The Charity Commission has published a report on its inquiry into Helping Hands for the Needy (registered charity number 1094509). The Charity was registered in 2002 and predominantly ran overseas health care and emergency relief projects. The Charity is now in liquidation.
The commission opened a statutory inquiry into the Charity in August 2010 following engagement with the trustees and an examination of the Charity’s financial information which indicated misuse of the Charity’s funds. To protect the Charity’s assets, the commission immediately suspended one of the trustees, who was also the acting CEO; he subsequently resigned before the commission could remove him permanently from his position as a trustee. The commission also took steps to restrict the Charity’s bank accounts, so that trustees could not withdraw funds without the commission’s consent.
The Inquiry found that the then trustees did not maintain proper financial controls over income and expenditure, keep proper records or produce annual financial accounts for the Charity. This lack of adequate governance and management of the Charity meant that the then trustees failed to safeguard the Charity’s funds which led to thousands of pounds of charitable funds being misused. One of the then trustees received unauthorised payments from the Charity, in breach of trust, and in addition many of these payments were not legitimate payments for the Charity to make. This included payments for parking and speeding fines, and for building work on the then trustee’s private residence. One of the then trustees disputes the commission’s findings and conclusions.
The commission concluded that there had been serious failings in the administration and governance of the Charity, which amounted to misconduct by the Charity’s then trustees.
In March 2011, the Charity was placed into voluntary liquidation by the trustees. The liquidator (see endnote 1) has started legal action to recover funds from one of the Charity’s trustees, and this process is still continuing.
Following a referral by the liquidator and in consultation with the Inquiry the Department of Business, Innovation and Skills commenced its own enquiry into the conduct of the trustees and directors which resulted in two trustees being disqualified as company directors.
Michelle Russell, Director of Investigations, Monitoring and Enforcement at the commission, said:
Our investigators in this case uncovered numerous and significant payments and benefits to one of the then trustees, who had sole control of the Charity’s bank account and was responsible for the day to day management of the Charity. Payments such as parking fines and paying for building work on a trustee’s private residence were clearly not legitimate or appropriate payments for a charity to make.
All trustees must take an active role and responsibility for ensuring charity funds are spent properly. It is absolutely vital that robust financial controls and procedures are in place and implemented. This includes ensuring there are audit trails for decisions, keeping accounting and financial records for both the receipt and use of funds, and that payments to trustees are well documented, under transparent procedures that deal with conflicts of interest.
This is another case where our powers were not adequate as the individual concerned resigned before we were able to remove him from his position. We were really pleased to work with the Department of Business, Innovation and Skills and provide evidence to support the action they took, which ultimately disqualified two of the trustees as company directors.
The commission’s guidance for trustees, The essential trustee: what you need to know (CC3), sets out what is required of a charity trustee, including their responsibilities to their charity.
It is the commission’s policy, after it has concluded an inquiry, to publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were. Reports of previous inquiries by the commission are available on GOV.UK.
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
Section 46 of the Charities Act 2011 gives the Charity Commission the power to institute inquiries. The opening of an inquiry gives the Commission access to a range of protective and remedial powers.
- The role of the liquidator includes investigating the financial affairs of the company and maximising the return to creditors. As a result the liquidator took on responsibility for recovery of any funds paid in breach of trust and where trustees had a duty to account for them to the Charity.