Decision

Charity Inquiry: Aid Convoy

Published 28 August 2020

This decision was withdrawn on

This report has been archived as it is over 2 years old.

Applies to England and Wales

The charity

Aid Convoy (‘the Charity’) was registered as a charity on 19 September 2012. It was governed by a Declaration of Trust dated 22 May 2012. Prior to its registration the charity operated under the name “Aid Convoy 2 Syria” (‘AC2S’) and was involved in the organisation of aid convoys to the border between Turkey and Syria.

The Charity’s entry can be found on the register of charities (‘the Register’).

Background

When the Charity Commission (‘the Commission’) first engaged with AC2S and the Charity its activities involved carrying out aid convoys to Turkey and Syria. AC2S was operating in high risk areas but was not registered or constituted as a charity. Following the Commission’s engagement with AC2S it was determined that the Commission had jurisdiction over AC2S funds and its management over them as they were for exclusively charitable purposes. The Commission advised the then trustees of AC2S of the need to register the organisation, which they subsequently did. The Charity was registered in September 2012 under the name Aid Convoy. In September 2013, following two cash seizures by the police and a subsequent police investigation the Commission opened a statutory inquiry into the Charity (‘the First Inquiry’). As a result of the police’s investigation and the First Inquiry the Charity suspended all aid convoys. The activities of the Charity changed and became solely the collection and shipment of aid from the UK to Turkey and Syria which was distributed by the Charity’s partners.

Sources of concern and initial Commission intervention

The Commission carried out a visit (‘the first visit’) to the Charity in January 2013 to offer regulatory advice and guidance and to inspect the Charity’s books and financial records. During the visit, the Commission examined financial records held by the Charity for the period July 2012 to January 2013 and found that the Charity had not kept sufficient financial records. The Charity was unable to account for approximately 50% of its expenditure as legally required; c£84,000 could not be accounted for. The Commission determined that the Charity did not have sufficient financial governance structures in place.

Following the first visit the Commission was informed by Kent Police that, in December 2012, cash had been seized from individuals holding themselves out as representatives of the Charity as they were leaving the country on an aid convoy organised by another body, called “Humanitarian Convoy for Syria”. The funds were seized under the Proceeds of Crime Act 2002 (‘POCA’) as officers had concerns about the provenance of the funds and suspected they may be the proceeds of crime and/or they may be intended for some criminal purpose. The representatives, from whom the funds were seized, were unable to substantiate that the funds were for charitable purposes or provide proof that the funds were being held by the representatives on behalf of the Charity. The cash seizure in December 2012 was not mentioned by the Charity at the visit by the Commission in January 2013, nor subsequently reported as a serious incident.

The Commission also discovered that Kent Police seized a further £17,000 in February 2013 from a number of individuals claiming to be the Charity’s volunteers. The individuals were leaving the UK on an aid convoy to Syria, which was departing from Folkstone. In this instance, the cash was subsequently returned to the Charity. This seizure was also not reported to the Commission as a serious incident.

The apparent lack of proper internal financial governance discovered at the first visit and the information about the seizures of cash, gave rise to a number of serious concerns. The Commission considered that these concerns warranted further examination as part of a statutory inquiry. As a result, on 30 August 2013 the Commission opened the First Inquiry into the Charity under section 46 of the Charities Act 2011 (‘the Act’)

The scope of the First Inquiry was to examine:

  • failure on behalf of the trustees to retain sufficient accounting records to show and explain all the Charity’s transactions as set out in Section 130 and 131 Charities Act 2011
  • an inability or unwillingness by the trustees to provide information to substantiate a large proportion of the Charity’s income
  • failure to evidence how the Charity’s funds have been expended in line with its objects or on charitable activity
  • taking charitable funds in cash out of the country without sufficient safeguards being in place
  • failure to notify the Commission that charitable funds had been seized by the police

Findings and Conclusions of the First Inquiry

The Commission concluded that there was poor financial management and governance at the Charity. There was evidence of misconduct and/or mismanagement in the Charity’s administration by the then trustees, in particular, the then trustees did not:

  • keep adequate basic accounting records to explain the Charity’s transactions and activities
  • maintain records of due diligence checks in regard to partner organisations or evidence that they had complied with the Charity’s own due diligence policy or show it carried out proper due diligence on partners, agents and employees connected to the Charity to ensure that the Charity’s assets or reputation were not put at undue risk
  • carry out adequate monitoring to ensure that the Charity’s funds and assets were only used in furtherance of the Charity’s purposes – they were unable to evidence and account for the proper end use of the Charity’s funds applied overseas
  • properly manage the Charity’s use of cash couriers; they failed to keep the necessary audit trails for cash transported and failed to manage the Charity’s resources responsibly
  • manage and report serious incidents properly - failing to report two separate cash seizure losses as serious incidents
  • implement and follow the Charity’s own Cash Handling Procedure

In summary, the then trustees failed to properly discharge their legal duties as trustees under charity law.

The Commission acknowledged, at the time and now, that the trustees responsible for the Charity at the time of opening the First Inquiry are no longer in place. Prior to May 2016 the trustees who were in place at that time were unwilling to meet with the Commission owing to the then ongoing criminal investigation. Following the criminal investigation, the trustees in office in 2016, following a change in trustees, met with the Commission in July 2016 and subsequently co-operated with the first inquiry, as they are expected to do. The First Inquiry concluded that there had been misconduct and/or mismanagement on the part of the trustees who were appointed during the course of the First Inquiry.

On 21 December 2016 the Commission exercised its legal powers and made an order under section 84 of the Act. The order directed the trustees to take specified action which was in the interests of the Charity within a set timeframe.

The section 84 Order directed the then trustees to take steps to improve the Charity’s management and governance processes specifically in relation to financial governance, due diligence and monitoring the end use of funds.

On 14 August 2017 the Commission confirmed to the Charity that the substantive investigative phase of the First Inquiry had concluded, and that a statement of its results was in the process of being drafted. The statement of results was subsequently subject to delay owing to the then ongoing criminal investigation.

Review of the section 84 Order

On 25 July 2018 the Commission visited the Charity as part of usual activity to monitor the compliance with an order served under section 84 of the Act. During this visit a number of governance issues were identified. These included persistent failings to file the Charity’s annual returns on time. It is a criminal offence by virtue of section 173 of the Act to fail to file accounts, and a breach of Clause 24 of the Charity’s Governing Document (‘GD’).

In addition to this, there were concerns relating to the due diligence undertaken on the Charity’s partners and whether the end use of the Charity’s property could be accounted for.

Given the nature of the above concerns, the Commission decided that it was necessary to open a second inquiry (‘the Inquiry’) to establish or verify facts and to collect evidence. There were reasonable grounds to believe that there may be a need to use the Commission’s regulatory powers of remedy and protection which are available only if an inquiry has been opened.

The publication of the report of the first inquiry was delayed following the opening of the second Inquiry.

Scope of the inquiry

The Second Inquiry examined the following regulatory issues:

  • compliance with filing statutory returns on time
  • providing false and misleading information to the Commission
  • financial control measures and appropriate banking facilities
  • due diligence checking and monitoring the end use of charitable property
  • control measures for the collection, storage and delivery of donated items

The inquiry closed with the publication of this report.

Findings

Governance

Section 163 of the Act states that where a charity’s gross income in any financial year exceeds £25,000, a copy of the trustees’ annual report required to be prepared under section 162 in respect of that year must be transmitted to the Commission by the charity trustees within –

a. 10 months from the end of that year, or

b. such longer period as the Commission may for any special reason allow in the case of that report

The Charity’s trustees failed to meet this legal requirement to file statutory returns, which generally forms a part of the Charity’ accounts for two of the past three financial years (FYE 1 April 2016 – 71 days late & FYE 1 April 2018 – 78 days late). FYE 1 April 2017 does show as being filed 4 days late, however the trustees have stated that this is an administrative error while referring the accounts to the Commission. It is a criminal offence by virtue of section 173 of the Act to fail to file accounts, and a breach of Clause 24 of the Charity’s GD where it states that the trustees must comply with their obligations under the Act. The Charity’s trustees, Mr Mumin and Mr Shafaq, were advised of their legal duty during the First Inquiry in correspondence of 21 December 2016and failed to make the required improvements. The trustees have consistently failed to meet their filing obligations. This demonstrates a pattern of behaviour of non-compliance. The trustees have been directly involved in the failure to file statutory returns over a period of three years of their tenure as trustees. This is misconduct and/or mismanagement in the administration of the Charity.

In addition to this, the accounts filed for FYE 1 April 2018 are not compliant with the Charity Statement of Recommended Practice (“SORP”). The accounts state that the Charity has generated £321,071.77 income during the year. This includes both direct transfers into the Charity’s account and cash donations. However, the trustees also state that the Charity has sent “40ft. containers of essential aid from new and used clothes to tinned food, medical equipment etc. delivered to Northern Syria at the average value around £25,000 each”. It is not known at present how many containers were sent during this reporting period and the value of the donated goods was not included in the Charity’s reported income as is required by the SORP. This means that the Charity’s income was seriously under reported and the true level of income may have required an audit which did not take place.

Both the 2017 and 2018 accounts state that the Charity is governed by a Memorandum and Articles of Association, however the Charity was governed by a Declaration of Trust, This has not been corrected despite the current trustees receiving specific advice to do so by the Commission during the meeting on 25 July 2018. This failure to respond to advice from the regulator and ensure that the Charity’s accounts are accurate is misconduct and/or mismanagement in the administration of the Charity.

Financial controls and management

The Commission became aware of the withdrawal of services to the Charity’s bank account during the visit on 25 July 2018, when advice was given to the trustees about banking facilities. The Commission obtained a copy of trustee meeting minutes on 25 April 2019. These minutes show that the meeting held on 13 September 2018 recognised the need to find an alternative high street bank due to services being withdrawn by their banking provider. The minutes of the trustee meeting noted, “A bank account is essential for the survival of charity and obtaining funds from Online services/old account.” An action from the meeting stated that “Trustee may need to create personal account in which no other funds are to be used”. The trustees failed to report the loss of financial services by the bank to the Commission as a serious incident. The Commission guidance on reporting serious incidents, in the main categories of reportable incidents section of the guidance, lists “forced withdrawal of banking services without an alternative” as an example of a reportable incident. The withdrawal of the Charity’s banking facilities formed part of the Commission’s meeting with the trustees on 19 December 2018. During the meeting, the trustees cited the banks decision to withdraw facilities as the reason for failing to comply with the Commission’s accounting requirements.

In correspondence dated 25 March 2019 the trustees stated that “financial difficulties and administrative overload on the charities resources and due to the closure of accounts, there has been an unforeseen delay in the submission of the financial records.”

In the trustee meeting held on 21 November 2018, the action of finding a replacement banking provider stated the identified bank “is an online bank, which has given us an account with a limit of £15K. In order not to go over the limit, trustee to use personal account (independent of any non-AC funds) for overflow.”

The Commission identified a number of payments, totalling £12,200, paid from the Charity’s bank account to a personal account between 21 and 30 November 2018.The name on this account was the same name as one of the trustees of the Charity. This was replicated in a second account where the name on this account was also the same name as another trustee of the Charity. Transactions totalling £8,859.50 were paid into the second account between 24 April 2019 and 27 August 2019.

Clause 26 of the GD states that “Any bank of building society account in which any of the funds of the charity are deposited must be operated by the trustees and held in the name of the charity. Unless the regulations of the trustees make other provision, all cheques and orders for the payment of money from such an account shall be signed by at least two trustees.” As the accounts are personal accounts, held in the sole names of trustees of the Charity, the trustees have breached this clause of the GD.

By the Charity being unable to find a comparable account and having to resort to using personal accounts to hold funds, a suitable alternative had not been identified and therefore this could be considered to be a serious incident. The trustees proceeded to breach Clause 26 of the GD without seeking prior consent from the Commission. The trustees did not seek advice of the Commission prior to proceeding with the use of personal accounts.

By attending that meeting, each of the trustees were aware of the removal of banking facilities and the subsequent opening of accounts held in the names of trustees, resulting in a breach of the GD.

Due diligence and monitoring

On 13 March 2019 the Commission contacted the trustees advising them of media reporting in BBC News and The Guardian on 4 March 2019 which stated that in 2017 Mr Tauqir Sharif (“Mr Sharif”) was deprived of his UK citizenship by the Home Secretary because it was assessed that he had travelled to Syria and is/was “aligned to an AQ (Al-Qaida) aligned group”. AQ is a proscribed terrorist organisation.

Mr Sharif had acted as a representative of the Charity on videos posted on the Charity’s social media account to evidence goods, donated to or purchased by the Charity, reaching Syria.

In response to this media reporting, the Commission promptly requested the trustees to review their relationship with Mr Sharif and the organisations that he represents, namely Live Updates from Syria (“LUfS”).

A response from the Charity dated 25 March 2019, copied below, states that:

“Aid Convoy has an indirect relationship with LUfS. This relationship exists as they are the media partner for our in-kind aid delivery partner ‘Baraka’ (Turkish Registered Organisation).

(i) Baraka utilises the English-speaking members of Live Updates from Syria to provide clear and coherent dialogue for their English-speaking partners.

(ii) Baraka have agreed that in any and all distributions of our aid, there will always be a Baraka representative present to monitor the proper application of funds.

Aid Convoy will be continuing to operate with Baraka as their delivery partner. We are comfortable with their policies and procedures.

(i) Who Baraka utilise for media coverage is not our ultimate decision however, pending an outcome of a discussion/investigation that would necessitate us to refuse direct or indirect association with them or their media/delivery partners, an avenue of dialogue could be established for alternative options if at all available.

(ii) To boycott our delivery partner due to a single media representative (voluntary or employed) of their chosen media partners, because the individual has been ‘assessed’; and thereby accused but not convicted; of association to a banned organisation, is not a decision we are willing to rush into.

As an action resulting from this concern, Aid convoy will be conducting a review of all retrievable information around Tauqir Sheriff and the accusations he is facing. This will be held in the latter part of April if not before. The aim will be to educate the trustees with as much available information about facts and accusations and allow them to make a decision if they want to pursue an avenue of dialogue with their partner to provide another non-native English speaker for their media feedback.”

This response is contrary to the Charity’s Due Diligence Checklist. The trustees provided a copy of a due diligence procedure and checklist for potential partners on 11 July 2018. The due diligence policy states: “Aid Convoy will take sensible measures to assure all actions carried out by the charity are researched and assessed to make sure the actions are:

  • cost effective
  • appropriate to Aid Convoy’s aims and with maximum benefit(s)
  • minimum risk(s) (i.e., legally, financially and protecting the charity’s reputation)”

Point 3 of the 7-step due diligence checklist “Concerns of the individual’s or organisation’s links to external group’s?” here an individual closely associated with a partner organisation has been linked to a proscribed terrorist organisation.

The trustees have also advised the Commission, on 27 November 2018, that a project of the charity named “Lul Wal Marjaan” which was described on its website as “Aid Convoy Nursery Project” as an extension of LUfS. which suggested that the Charity’s relationship with LUfS was more direct than was suggested in relation to Baraka as set out above. By continuing to operate with such projects and individuals the trustees have failed to adhere to the “minimum risk” element of the procedure, as they are putting the reputation of the Charity at serious risk.

The Inquiry found that the Charity’s relationship with LUfS was inappropriate, given that:

(i) it is contrary to the Charity’s own due diligence policy, given the link to an external group of concern

(ii) the UK Government’s assessment is that Tauqir Sharif is associated with an AQ aligned group

(iii) the Home Secretary took the decision to deprive Tauqir Sharif of his citizenship. Despite this, the trustees maintained a relationship with Tauqir Sharif, albeit via LUFS. The Inquiry is critical of the trustees in this regard and took further regulatory action to address this issue – see regulatory action taken

The trustees failed to apply their own due diligence policy. The policy was drafted and implemented during the tenure of the current trustees. The trustees are responsible for the application of the due diligence policy. Failing to apply this has resulted in the Charity’s reputation being put at undue risk. This is misconduct and/or mismanagement in the administration of the Charity.

Conduct of the trustees

The Inquiry found that the trustees provided false and misleading information to the Commission in the Annual Return filed for the financial year ending 1 April 2017. Providing false or misleading information to the Commission is a criminal offence under section 60 of the Act.

The Annual Return states that the Charity did not operate outside of England and Wales during the financial period, however the key achievements reported in the accounts for the same period relates to activity overseas. This is one of a number of irregularities in the accounts. Another is the declaration that the Charity has no UK volunteers - this is incorrect.

As the Annual Return declaration, signed by Mr Asim Shafaq (‘Mr Shafaq’) who was a trustee of the Charity, confirms that the information provided is correct to the best of Mr Shafaq’s knowledge and has been brought to the attention of all of the trustees. The Inquiry advised the trustees of this on 13 November 2018, who responded stating “The Annual return is our mistake and it is highly embarrassing, we trusted who we thought was a reliable accountant who had previously done our returns. But it should have been noticed before it was signed by a trustee, which it was not, further it was not brought to the attention of the trustees. This is a lesson learned and it is something that will not happen again.” Nevertheless, the trustees failed to scrutinise the documents to ensure factual accuracy prior to submitting to the Commission.

False and misleading information has been submitted to the Commission, this is misconduct and/or mismanagement in the administration of the Charity.

As stated above, the trustees have failed to comply with legal duties in relation to the Act and in compliance with the Charity’s GD. In addition to this, there are concerns as to the control measures in place for accepting charitable donations that require a licence for handling, storing or shipment for convoys overseas. The trustees did not demonstrate having suitable skills, knowledge or experience in order to handle controlled medicines, nor do they have adequate storage or logistical equipment or premises. Despite this, donations of controlled substances were collected, including accepting donations of medicines containing morphine, a classified substance without a prescription.

Controlled medicines must be disposed of correctly, following guidelines from the Medical and Healthcare Products Regulation Agency (‘MHRA’), however the trustees were unable to evidence what was collected, where it was stored or how it was disposed of.

There was a risk that because the trustees do not know what is included in each container, they could not accurately account for the end use of the donated goods. The trustees fail to keep accurate records of what goods are loaded into containers, therefore are unable to assess whether all goods are accounted for once the container reached Syria, and that they have not fallen into the hands of terrorist organisations.

During the 2017 financial year the trustees advised that the Charity sent 48 containers to Northern Syria, valued at an average of £60,000 each as stated in the Trustees Annual Report. This means that £2,880,000 worth of goods was shipped within that reporting year that could not be appropriately accounted for.

This was further evidence of misconduct and/or mismanagement in the administration of the Charity.

Interim Manager Appointment

On 1 November 2019 the Commission appointed Adam Stephens of Smith & Williamson LLP as an Interim Manager (‘the IM’) under section 76(3)(g) to the exclusion of the trustees. The IM was appointed to:

  • consider the viability of the Charity and to take the appropriate action
  • by whatever means that is available, safeguard the assets of the Charity to prevent any loss of Charity property
  • if he determined that the Charity is viable to make recommendations to the Charity trustees about actions necessary to secure compliance with legal requirements and standards

The IM met with the trustees on 5 November 2019, in which the trustees advised that the Charity lacked a stable bank account and fundraising platform, and that the Charity was “on its last legs”.

Further Concerns

The IM was appointed due to the severity of the misconduct and/or mismanagement and was appointed to the exclusion of the Charity’s trustees. Despite this, there were still appeals for donations in the Charity’s name/using the Charity’s registration number. This activity was not authorised by the interim manager and without his authorisation such activity was not permissible.

An appeal was made online on 26 February 2020 asking for donations in the form of clothing, Moses baskets, stationary, medicines, nappies, toiletries and creams “to be sent to Syria via Aid Convoy”. The appeal displayed the Charity’s reference number of Aid Convoy, 1149105.

The Interim Manager confirmed on 10 March 2020 that he was unaware of this appeal and had not been in receipt of any goods.

On 9 March 2020, the Commission sent a Direction under section 47 of the Act to the trustees of the Charity requesting information regarding the appeal.

In response, on 16 March 2020, Muhammed Abdul Mumin (‘Mr Mumin’) provided a response to questions, however the responses were not specific to this appeal, but were in relation to generic appeals of the Charity while it was fully operational under the control of the trustees. Further conversations between the Inquiry officer and Mr Mumin revealed that Mr Mumin was not aware of this appeal and that as far as he was aware, all appeals were stopped in November 2019.

The Inquiry officer asked who would usually collect donations, Mr Mumin advised it is an outside company. He doesn’t know any names of employees or contacts as a volunteer of the Charity arranges this.

There are concerns that appeals are being made in the name of the Charity, displaying its charity number, however the donations were not reaching the Charity. If the Charity trustees were conducting the appeals, they were not allowed to do so because they were excluded from acting in the administration of the Charity due to the Interim Manager’s appointment. If they had knowledge of any such appeals, they should have informed the Interim Manager – they did not.

There was a risk, whilst such appeals were ongoing, that donors and members of the public were being misled by these appeals.

IM’s assessment of the Charity’s future viability

The IM stated that he found limited ongoing operational activities relating to the Charity.

The IM stated that “Due to the lack of cooperation, I have been unable to address the regulatory concerns identified by the Commission.”

The IM also had serious concerns over the management of the Charity by the trustees, explaining that “Neither of them seemed to have an appropriate knowledge of the operations of the Charity, much of which they informed me was managed by an external consultant. The trustees had not maintained adequate financial records to my satisfaction for several years, which further hindered any attempts to ascertain that the Charity had a viable future.”

On the basis of the above, the IM concluded that the Charity had no viable future.

The IM, after making the determination that the Charity was not viable, took action to wind up the Charity in accordance with the GD. In doing so, final accounts were prepared. The IM estimated that the charity generated income of £102,246 during the financial year ending 1 April 2020 based on the Charity’s bank statements, however, he states in the accounts that “due to lack of adequate record keeping by the Charity prior to the appointment of the Interim Manager, it is not possible to confirm the accuracy of this figure.”

During the course of winding up the Charity, the IM identified a charity that was willing and able to apply the remaining funds in line with the Charity’s objects. The final account balance, after settling outstanding liabilities, totalling £12,218 plus physical goods were transferred to the receiving charity. The Charity was removed from the Register on 12 June 2020 on the basis that it ceased to exist following the IM dissolving the Charity in accordance with its GD.

The IM made attempts to gain access to the Charity’s social media and online platforms. However, the trustees have failed to comply with the IM’s requests. The IM requested that the trustees remove the online platforms, which was completed as a result of the intervention of the IM.

The costs of the IM’s appointment were indemnified by the Commission. The total cost of the IM appointment was £35,022 (inclusive of VAT). Further to this, professional services and disbursements were met from the Charity’s funds totalling £4,522.10 and £382.24 respectively.

Conclusion

The Commission concluded that there was poor financial management and governance at the Charity. There was evidence of misconduct and/or mismanagement in the Charity’s administration by the trustees, in particular, the trustees did not:

  • comply with legal duties to file statutory returns to the Commission
  • comply with the Charity’s GD in relation to financial management, placing charitable funds at undue risk
  • maintain records of due diligence or evidence that they had complied with the Charity’s own due diligence policy or show it carried out proper due diligence on partners, agents and employees connected to the Charity to ensure that the Charity’s assets or reputation were not put at undue risk
  • carry out adequate monitoring to ensure that the Charity’s funds and assets were only used in furtherance of the Charity’s purposes – they were unable to evidence and account for the proper end use of the Charity’s funds applied overseas
  • comply with legal requirements in relation to the handling of controlled substances
  • report serious incidents to the Commission as required

In summary, the trustees, including those who were trustees throughout the existence of the Charity, have failed to properly discharge their legal duties as trustees under charity law and placed charity property at undue risk.

Regulatory action taken

the Inquiry issued orders under section 52 of the Act to obtain the Charity’s bank statements and exchanged information with police and other law enforcement agencies under sections 54-56 of the Act.

On 20 March 2014 the Commission froze the Charity’s bank account using its power in section 76 of the Act. The order was subsequently discharged on 21 December 2016.

On 21 December 2016 the Commission exercised its legal powers and made an order under section 84 of the Act directing the trustees to take specified action which was in the interests of the Charity within a set timeframe (the ‘action plan’).

On 5 July 2019 the Commission used its power under section 76(3)(f) of the Act to restrict certain transactions without prior approval from the Commission. The restrictions applied to overseas transfers or payments, payments to trustees or related parties and cash withdrawals.

Throughout the Inquiries, the Commission used information gathering powers under sections 47 and 52 of the Act to obtain information and documentation in order to assess the trustees’ compliance with their legal duties.

On 1 November 2019 the Commission appointed Adam Stephens of Smith & Williamson LLP as an Interim Manager (‘the IM’) under section 76(3)(g) to the exclusion of the trustees.

The Commission served an Order under section 84a of the Act on 9 April 2020 to the trustees directing specified action not to be taken. The Order specified that:

a. conducting any appeals for donations of any kind in the name of Aid Convoy; or

b. conducting any appeals for donations of any kind that display the charity registration number of Aid Convoy, namely 1149015

could not take place as it would constitute misconduct or mismanagement in the administration of the Charity.

As a result of the significant evidence of misconduct and/or mismanagement, on 8 July 2020 Mr Muhammed Abdul Mumin and Mr Asim Shafaq were disqualified under section 181A of the Act for a period of 8 years from being a charity trustee or acting in a position of senior management within any charity in England and Wales. It is a criminal offence to act as a trustee whilst disqualified.

On 12 June 2020 the Charity was removed from the Register under section 34b on the basis that it ceased to exist following the IM’s action to dissolve the Charity

Issues for the wider sector

Application of charitable funds and financial controls

It is the fundamental duty of all charity trustees to protect the property of their charity and to secure its application for the objects of the charity. In order to discharge this duty it is essential there are adequate internal financial and administrative controls over the charity’s assets and their use. Therefore, in order to show that they are complying with their legal duties, trustees must keep records and an adequate audit trail to show that the charity’s money has been properly spent on furthering the charity’s purposes for the benefit of the public.

Charity trustees must exercise sufficient control over their charity’s financial affairs both in the UK and internationally. As an absolute minimum, they must keep proper and adequate financial records for both the receipt and use of funds and audit trails of decisions. Records of both domestic and international transactions must be sufficiently detailed to show that funds have been spent properly and, in a manner, consistent with the purpose and objectives of the organisation.

Charities working internationally

Many charities are based in the UK and send money to projects, charities, not for profit organisations and direct to beneficiaries in other countries - these charities carry out invaluable work, in challenging circumstances, often helping the neediest in society. Trustees of such charities may need to take additional steps to ensure that charitable funds are properly used and reach intended beneficiaries. In some cases, the risks will be significantly higher. Sometimes these risks arise because the charity is not on the ground to check funds have been spent properly, requiring trustees to consider carefully what specific due diligence and monitoring steps they need to undertake. These steps may be more time-intensive than for other charities.

When working internationally, charities often operate through local partners rather than establishing their own delivery infrastructure in their country or region of operation. Working through or with a local partner can be an effective way of delivering significant benefits direct to a local community. It does not, however, shift or alleviate responsibility for ensuring the proper application of the charity’s funds by the local partner. That responsibility always remains with the charity trustees, forming part of their duties and responsibilities under charity law. The need to implement risk strategies therefore remains critical.

Working in partnership

Further information and regulatory advice and guidance on these subjects is available on the Commission’s website in Internal financial controls for charities (CC8) and chapter 2 of the toolkit (Protecting charities from harm). Guidance on charities and tax is available from HMRC.

Reporting duties to the Commission (including serious incidents)

Trustees should provide the Commission with information about serious incidents as soon as possible after they become aware of them. If a charity has an income over £25,000 trustees must, as part of the Annual Return, confirm that there are no serious incidents or matters relating to the charity over the previous financial year that should have brought to the Commission’s attention but have not. Any serious incident that has resulted or could result in significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation should be reported to us immediately. Failure to confirm this is a breach of legal requirements and may be taken as evidence of misconduct and mismanagement in the administration of a charity.

More information on reporting a serious incident can be found on our website.

Cash Couriers

The Commission strongly advises charities against the use of cash couriering as a method to transfer charitable cash due to the risks involved.

The Commission recognises that charities which work, or support activities internationally need to move money across international borders. Most countries have formal banking systems in place. Using formal banking systems is a prudent and responsible way to ensure that charity funds are safeguarded, and that there are appropriate audit trails of the sort which trustees must keep for the receipt and use of money. This is the case even if transferring funds through such channels incurs an administrative cost to the charity. The Commission’s position is that formal banking systems should always be used where they exist as they provide the safest and most auditable means of transferring charitable funds. The Commission would remind trustees considering the use of a cash courier of their duty to account for their charity’s income and expenditure by maintaining and preserving accounting records and to act prudently and responsibly to safeguard their charity’s assets.

The Commission accepts that in exceptional circumstances, where other means of transferring funds are not available, that cash couriering may be the only option available. In such circumstances, the Commission expects as a minimum that the trustees will have put in place the sufficient safeguards.

Procuring, storing, supplying and exporting medicines

Procuring is any action by which a charity or charitable appeal receives medicines or medical equipment which can include, but is not limited to specific appeals, nonspecific donations and purchasing.

The Commission are alert to the fact that charities and supporters of the charities have, and continue to, appeal for donations of medicines, medical devices and medical equipment including pain killers, clotting agents and syringes.

The purchase, storage and distribution of medicines is regulated by the MHRA who have responsibility for licencing such activity defined within the Human Medicines Regulations 2012.

The correct procurement and distribution of medicinal products is an important activity in a legal and integrated supply chain and prevents falsified medicines from entering the supply chain. Compliance with the guidelines ensures control of the distribution chain and maintains the quality and integrity of medicinal products. Charities that appeal for or purchase medicines should be aware of the regulations and ensure that they are compliant with them.