and Wales, has today published a report of its inquiry into the charitable company, The Egyptian Community Association in the UK. The inquiry was opened in November 2011 after the regulator obtained evidence that charitable funds had been transferred into the personal bank accounts of one of the charity’s trustees, Mr Nehad Gamal-Eldin.
During the investigation the Commission established misconduct and mismanagement by the trustee in relation to the charitable company and charitable funds he held in his bank account. The concerns were so serious that the regulator took steps to remove the trustee from his position and referred the case to the police.
Following information provided by the Commission, the police arrested Mr Nehad Gamal-Eldin in September for the theft of charitable funds. These funds were the proceeds of the sale of a property owned by an unincorporated charity with the same name as the charitable company and which had been transferred to the charitable company shortly after the sale. The charitable funds were then transferred into the personal bank accounts of Mr Nehad Gamal-Eldin.
The trustee pleaded guilty to charges of theft of more than £600,000 in November 2012 and was sentenced to imprisonment for 3 years. As a result, he is disqualified from trusteeship. (see endnote) In September 2013, the convicted trustee was subsequently issued with a confiscation order to pay £702,606.14, most of which was to be paid to the unincorporated charity. Mr Nehad Gamal-Eldin failed to pay the debt by the given deadline and was sentenced to a further 4 years imprisonment.
The report concludes that in addition to misconduct and mismanagement by Mr Nehad Gamal-Eldin, there had been a serious failure by the former trustees of the charitable company to put in place proper financial controls and decision making procedures to protect charitable funds.
As at 7 December 2012, the charitable company had no validly appointed trustees and had ceased to operate. It was removed from the Register of Charities.
Michelle Russell, Head of Investigations and Enforcement at the Charity Commission said:
The theft of any charitable funds is unacceptable - in this case it was over £600,000. The sentence given to the trustee sends a clear signal that abuse of charities will not go unpunished and the additional years of imprisonment that were handed down demonstrate that failure to return charitable funds is also taken very seriously by the courts.
This was a case where we referred our suspicions to the police - we are pleased that they took up our referral and that a conviction was secured. The Commission is not a prosecuting authority but this is a clear example of how we work with others to make sure criminal abuse of charities gets pursued.
The findings of our investigation also have wider lessons for all trustees - you are responsible for taking steps to protect charitable funds from abuse, and ensure they are used for legitimate purposes. You must make sure you have proper financial controls in place and proper decision making procedures to protect funds. It should not be possible with good controls and robust reporting and checking procedures for someone to transfer significant amounts of charitable funds inappropriately to a personal bank account undetected.
Where charities detect foul play and that a crime has been committed they must report those suspicions to the police and to us under the ‘Reporting serious incidents’ process. Trustees have a duty to take steps to manage risks to your charity and owe it to their donors and the public to be vigilant and do so.
The full statement of the results of the inquiries can be read on the Charity Commission website.
Notes to Editors
The Charity Commission is the independent regulator of charities in England and Wales.
- Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
- charities know what they have to do
- the public know what charities do
- charities are held to account
The trustee was disqualified from acting as a trustee for charity, or as a charity trustee, as a person convicted of an offence involving dishonesty or deception in accordance with section 178 of the Charity Act 2011. His conviction will become spent 7 years after the end of the sentence under the Rehabilitation of Offenders Act 1974, and his disqualification will apply for this period.