Decision

Charity Inquiry: Darul-Uloom School London

Published 20 May 2022

Applies to England and Wales

The charity

Darul-Uloom School London (‘the Charity’) was registered on 13 January 1995. It is governed by a Declaration of Trust.

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

The Charity’s purpose, as set out in its Declaration of Trust (‘GD’) is: ‘The advancement of education and religion in accordance with the tenets and doctrines of Islam.’

One of the primary activities of the Charity is the provision of education through the running of an independent school (‘the School’) for boys between the ages of 11 to 19. The School is a registered independent school and its proprietors are the trustees of the Charity, it is regulated and inspected by Ofsted and the Department for Education (‘the DfE’).

Background

The Commission received a report, on 31 May 2018, of a serious incident (‘RSI’) on behalf of the Charity’s trustees relating to an incident that took place at the Charity’s premises on 30-31 May 2018 (‘the Incident’). The Incident involved an altercation at the Charity’s premises between one of the Charity’s then trustees, Mr Yusuf Musa (‘Trustee A’) and two individuals, unconnected to the Charity.

Trustee A, who was also at the time of the Incident the Charity’s Designated Safeguarding Lead and a teacher at the School, was arrested following this incident. Trustee A was charged with an offence ^{[footnote 1]} on 21 June 2018. On 14 November 2019 the Metropolitan Police confirmed to the Commission that the CPS decided to offer no evidence in the criminal trial and therefore it did not proceed. Another trustee of the Charity, Mr Mustafa Musa, (‘Trustee B’) was also arrested at the time of the Incident. Trustee B was, at the time of the Incident a trustee of the Charity and the Headteacher at the School. Trustee B is the father of Trustee A. Following his arrest, no further action was taken by the Police against Trustee B.

The Commission was also notified about the Incident by the DfE as the School is an independent school and on the Register of Independent Schools that it maintains. On 14 June 2018 the Commission received confirmation that the then Secretary of State for Education (‘the SoS’) had made an application to Westminster Magistrates Court for an emergency closure order pursuant to s.120(1)(b) of the Education and Skills Act 2008. Whilst this application was not granted, a number of undertakings were given by the trustees of the Charity which were sealed in an Order by Westminster Magistrates (‘the WM Order’) Court following proceedings in late June 2018.

The WM Order recorded the undertakings given by the Charity’s then trustees during the proceedings initiated by the SoS, in summary they were:

• trustees A and B ‘shall have no involvement whatsoever with the school known as Darul Uloom School London (‘the school’) from 22 June 2018. For the avoidance of doubt this non-involvement includes, but is not limited to, employment in connection to the school, attending the school’s premises (including the boarding provision and any flat located on the school’s premises) and/or acting in any capacity for or on behalf of the Trust including acting as a trustee of the Trust’
• the School was to remain closed until such time as an independent trustee, approved by the DfE, was appointed and actions were taken to comply with the Westminster Magistrates Court Order
• a safeguarding audit was to be undertaken

On 20 June 2018, the Register was updated to reflect that Trustees A and B ceased to be trustees of the Charity.

As a result of the Incident, the Charity’s premises were searched by the Metropolitan Police Service (‘the Police’). During their search the Police found and seized, under the Proceeds of Crime Act 2002 (‘POCA’), over £400,000 from the premises (‘the Funds’). The Funds seized from the Charity’s premises was comparable to the declared annual income for the Charity in its previous accounts. The Funds were subject to a POCA cash detention order obtained by the Police following the cash seizure. On 27 May 2020 the Commission received confirmation from the Metropolitan Police that the Funds were returned in full, with accrued interest. The Funds totalled £406,607.52 and $823.07 and were returned to the Charity by cheque on 22 May 2020.

Issues under investigation

On 15 June 2018 the Commission opened a statutory Inquiry (‘the Inquiry’) into the Charity under section 46 of the Charities Act 2011 (‘the Act’).

The Inquiry closed on with the publication of this report.

Since the opening of the Inquiry, the individuals acting as trustees of the Charity have changed. Details of those who have acted as trustees can be found in the Trustees’ Annual Reports which are accessible via its entry on the Register. Unless otherwise stated, reference to ‘the trustees’ in this report refers to those who acted as trustees at the time of the Incident.

The scope of the Inquiry was to examine:

• the management and oversight of the Charity by the trustees – including the financial management of the Charity
• the conduct of Trustee A

At the time of opening the Inquiry, several other statutory agencies were involved and taking action in relation to the School and individuals connected to it. Although the scope of the Inquiry included the management and oversight of the Charity – and therefore the School – by its trustees, due to the involvement of other statutory safeguarding agencies, the Commission focused on the governance and financial management of the Charity by the trustees.

Findings

The management and oversight of the Charity by the trustees – including the financial management of the Charity

The Inquiry found that the Charity was not properly managed or administered by the trustees.

Financial Controls and Management

As referenced above, as a result of the Incident, the Police undertook a search of the Charity’s premises. The Funds were found in a padlocked wooden chest despite there being a safe at the School. The trustees had confirmed to the Inquiry that the Funds were donations and school fees and belonged to the Charity. The Charity’s GD specifies that its income is to be passed to the Treasurer and deposited into its bank account (clause 11). As is evident from what has been examined by and disclosed to the Inquiry, the trustees of the Charity, did not comply with the Charity’s GD as they are legally required to. The Funds were, based on evidence provided to the Inquiry by the trustees of the Charity, gathered over a period of months prior to the Incident thereby demonstrating repeated failings, over time, to comply with the Charity’s GD and otherwise act reasonably and responsibly in terms of securing the safe deposit of a sizeable sum of charitable funds.

These repeated failures and breach of duty are compounded by the evidence given by Trustees A and B in their respective appeals against the Commission’s decisions to disqualify them from trusteeship (see ‘Regulatory Action Taken’ further in this report) where they acknowledged that there had been burglaries in the area at the time the Funds were held in the wooden chest and an attempted arson at the School’s premises. Contents insurance held by the Charity at the time was not sufficient to cover the amount held (over £400,000) on the premises and the Charity’s own internal financial controls policy and culture at the Charity reflected a cash intensive operating model which did not comply with best practice or its GD.

The Inquiry found that holding and storing the Funds was not prudent or reasonable and constitutes a failing on the part of the trustees to manage the Charity’s resources responsibly and in accordance with its GD. The value of the Funds – over £400,000 - represent a significant portion of the Charity’s income. Its declared income for the year ending (‘FYE’) 31 July 2017 was £411,958. Whilst the Funds were held by the Police as part of a civil POCA investigation, they were inaccessible to the Charity since May 2018 and were, until they were returned, at risk of forfeiture. In addition, the Charity has had to expend resources to secure the return of the Funds which could have otherwise been used to further the Charity’s objects.

On 3 October 2018, the Commission conducted a compliance visit to the Charity. The Inquiry found that whilst a financial policy was in place, this made no reference to the GD ^{[footnote 2]} and the requirement to deposit the Charity’s funds into a bank account in its name. In addition, the Charity’s financial policy stated that it was due to be reviewed in August 2018; it was not reviewed as confirmed by the trustees during the October compliance visit.

The Inquiry notes that since the Incident the Charity’s subsequent and current trustees have made improvements in respect of the Charity’s internal financial controls and a significant reduction from the cash-intensive model, essentially where most transactions (both income and payments) were made in cash, it had adopted. For example, in October 2018 the Inquiry conducted a compliance visit to the Charity where, amongst other things, it reviewed the Charity’s financial records. This review identified that the majority of the Charity’s income (donations and payment of school fees) were received in cash, not banked and that expenditure – including staff salaries, building and renovation works and other costs were paid in cash. In September 2019, the Inquiry conducted a second compliance visit to the Charity. Staff were then being paid electronically, a greater proportion of school fees were collected by cheque or bank transfer and cash received was banked more regularly.

Compliance with the Independent School Standards

The School, operated by the Charity as its primary activity, has and continues to be subject to the independent school standards as set by the DfE and inspected by Ofsted. Published Ofsted inspection reports relating to the School show that since 2013 Ofsted have rated the School as being either ‘inadequate’ or ‘requires improvement’ which are the two lowest ratings that Ofsted can award to an institution.

In May 2017 Ofsted rated the School as being ‘inadequate’ – which is a lower rating than ‘requires improvement’ which was given at the standard inspection in 2015. A further inspection was conducted in 2018, which concluded that the School did not meet all the independent school standards that were checked during that inspection. These failings to comply with the independent school standards are not isolated and took place over time. On 6 August 2019, Ofsted published its latest report following an inspection of the School on 18-20 June 2019. This report rated the School as ‘requires improvement’, which is an improvement on the ‘inadequate’ rating from May 2017. Trustees are required to comply with the law as it relates to their charity and its activities – in the case of the Charity this requires adherence to the independent school standards.

In Ofsted’s 2019 report, reference is made to the governance of the School. Ofsted found that ‘there have been some important improvements to the School’s governance as a result of better oversight of the work of senior leaders. Support for and challenge of senior leaders is now more rigorous. However, the capacity of trustees to maintain this rigour is not secure. It relies too heavily on the expertise of one or two members of the board. Although trustees want the best for the school and its pupils, they are not systematic enough in the way they carry out their work. As a result, the impact of governance on the quality of education remains limited’. The Inquiry notes Ofsted’s findings and finds that there were concerns regarding the governance of the Charity as outlined in the Governance section below. In two meetings with representatives from the trustee board, the Inquiry expressed broader concerns about the governance of the Charity including over-reliance on employees of the Charity to provide information and answers to the Inquiry’s questions.

The Inquiry notes, that there have been improvements in the School’s adherence to the independent school standards, as reflected by the most recent Ofsted inspection in May 2021 which concluded that the School met all of the standards examined in that inspection.

Governance

The Inquiry found that the Charity’s governance was inadequate and that this was a failing of its trustees.

The trustees failed to comply with their legal duties under charity law to submit all of the Charity’s Annual Return, Trustees’ Annual Report and Accounts (‘Annual Accounting Documents’) for the financial year ending 31 July 2018. Failure to do so is a breach of the trustees’ statutory duties under sections 162, 163, 164 and 169 of the Act. It is also a criminal offence under section 173 of the Act. The Charity’s entry on the Register shows it as submitting its statutory returns 172 days late for the FYE 31 July 2018.

On 5 September 2019 the Inquiry visited the Charity, two trustees were in attendance on behalf of the wider trustee board. The trustees were reminded during that visit that the Annual Accounting Documents were overdue and must be submitted; assurances were provided that the Annual Accounting Documents would be filed with the Commission within the next few weeks following that meeting. The documents were filed in November 2019. The Commission notes that in subsequent years the Charity’s trustees have filed the Charity’s Annual Accounting Documents on time as they are required to.

In addition to being chair of trustees, Trustee B was also Principal of the School. In that role and capacity they conducted performance reviews of teachers at the School – including Trustee A, his son. The Inquiry found that there was no recognition of the inherent conflict of interest that arose from this and that it therefore was not managed by the trustees involved or by the wider trustee board. The Inquiry found this to be further evidence of misconduct and/or mismanagement in the administration of the Charity.

The conduct of Trustee A

At the time of the Incident Trustee A, in addition to being a trustee was an employee of the Charity and the School’s designated safeguarding lead. The Inquiry found that whilst a trustee, Trustee A was responsible for – either individually or collectively with the other trustees – misconduct and/or mismanagement in the administration of the Charity.

The Incident at the Charity’s premises resulted in a number of public authorities intervening and scrutinising the activities of the Charity and the School, this was as a direct result of the conduct of Trustee A.

As a result of the Inquiry’s findings, the Commission took action to disqualify Trustee A from trusteeship and senior management functions – see regulatory action taken.

Conclusions

The Inquiry concluded that the Charity’s trustees – including Trustees A and B failed to comply with their trustee duties and were responsible for serious mismanagement and/or misconduct in the administration of the Charity which placed the Funds, beneficiaries and the Charity’s property at significant risk.

Various failures in governance at the Charity were identified for which the trustees are culpable. These have or are being addressed by subsequent trustees to restore the Charity to a secure footing.

Regulatory Action Taken

Prior to opening, and throughout, the Inquiry, the Commission liaised closely with multiple agencies including the Police, DfE, Ofsted and Bromley Council. Information was shared with these agencies under sections 54-56 of the Act on numerous occasions.

The Commission exercised its information gathering powers under section 47 of the Act on numerous occasions to obtain information, in the form of copy documents and answers to specific questions, from the trustees and others.

On 15 June 2018, at the time of opening the Inquiry, the Commission exercised its power under section 76(3)(a) of the Act to suspend Trustee A as a trustee, officer and/or agent of the Charity. The Commission’s suspension Order ceased to have effect as at the date that Trustee A resigned from his positions in the Charity. Due to Trustee A’s conduct, the Inquiry considered that he was unfit to be a trustee of a charity and/or hold senior management positions within a charity.

On 24 October 2018 the Commission issued notice of its intention to disqualify Trustee A from trusteeship and senior management functions in all charities in England and Wales under section 181A of the Act. On 26 November 2018, the legal representatives of Trustee A made representations to the Commission regarded its proposed actions. At the time these representations were received, criminal proceedings against Trustee A were outstanding so the Commission took the decision to await the outcome of these before considering the representations that had been received. Additional representations were provided in writing and received on 15 October 2019 following the conclusion of criminal proceedings against Trustee A. On 24 October 2019 the Commission contacted both Trustee A and his solicitors offering an opportunity for him to make further oral representations against the Commission’s notice of intention to disqualify him. Oral representations were made on the 27 November 2019.

These representations were considered by an independent reviewer as part of the Commission’s decision review procedure. The outcome of the decision review on 28 January 2020 concluded that the disqualification of Trustee A was lawful, reasonable, and proportionate and that the decision represents the final decision of the Commission. The reviewer also considered the disqualification period and determined that 5 years was proportionate considering the circumstances. On 30 January 2020, the Order to disqualify the Trustee A was sent, accompanied with the Commission’s Statement of Reasons.

Trustee A made an application to the First-Tier (Charity) Tribunal (‘the Tribunal’) on 11 March 2020 to appeal the Commission’s disqualification Order. On 1 March 2021, Trustee A’s appeal against the Commission’s order was dismissed by the tribunal and the disqualification Order came into legal effect on that date. As a consequence of the Commission’s Order, Trustee A is prohibited from acting as a trustee or holding a senior management function in any charity in England and Wales for a period of 5 years from 1 March 2021.

The Inquiry also considered that Trustee B was unfit to be a trustee and/or hold senior management functions in a charity as a result of their conduct in the Charity whilst a trustee. On 18 September 2019 the Commission issued notice of its intention to disqualify Trustee B from trusteeship and senior management functions in all charities in England and Wales under section 181A of the Act. On 21 October 2019, Trustee B’s solicitors made written representations on behalf of Trustee B to the Commission regarding its proposed actions.

These representations were considered by an independent reviewer as part of the Commission’s decision review procedure. The outcome of the decision review on 27 January 2020 concluded that the disqualification of Trustee B for a period of 5 years was lawful, reasonable and proportionate and that the decision represents the final decision of the Commission. The reviewer also considered the disqualification period and determined that 5 years was proportionate considering the circumstances. On 30 January 2020 the order to disqualify Trustee B was sent accompanied with the Commission’s Statement of Reasons.

Trustee B made an application to the Tribunal on 11 March 2020 to appeal the Commission’s disqualification Order. On 14 June 2021, Trustee B’s appeal against the Commission’s Order was dismissed by the tribunal and the disqualification order came into legal effect on that date. Trustee B applied to the Tribunal for permission to appeal its decision to the Upper Tribunal (Tax and Chancery Chamber) (‘the Upper Tribunal’). The Tribunal refused Trustee B’s application in a decision on 27 July 2021. The application for permission to appeal was renewed before the Upper Tribunal who refused it for the reasons given in its decision of 5 October 2021. Trustee B applied for the application to appeal to be reconsidered at an oral hearing; this was heard on 29 November 2021. The Upper Tribunal’s decision, as communicated on 6 December 2021, was to refuse the application.

The Inquiry also considered the conduct of other trustees of the Charity as a result of the Incident. On 22 November 2019, the Inquiry issued notice of its intention to issue two trustees – Mr Maljee (‘Trustee C’) and Mr Patel (‘Trustee D’) - with Official Warnings under section 75A of the Act. The grounds for the Official Warning were that there had been a breach of duty (failure to comply with the Charity’s GD) and misconduct and/or mismanagement for which they were culpable and/or had otherwise contributed to or facilitated.

Written representations were made on behalf of Trustee C and Trustee D on 26 January 2020. In addition to the written representations supporting documentation was provided. These representations were considered by an independent reviewer on 3 March 2020 who concluded that the Commission’s decision to issue Trustee C and Trustee D with Official Warnings under section 75A of the Act was reasonable, proportionate and lawful. The Commission concluded that the Official Warning should be issued without modifications. The Official Warnings were published on the Charity’s entry on the Register for 1 year after they were issued.

On the 12 December 2019, the Commission sent a direction under section 84 of the Act to the acting Trustees at the time; requesting that the trustees take a number of actions. This included ensuring that the trustees comply with account filing requirements, conduct a review of the Charity’s GD, comply with Independent School Standards as set by Ofsted, comply with a WM Order, review and implement financial controls policies and procedures and to take necessary steps to secure the return of funds seized by the Metropolitan Police.

This Order was varied twice by the Commission under 337(6) of the Act on 12 June 2020 and 11 September 2020 owing to the impact of the Covid pandemic. There remains one outstanding issue in respect of the title to the property from which the School operates. In February 2022 the Commission set out its position on this matter and requested that the trustees consider their position to ensure that the Charity’s property is properly protected. The Commission has afforded the trustees 9 months to consider this matter further and take appropriate action; the Commission will monitor the trustees’ progress and actions in respect of this.

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.

Governance

Trustees are representatives of the charity they govern or the charitable funds they are responsible for, in the charity sector. Trustees must be aware of and act in accordance with their legal duties. The conduct of trustees can be a key driver of public trust and confidence in the charity sector. When the conduct of trustees falls below the standards expected there can be damage to the reputation of individual trustees, the charity and possibly the wider charity sector.

Conflicts of interest

Conflicts of interest and/or loyalty are more likely when there are only a small number of trustees on the board, when trustees are closely related, or when the charity has dealings with organisations in which the trustees have interests. It is vital that trustees avoid becoming involved in situations in which their personal interests may be seen to conflict with their duties as trustees and trustees have a legal duty to act only in the best interests of their charity. The trustees should put in place policies and procedures to identify and manage such conflict. Further information is available from our guidance on Conflicts of interest: a guide for charity trustees (CC29)

Financial Controls

Trustees of charities with an income of over £25,000 are under a legal duty as charity trustees to submit annual returns, annual reports and accounting documents to the Commission as the regulator of charities. Even if the charity’s annual income is not greater than £25,000 trustees are under a legal duty to prepare annual accounts and reports and should be able to provide these on request. All charities with an income over £10,000 must submit an annual return.

Failure to submit accounts and accompanying documents to the Commission is a criminal offence. The Commission also regards it as mismanagement and/or misconduct in the administration of the charity.

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. In this case there was no clear audit trail of cash donations from donor to bank, or to expenditure.

The Commission has produced guidance to assist trustees in implementing robust internal financial controls that are appropriate to their charity. Internal Financial Controls for Charities (CC8) is available on GOV.UK. There is also a self check-list for trustees which has been produced to enable trustees to evaluate their charity’s performance against the legal requirements and good practice recommendations set out in the guidance.

Charity trustees should ensure that adequate records are kept of their decisions so that they can demonstrate that they have acted in accordance with the GD and with best practice. Such records ensure that trustees can demonstrate that they had:

• acted honestly and reasonably in what they judged to be the best interests of the charity
• taken appropriate professional or expert advice where appropriate
• based their decisions on directly relevant considerations

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 GD 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.

Trustees should ensure that these policies are implemented and reviewed at appropriate junctures. A failure to implement internal policy documents could be evidence of misconduct and/or mismanagement in the administration of the charity and can put assets, beneficiaries and a charity’s reputation at risk.

1. On 21 June 2018, Trustee A was charged with one offence of possession of an imitation firearm with intent to cause fear. ↩

2. Clause 11 of the Charity’s GD states that “All cash received by or on behalf of the Institution be handed to the treasurer who will pay same into the Institution’s bank account. All cheques shall be signed by not less than two of the Trustees” ↩