Decision

Charity Inquiry: Idaara Maarif-E-Islam and The Voice of Truth

Published 18 February 2021

This decision was withdrawn on 21 February 2023

The report has been archived in line with our policy as it is over 2 years old.

Applies to England and Wales

The Charities

The Voice of Truth (TVOT)

TVOT was an unincorporated charity governed by a constitution dated 6 August 2002, as amended on 2 November 2002. The charity was registered with the Charity Commission (‘the Commission’) on 25 November 2002. TVOT was removed from the register on 29 January 2018, on the basis that it no longer operated.

The most recent set of charity accounts held on Commission records, for the year ended 31 March 2016, record an income of £165,948 and expenditure of £163,235.

TVOT’s objects were to promote the benefit of the Muslim community in Birmingham and the West Midlands and in particular, but not exclusively, the Shia Muslim (followers of Fiqh-E-Jafaria) community.

Idaara Maarif-E-Islam (IMEI)

IMEI was registered as an unincorporated charity with the Commission on 27 October 1977, and is governed by a constitution adopted on 13 August 1977, as amended on 27 August 2000, 29 June 2008, 5 July 2010, 7 June 2015 and 15 May 2016. Its objects are to promote and further the Muslim faith, which includes Islamic teaching of the Holy Quran as per Fiqh-e-Jaffaria.

The most recent set of accounts for the IMEI held on Commission records, for the year ended 31 December 2019, record an income of £298,858 and expenditure of £318,435.

Details of Idaara Maarif-E-Islam can be found on the register of charities.

Issues under Investigation

The Commission became aware of financial irregularities within TVOT, having received correspondence from a number of members of IMEI, indicating that they had been contacted regarding donations to TVOT. Following an investigation into these claims, the Commission obtained information which suggested that Gift Aid claims made by TVOT included details of amounts given by some donors to IMEI and not to TVOT. The Commission was concerned about the basis upon which these Gift Aid claims had been made and whether data breaches had occurred in IMEI.

Further enquiries were made and it became clear that the signatories to the bank account for TVOT were not the current serving trustees and substantial sums had been paid from TVOT’s bank account to an individual, referred to in this report as Trustee A.

Commission records indicated that Trustee A and some of his family were involved in the administration and management of both charities.

The statutory inquiry into the charities, under section 46 of the Charities Act 2011 (the Act), commenced on 26 October 2017.

The scope of the statutory inquiry was to examine the administration, governance and management of the charities and the extent to which any weaknesses identified were as a result of misconduct and/or mismanagement by the trustees.

Findings

Governance of TVOT

The individual, who accepted responsibility for all the affairs of TVOT since 2013, was asked to attend an interview with the inquiry but was unable to attend on the date arranged. A second interview date was agreed but he failed to attend.

Failure to keep and file accounting records

The inquiry found that TVOT had insufficient accounting records (for example, receipts and invoices), which constituted a breach of legal duties under section 130 of the Act which requires trustees to ensure that accounting records are kept. The inquiry also found no evidence to support the explanation that all TVOT’s records had been destroyed in the Grenfell Tower Fire, and insufficient justification as to why these documents were not held at, or near, TVOT’s address in Birmingham.

Following concerns raised by IMEI and a closer inspection of TVOT’s annual accounts, the Commission found that two sets of accounts had been filed for TVOT for the year ended 31 March 2016. The first set included what appeared to be an altered copy of the independent examiner’s report from IMEI’s 2015 accounts. This was later replaced by a second set of accounts that did not contain an independent examiner’s report at all, as required.

The inquiry found that the named contact for TVOT and the person said to have submitted the annual returns to the Commission during 2011 and 2012, had no knowledge of the charity and was not, and never had been, involved in the administration of TVOT.

The filing of incorrect information with the Commission is mismanagement and/or misconduct in the administration of the charity and may be a breach of section 60 of the Act.

Unauthorised related party transactions

The inquiry found that from 13 April 2015 to 19 January 2018, £80,900 was paid to Trustee A in a number of different ways including payments to a company (now dissolved) of which Trustee A was the sole director and different bank accounts which correlate to the aliases of Trustee A. These funds were appropriated from the bank account of TVOT without proper authorisation, and Trustee A has been unable to provide adequate supporting information to justify their expenditure.

Unsupported gift aid claims

Following a review of the bank statements of TVOT, the inquiry found that the funds used to make these payments had been initially deposited into the bank account by HMRC Charities, following the submission of Gift Aid claims.

The inquiry found no evidence that the Gift Aid claims reflected donations made to TVOT. Gift Aid claims made by TVOT between 2010 to 2016 resulted in Gift Aid payments in excess of £95,000, which would have required the charity to have received donations in excess of £350,000. However, the inquiry was unable to locate any information that supported this level of donations to TVOT. As mentioned above, the inquiry learned that in 2017, members of IMEI were alerted to potential financial mismanagement in TVOT regarding claims from TVOT that matched donations to IMEI instead.

Governance of IMEI

The inquiry interviewed 17 of the original 19 trustees of IMEI and the majority of them co-operated with the inquiry. Two trustees were not available for interview. The Honorary Secretary of IMEI supplied all committee meeting minutes, agendas and other charity documents on request.

Internal review of Trustee A’s conduct

During the trustee interviews it was disclosed that in June 2017, IMEI had suspended Trustee A from the Executive Committee and his role as Information Secretary at IMEI when it became known to them that he might have been involved in a Gift Aid irregularity in TVOT. The role of Information Secretary was said to allow the holder access to the contact information of the entire membership of IMEI.

In September 2017, Trustee A was reinstated when a petition for reinstatement, signed by a majority of the trustees of IMEI, was presented to the trustees at a committee meeting.

The inquiry was informed by a former trustee that a meeting held by IMEI in September 2017, to discuss the conduct of Trustee A, was chaired by Trustee A’s sibling. Minutes from the relevant committee meetings were provided to the inquiry and say that, although Trustee A’s sibling left the discussion on 7 September 2017, he did not do so on 8 June 2017 and 19 September 2017 when the decisions were made to suspend and then reinstate Trustee A. Therefore, the trustees of IMEI failed to recognise and appropriately manage the conflict of loyalty in making these decisions.

The inquiry was informed that the reinstatement of Trustee A caused division amongst the trustees of IMEI and, on 11 November 2018, Trustee A then resigned as a trustee of IMEI. An internal investigation by IMEI also checked and later confirmed that no funds had been transferred from IMEI to TVOT.

Composition of the trustee board

The inquiry was made aware that, following the interviews, a number of trustees had resigned from IMEI’s trustee board. Two of these trustees signed voluntary undertakings (at the request of the Commission), to resign from the charity and not to take on any new trusteeships for five and seven years respectively. IMEI remained quorate throughout the period of resignations and appointed the requisite number of trustees in order to comply with the charity’s governing document. The inquiry acknowledges that this involved considerable effort on the part of the acting President of IMEI.

The resignation and appointment of trustees following interviews with the Commission caused disharmony within the charity and the Commission was consulted on the interpretation of IMEI’s governing document in order for IMEI to remain quorate. The application of a previously unutilised provision ensured the charity continued to function and there was no impact on the operations of the charity.

The inquiry found that while the trustees of IMEI are committed to upholding the religious objectives of the charity, some members of the Mosque opposed those attempting to make changes within the Mosque. Trustees were reminded that all trustees must work together in the interests of the charity that they serve.

The inquiry found that none of the trustees of IMEI had attended an induction programme and the majority were not aware of the guidance available on the Commission’s website to assist them in their roles as trustees of the charity. The trustee board has now been referred to the relevant Commission guidance, including on decision making and the principles of custodian trusteeship.

Historic Events

The inquiry found that many of the trustees of IMEI were unhappy with an historic event that had involved a previous trustee and the then president of the charity, the late Saharwat Shah. Mr Shah had been employed by the charity and been remunerated in this role. The inquiry found that the Commission had advised the charity in 2013 that the payment of remuneration to trustees was a breach of the charity’s governing document, and where payments had been made in the past, it was for the charity itself to decide how to proceed.

The charity supplied documents to the inquiry showing that the matter had been discussed at a trustee meeting where it was agreed that Mr Shah should no longer receive remuneration. In addition a letter was sent to Mr Shah on 16 September 2013, to notify him that the Executive Committee had made the decision not to request a repayment of his remuneration.

Conclusions

The inquiry concluded that there was misconduct and/or mismanagement in the administration of TVOT, including a breach of section 130 of the Act (the failure to keep sufficient accounting records) and possible breaches of section 60 (the supply of false or misleading information to the Commission). TVOT has been removed from the register of charities and Trustee A has been disqualified for ten years in response to his conduct.

While the inquiry identified instances of poor governance within IMEI, together they did not amount to misconduct and/or mismanagement in the administration the charity and have now been addressed by the charity.

Regulatory action taken

TVOT was removed from the register on 29 January 2018, under section 34 of the Act, on the basis that it no longer operated.

On 12 June 2019, signed undertakings were obtained from two trustees of IMEI, to resign from the charity and not to undertake the role of trustee for five and seven years, respectively.

A Disqualification Order for ten years under section 181A of the Act was served on Trustee A on 11 November 2019. Trustee A exercised his right to appeal and, on 19 October 2020, the First-Tier Tribunal (Charity) dismissed the appeal and upheld the Commission’s order in full. Trustee A has informed the Commission that he has now applied to the Upper Tribunal for permission to appeal.

Orders under section 52 of the Act and Directions under section 47 of the Act were made in the course of the inquiry to obtain relevant information.

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.

Charity trustees must work together to further the objects of the charity they serve and they must demonstrate how charitable purpose dominates everything that they do. All trustees are jointly and equally responsible for the events that occur within a charity; no one trustee is more important than the others and decisions must be by general consensus and not reflect the dominance of one trustee alone.

Trustees must ensure that adequate financial and administrative controls are in place, that meetings and decisions are properly recorded and the records of the charity are kept in a safe location.

Trustees must actively manage any conflicts of interest which may result from a family or business relationship. They should step back from or avoid any situation where a conflict exists or is likely to arise if it is clear the conflict cannot be adequately managed, even if this means, for example, that additional impartial trustees are appointed or that the affected trustees resign. 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.

Charity trustees are under a legal duty to co-operate with the Commission, particularly where the Commission has opened a statutory inquiry and the courts have been very clear about this. This includes requests by the Commission to attend meetings and interviews and the provision of information. Where trustees fail to co-operate in this way it may be a relevant factor in assessing whether misconduct or mismanagement may have taken place in a charity and considering whether any regulatory action is proportionate.