Decision

Charity Inquiry: Anaya Aid

Published 26 March 2020

This decision was withdrawn on 7 April 2022

This Inquiry has been archived as it is over 2 years old.

The Charity

Anaya Aid (‘the charity’) was registered with the Charity Commission (‘the commission’) on 19 July 2013 and is governed by a Memorandum and Articles of Association, incorporated on 15 February 2012, as amended by special resolution dated 3 June 2013. The charity’s name was changed on 16 March 2015.

The charity’s objects are recorded on the register of charities as: - advance education by providing education to the local community for children and adults including, e-learning, health education and sports and leisure training and activities - promote religious harmony for the benefit of the public including but not limited to education faith communities on each other’s faiths - advancement of the religion of Islam

The charity’s entry can be found on the register of charities.

Issues under Investigation

The commission opened a compliance case into the charity in May 2014 due to regulatory concerns regarding the charity operating in high risk areas, including Syria. At the time several proscribed terrorist organisations, and other armed groups, were known to operate in Syria.

This led to several compliance visits to the charity conducted on 5 August 2014 (‘the 2014 visit’), 18 June 2015 (‘the 2015 visit’) and 12 October 2016 (‘the 2016 visit’).

The 2014 visit identified serious regulatory concerns regarding the charity’s operation including: ineffective due diligence on the charity’s partners, failure to evidence the end use of the charity’s funds, inaccurate and late filed statutory accounts, ineffective financial controls, and general poor governance. These issues were highlighted to the trustees, and the commission provided advice and guidance.

The 2015 visit established that the trustees had not acted effectively to address the failings identified by the 2014 visit. Following the 2015 visit, on 16 October 2015 the trustees were issued with an Action Plan by the commission under s15(2) of the Charities Act 2011 (‘the act’) setting out a number of actions the trustees were required to take to address these continued failings in the operation of the charity.

On 18 December 2015 approximately £5,000 of the charity’s money was seized by the Metropolitan Police Service (‘MPS’) at Heathrow Airport after two of the then trustees, Mr Mohammed Malik (‘Mr Malik’) and Mr Patrick Liu (‘Mr Liu’), were carrying cash on behalf of the charity on their journey to Turkey and Syria (‘the 2015 cash seizure’). This cash was seized under section 294 of the Proceed of Crime Act 2002. This cash was returned to the charity several months later. After the commission became aware of this cash seizure it provided advice and guidance to the charity strongly advising against couriering cash. Following this trip Mr Liu remained in Syria and later resigned as a trustee of the charity.

The 2016 visit was to assess the trustees’ compliance with the Action Plan, and to discuss further the 2015 cash seizure. The 2016 visit established that the trustees at the time of the Action Plan, and who remained trustees, had only partially complied with the Action Plan and there remained a number of serious failings in the charity’s operations.

On 24 April 2017, €23,000 and £1,500 of the charity’s money was seized by the MPS from Mr Malik as he passed through the Port of Dover while taking part in a charity aid convoy to Bulgaria (‘the 2017 cash seizure’). This cash was seized under Schedule 1 of the Anti-Terrorism, Crime and Security Act 2011 and was detained for until January 2018, meaning funds could not be used for 9 months.

Following the 2017 cash seizure, and due to the failure of trustees to comply with the commission’s regulatory advice and guidance issued to the charity throughout three compliance visits, on 5 June 2017 the commission opened a statutory inquiry into the charity.

The scope of the inquiry was to examine a number of issues including: - whether the trustees had put the charity’s funds at risk - the inability of the trustees to adequately account for the end use of the charity’s aid and funds - the trustees’ failure to comply with a significant amount of regulatory advice and guidance from the commission over the course of 3 years - the administration, governance and management of the charity by the trustees

Soon after the opening of the inquiry, the commission used its power under section 76(3)(f) of the act to restrict the trustees of the charity from conducting cash couriering and also used its power under section 84 of the act to direct improvements to be made by the trustees to the charity’s operation. Further information is provided under ‘regulatory action taken’.

The individuals who served as trustees of the charity during the compliance case and inquiry have been, according to the commission’s records: - Mohammed Malik, Pervaz Nazir and Sohail Khan were trustees throughout the compliance case and inquiry - Nour Abu-Roomi was a trustee between 1 September 2016 and 3 December 2018 - Patrick Liu was a trustee between 24 February 2014 and 31 January 2016 - Gary Bailey was a trustee between 6 May 2014 and 3 August 2015

Where any misconduct and/or mismanagement and/or breach(es) of trust and/or duty by the trustees is referred to in this report, it relates to the trustees at the time.

The inquiry closed with the publication of this report.

Findings

Whether the trustees had put the charity’s funds at risk

Trustees have a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects. Trustees should not only ensure that financial controls are put in place but also that sufficient information is reported back at trustee meetings to satisfy them that the controls are being property observed. Such systems help prevent financial crime and ensure the charity is reporting accurately to the public and help protect the charity’s reputation.

The trustees at the times put the charity’s funds at risk by attempting to courier cash out of the UK. This approach resulted in two cash seizures by the MPS - the 2015 cash seizure and the 2017 cash seizure as detailed in the ‘issues under investigation’ section above. Although in both cases the trustees at the time eventually secured the return of the seized funds, during the months they were detained the funds could not be applied in accordance with the charity’s purposes.

The cash couriering (and seizure) on 24 April 2017 occurred despite the charity’s previous experience of the 2015 cash seizure, despite specific advice from the commission to the then trustees against couriering cash due to the risks involved (including a letter on 27 February 2017), and after the commission’s published advice on 24 February 2017 strongly advising charities against the use of cash couriering as a method to transfer funds due to the risks involved. Additionally, the 2017 cash seizure was of significantly more funds than the amount seized in the 2015 cash seizure.

During the inquiry the then trustees were unable to provide an adequate explanation of why it was in the best interests of the charity to (attempt to) transfer funds in this manner, rather than through the formal banking system. The then trustees were also unable to demonstrate any formal consideration of the decision to use cash couriering, and having decided to do so, any mitigation of the inherent risks involved.

The commission considers that the trustees’ use of cash couriering without adequate consideration of, or management of, the risks involved, which resulted in the two seizures of the charity’s funds by the MPS, is misconduct and/or mismanagement by the trustees at the time.

Since the commission issued the trustees with an order under s76(3)(f) of the act on 20 June 2017, the trustees have not attempted to conduct further cash couriering. During the inquiry the trustees confirmed that the charity has no plans to use cash couriering again, and instead solely obtains aid in the UK to ship to its end beneficiaries via overseas partners.

Accounting for the end use of the charity’s aid and funds

The trustees of the charity did not consistently receive adequate reporting from the charity’s delivery partners, in particular its partners in Syria, in the period June 2014 to May 2019. When reporting was received from delivery partners it often did not contain the required detail to evidence the end use of the charity’s aid. Both the quality and quantity of reporting received were often contrary to the MOUs in place with delivery partners.

The commission’s view is that due to these failures of reporting from 2014 to 2019, it is not possible to see how the trustees at the times could adequately account for a large part of the end use of the charity’s aid and funds, particularly its regular, ongoing aid container work.

This is a particularly serious failing by the then trustees given that the charity was involved in high risk areas in Syria where terrorist groups were known to operate and was a serious risk to the charity’s property.

The commission provided advice and guidance to the trustees at the time about the issue of inadequate reporting from delivery partners both before and during the inquiry, including in August 2014 and a section 84 Order on 20 June 2017. However, ineffective remedial action was taken by the then trustees, and the charity continued to use some of the same delivery partners for a number of years, including in high risk areas such as Syria, where a particular partner was used until November 2017.

At a books and records inspection in May 2019 the trustees at the time could still not demonstrate that when written agreements had been established with delivery partners that these were always fully adhered to, and effective reporting was consistently being received to evidence the end use of the charity’s aid and funds.

The commission considers that the trustees at the time did not discharge their legal duties and responsibilities in terms of monitoring the end use of the charity’s aid, and this is misconduct and/or mismanagement.

The administration, governance and management of the charity by the trustees

Due diligence on partners

A significant aspect of a trustee’s legal duty to protect charitable assets, and to do so with care, means carrying out proper due diligence on those individuals and organisations that give money to or receive money from or work closely with the charity.

The commission set out the requirements for due diligence to the trustees at the time on a number of occasions between August 2014 to September 2018. Despite this, and although some improvements had been made, at a books and records inspection in May 2019 the trustees at the time could not demonstrate that detailed due diligence had been conducted on all the charity’s implementing partners who deliver the charity’s aid overseas.

During the compliance case and the inquiry, the commission identified particular concerns about the use of the charity’s delivery partners in Syria, most notably Person A, a UK national in Syria, and then later a Syrian NGO (‘the Syrian NGO’), of which Person A was a senior leader. This was due to: (i) the inadequate reporting of the end use and location of the charity’s aid between June 2014 and September 2018, which raised concerns that the aid may have not reached the intended beneficiaries, (ii) serious allegations about the conduct of Person A in Syria made in 2014, and (iii) social media posts by Person A in 2015 that could be considered controversial.

During the compliance case the trustees at the time confirmed to the commission that they were aware of the allegations about the conduct of Person A in Syria and had not identified any evidence to substantiate the claims. However, the trustees at the time, when the charity became aware of the allegations in 2014, did not put the allegations to Person A or contact individuals in Syria who may be able to provide information related to the allegations.

In September 2015 Person A made social media posts that could be considered controversial - these posts, among others, were reported in an online article. After the commission contacted the charity about Person A’s social media posts in 2015, the trustees who issued a final warning letter in September 2015 to Person A about their conduct. Both instances had the potential to cause reputational damage to the charity and demonstrated ineffective due diligence processes on delivery partners.

In 2017 the trustees explained to the Commission that a former trustee of the charity, Mr Liu, was involved in the management of the Syrian NGO since 2016 (following his move to Syria from the UK) which provided oversight and reassurance. While the commission accepts that a former trustee being associated with the charity’s delivery partner in Syria provided some limited assurance, it did not replace the need for effective due diligence to be completed. Mr Liu was killed in Syria on 1 March 2019, reportedly by a suicide bomber.

The trustees formally reviewed the charity’s relationship with the Syrian NGO in 2017, using an external consultant as directed by the commission’s section 84 Order, but decided to continue the relationship. The commission’s concerns were raised further by the charity advising that Person A had their citizenship withdrawn by the UK Government in October 2017, on grounds reported in the media that they were a risk to national security and aligned with an al-Qaeda-aligned group. It was only after the removal of Person A’s UK citizenship that the trustees at the time suspended the charity’s relationship with the Syrian NGO in November 2017. The charity no longer works in Syria.

The trustees at the relevant times have failed to consistently undertake effective due diligence on the charity’s delivery partners in high risk areas of operation, which has led to the charity’s assets being put at risk, including through using a delivery partner reported to be linked to concerns about terrorism, as demonstrated by the deprivation on Person A’s UK citizenship, and the reasons for it. This was misconduct and/or mismanagement by the trustees at the time.

General governance of the charity

At the opening of the inquiry many aspects of the charity’s basic governance were poor, including its internal record keeping, financial controls and filing of statutory returns.

During the inquiry and following the issuing of the commission’s section 84 Order in June 2017 which required the trustees to commission an external governance review, some of the charity’s governance has improved, notably the charity’s internal financial controls which have been formalised and improved.

However, the commission’s recent inspection of May 2019 identified that other governance issues remain, including insufficient detail in trustee meeting minutes, in particular the reasons for the trustees’ decisions, record keeping regarding the shipping of aid containers overseas, and the due diligence and reporting provided by partners as set out above. A number of these failing were highlighted in the previous advice and guidance provided to the charity by the commission including in the section 84 Order of June 2017.

The trustees at the times have filed the charity’s statutory returns late, in FYEs 2014, 2015, 2016 and 2018. This may be a criminal offence under section 173 of the act and is misconduct and/or mismanagement by the trustees. The trustees have filed the charity’s 2019 accounts on time.

The trustees of the charity complied with the Orders and Directions issued by the commission during the inquiry to obtain information, and the temporary and protective measure to restrict transactions.

Conclusions

The commission concluded that certain actions of the trustees constituted misconduct and/or mismanagement. The charity was mismanaged by the trustees at the relevant times, specifically there were failings to effectively manage and oversee the end use of the charity’s aid and consistently conduct robust due diligence on the charity’s delivery partners. This was despite significant advice and guidance being provided by the commission to the charity over several years that was not fully acted upon. These failings meant that the trustees could not fully account for all the charity’s aid, and there is a risk that, given the charity’s operations in high risk areas overseas, aid could have been misappropriated by terrorist organisations or otherwise misused.

The commission recognises that the trustees have taken some steps to address the failures in the charity’s governance and financial controls both during the compliance case and the inquiry, but these have not gone far enough, and further improvements are required, as detailed in an Official Warning issued to the Charity on 10 March 2020.

The commission acknowledges that the trustees co-operated with the inquiry throughout, as they are expected to.

Regulatory Action Taken

On 10 March 2020 the commission issued an Official Warning under section 75A of the act to the charity. The Official Warning requires the trustees to take steps to rectify the failings set out in the report. The Official Warning was published on 10 March 2020.

On 20 June 2017, the commission made an Order under section 76(3)(f) of the act to restrict transactions and payments in relation to the use of cash couriers. This Order was discharged on 19 August 2019.

On 20 June 2017, the commission made an Order under section 84 of the act directing the trustees to undertake specific action to improve the governance of the charity.

Directions were issued to obtain information in the form of copy documents and answers to questions under sections 47 of the act.

During the inquiry, information was exchanged with the police and law enforcement agencies under section 54 to 56 of the act.

Issues for the Wider Sector

The purpose of this section is to highlight the broader issues arising from the commission’s assessment of the issues raised publicly that may have relevance for other charities. It is not intended as further comment on the charity in addition to the findings and conclusions set out in the earlier sections of this report but is included because of their wider applicability and interest to the charity sector.

Trustees are custodians of their charities. They are publicly accountable and have a responsibility and duty of care to their charity which will include taking the necessary steps to safeguard their charity and its beneficiaries from harm of all kinds, including from terrorist abuse.

A significant aspect of a trustee’s legal duty to protect charitable assets, and to do so with care, means carrying out proper due diligence on those individuals and organisations that give money to or receive money from or work closely with the charity. Due diligence is the range of practical steps that need to be taken by trustees so that they are reasonably assured of the provenance of the funds given to the charity; confident that they know the people and organisations the charity works with; and able to identify and manage associated risks.

Trustees must ensure that their charity has adequate financial controls in place. It is important that the financial activities of charities are properly recorded, and their financial governance is transparent. Charities are accountable to their donors, beneficiaries and the public. Donors to charity are entitled to have confidence that their money is going to legitimate causes and reaches the places that it is intended to, this is key to ensuring public trust and confidence in charities.

Trustees are jointly and equally responsible for the management of their charity. To be effective and to meet their statutory duties as charity trustees they must contribute to the management of the charity and ensure that it is managed in accordance with its governing document and general law. All charities should have appropriately tailored internal policy documents which address the specific risks associated with the kind of activities that are undertaken.