Charity Inquiry: Island Health Trust
Published 3 July 2025
Applies to England and Wales
© Crown copyright 2025
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The charity
Island Health Trust (‘the charity’), is a company limited by guarantee which was incorporated on 28 December 2008 and registered with the Charity Commission (‘the Commission’) on 12 January 2009. The assets and liabilities of the unincorporated charity were transferred to the company in April 2009. It is governed by a memorandum and articles of association, amended by special resolution on 27 February 2015.
The charity’s objects are to ‘promote the provision of primary health care in any manner which is deemed by law to be charitable’.
The charity’s entry can be found on the Register of Charities.
The charity’s main asset is the Island Health Centre, the Isle of Dogs, East London which is rented to a local NHS GP practice on a commercial property lease. The rental income is the charity’s only source of income which it used to service its mortgage. The charity also has a grants programme.
Trustees
According to the Commission’s records, the following have served as trustees of the charity during the relevant period:
Former trustees
Trustees A is referred to in this report as the ‘former Chair’.
Trustees B, C, D, E, F, G, H, and I are collectively referred to in this report as the ‘former trustees’.
| Name/Role | From | To |
|---|---|---|
| Suzanne Goodband: Trustee A and former Chair |
12 March 2011 | 31 October 2018 |
| Trustee B | 12 March 2011 | 1 April 2016 |
| Trustee C | 12 March 2011 | 1 April 2016 |
| Trustee D | 1 April 2016 | 27 October 2016 |
| Trustee E | 1 April 2016 | 31 July 2017 |
| Trustee F | 1 April 2016 | 30 September 2017 |
| Trustee G | 1 April 2016 | 13 March 2017 |
| Trustee H | 1 April 2016 | 22 November 2017 |
| Trustee I | 1 November 2017 | 31 October 2018 |
This information is inconsistent with records held by Companies House which record Trustee A, B and C as Directors of the charity since 2009 and information provided by Trustee A confirming their appointment since 26 October 2009.
Current trustees
Trustees J, K, L, M and N are collectively referred to in this report as ‘the current trustees’ and are now responsible for the administration and management of the charity going forward. It is recognised that the current trustees have made significant progress to address the governance failings in this report.
| Role | From | To |
|---|---|---|
| Trustee J | 1 June 2017 | to Date |
| Trustee K | 1 June 2017 | to Date |
| Trustee L | 1 June 2017 | to Date |
| Trustee M | 1 June 2019 | to Date |
| Trustee N | 19 August 2024 | to Date |
Background and issues under investigation
The Commission opened a compliance case into the charity in December 2016, following a number of concerns raised by the Executive Mayor of the London Borough of Tower Hamlets, Local Councillors and a Member of Parliament. These matters included complaints relating to the governance of the charity as well as concerns relating to the use of the charity’s funds and potential private benefit to one or more trustees.
The compliance case was closed in June 2017, with the Commission providing advice and guidance, based on the evidence available at that time. The Commission recognised that the trustees had received professional advice that provisions in their governing document permitted them to pay trustees for services. Despite this, the Commission’s concerns remained in relation to the failure of the trustees (in post at the relevant time) to recognise and consider the public benefit during the preparation of service contracts, the inadequate recording of decisions and a failure on their part to recognise and respond to potential public concerns and reputational risks.
The then trustees engaged with the Commission to address our regulatory concerns and undertook to review and consider how best to improve the charity’s engagement and communication with local stakeholders.
The matter was re-opened in August 2017 following further correspondence received from a Local Councillor highlighting similar concerns relating to the governance and administration of the charity as well as the activities of Trustee A, who at the time was Chair of the Board of Trustees (‘former Chair’). Information provided to the Commission revealed that Suzanne Goodband Interim Solutions Limited (‘SGIS’), a consultancy company, solely owned by the former Chair, received significant benefits from the charity amounting to £349,955 (between 3rd March 2015 to 31 March 2017) which represented 60% of the charity’s income over two financial years.
On 20 November 2017, the Commission opened a statutory inquiry (‘the inquiry’) into the charity under section 46 of the Charities Act 2011 (‘the Act’).
The scope of the inquiry was to examine:
- the administration, governance and management of the charity by the trustees with specific regard to the extent to which the trustees have:
- prudently managed the charity’s financial resources since 1 April 2012
- expended funds on activities which fall wholly within the charity’s purposes
- ensured the decision to enter into contracts/pay trustees or connected parties (resulting in significant expenditure) were properly taken and adequately supervised
- whether and to what extent any issues or weaknesses in the administration of the charity during the period under review:
- were as a result of misconduct and/or mismanagement by the trustees
- require rectification by the trustees or the Commission
The inquiry closed with the publication of this report.
Findings
The administration, governance and management of the charity by the trustees
The findings and conclusions of the inquiry as set out in this report are those of the Commission and not necessarily agreed by all former trustees.
The charity’s main asset is the Island Health Centre (the health centre), a property on the Isle of Dogs which is rented to a local NHS GP practice. The rent generated from this arrangement went to servicing the charity’s mortgage on this property, which was paid off during the Financial Year Ending (‘FYE’) 31 March 2014. This meant that the charity had more funds to spend on its charitable purposes. As a result, the former trustees decided to review the charity’s strategic direction and activities.
In July 2014 the charity was approached by a property development company who was redeveloping the neighbouring land and was considering an option to include the land on which the health centre was situated. The former Chair and former trustees felt that it was important that they were part of redevelopment discussions due to the potential impact of the redevelopment on the charity. Though speculative, the potential financial benefits arising from this redevelopment would have been significant if they went ahead. It was anticipated that the charity could sell a long lease on the land (the re-development opportunity) which potentially would release around £10 million over the next three to eight years for the charity to invest in improving the health status of the people of Tower Hamlets and Newham. The redevelopment opportunity created a sense of urgency around some of the planning and decision making by the former trustees and was in part the rationale for the appointment of the former Chair to project manage the charity’s strategic review and direct all activities in relation to the site re-development.
On 3 March 2015 the charity entered into a consultancy agreement with SGIS to project manage the strategic development of the charity.
Ultimately, the re-development opportunities and consequently the main thrust of the new strategy did not progress
The inquiry was not satisfied that the decision to enter into the contract with the consultancy company was properly taken and in the best interests of the charity or that the charity exercised sufficient oversight and adequately monitored its performance.
The speculative expenditure of charitable funds in connection with the strategic development and the property deal which did not go ahead, resulted from poor decision making by the former trustees led by the former Chair. The amount of expenditure involved was disproportionate in terms of the size, income and activities of the charity. It also resulted in a high level of public interest which had a detrimental impact on the reputation of the charity, including negative media coverage and complaints made to the Commission regarding the administration and management of the charity, as well as allegations of misuse of funds.
Acting outside of the charity’s objects
As set out above after paying off the charity’s mortgage the then trustees decided to review the charity’s strategic direction. The charity’s strategy development project was closely tied with the redevelopment of the land on which the charity’s property was situated. Plans for the future of the charity were being based on the potential financial rewards arising from the redevelopment opportunity. Generally, trustees’ being proactive about strategic development and reviewing its activities is a positive thing. However, the objects of the charity are limited to primary health care (which has a specific and narrow scope) which means that the charity was limited to exploring new opportunities which fell within their objects.
During the strategic review, led and driven by the former Chair, the trustees determined that the charity should expand its work to incorporate social care activities including initiating social enterprise employment schemes as a way of improving public health. The inquiry found that the former trustees took specialist legal advice on two separate occasions (between May-September 2015 and May 2016) which clearly advised that the charity’s current objects would need amending if they were to continue with their plans for the charity’s strategic development.
Despite this clear advice and the acknowledgement from the trustees that their objects needed amending – an application for consent for any changes to those objects was never made to the Commission.
The inquiry found that the former trustees and former Chair were aware that the proposed new strategy fell outside the scope of the charity’s objects and despite this continued to expend significant funds developing their strategy. Therefore, any charitable funds that were expended on pursuing a speculative redevelopment opportunity in order to fulfil a strategic direction that did not further the charity’s objects was a breach of trust by the trustees in post at the relevant times and was misconduct and/or mismanagement in the administration of the charity.
Financial management and unauthorised trustee benefit
The inquiry found that the former trustees were of the view that a significant amount of preparatory work was required to prepare the charity’s revised strategy and this would be best taken forward under the direction of a dedicated executive. Also, in view of a perceived urgency in the need to engage with parties involved in a potentially lucrative land deal (the potential benefit of which would complement and support the strategic development) the trustees decided to engage the former Chair in a consultancy capacity in order that the necessary work could be carried out expeditiously. In addition to the former Chair the charity also hired another consultant (the ‘consultant’) who had previously worked with the former Chair, to manage the lease negotiations between the healthcare organisations based at the health centre and the charity. In March 2015 the consultant was initially paid at a daily rate of £1,000 for days worked on specific projects. The charity paid the consultant £105,834.88 during the financial years ending 31 March 2016 and 31 March 2017.
The former Chair entered into a service contract (as a consultant) with the charity through the company, SGIS, an organisation that she wholly owns. Between 3 March 2015 and 31 March 2017 the charity paid SGIS £349,955.
The positions in which the former Chair and the consultant were placed in relation to the charity and each other created a clear and obvious conflict of interest. The former Chair had recruited the consultant, with the consent of other trustees. She was aware of the terms of his consultancy arrangements. Together with the other trustees, she chose the role that he was to adopt within the charity and the work that he was to undertake. The former Chair then proceeded on the basis that the consultant would seek legal advice on behalf of the charity about her own appointment as a consultant, that he would manage the process by which the terms of her appointment were agreed by the trustees, and that he would supervise or monitor the work that she undertook. The consultant was then established as the chair of the subcommittee of the board that was to approve the work that the former Chair undertook and the payment she received for it, despite him not being a trustee.
A conflict of interest exists even where there is the possibility that a trustee’s personal or wider interests could influence trustee decision making. Even the perception that there is a conflict of interest can damage the charity. Conflicts of interest relate to a trustee’s personal interests and the interests of those connected to them. Transactions between the charity and a connected person can give rise to conflicts. Similarly, there is a conflict of interest where there is a benefit or a potential benefit to a connected person.
The former Chair’s personal and professional connections with the consultant created a clear conflict of interest, in relation to both financial conflicts and loyalty conflicts, which was not managed sufficiently by the trustees in post at the relevant times. The former Chair told the inquiry that she does not accept that her entering into the consultancy contract and subsequently receiving payments nor the consultant’s role in relation to it, was in any way improper.
The charity also entered into service contracts with trustee F and trustee G (who were trustees of the charity at the time) and received payment in connection with specialist consultancy work in the furtherance of the new strategy. Trustee F received remuneration of £15,913 and trustee G received remuneration of £8,325.
The inquiry found that the overall expenditure on consultants and advisers by the charity was excessive, unreasonable and disproportionate to any value that the charity received. In addition, the decision to remunerate the former Chair and trustees F and G was in breach of the charity’s governing document.
Clause 5.4.4.1 in the charity’s governing document prohibits trustee remuneration unless the payment or transaction is permitted in accordance with, and subject to the conditions in section 73A or 73F of the Charities Act 1993 (which has been replaced by section 185 of the Act). This provision covers payments to trustees and connected persons which includes a body corporate in which the trustee has a substantial interest. SGIS Ltd is connected to the former Chair and therefore the substantial payments made to SGIS should have complied with the provisions of section 185 of the Act.
In order for payments to a trustee to comply with section 185 of the Act, the trustees receiving remuneration must be in the minority. At the time the former Chair was being remunerated by the charity, other trustees were also being paid (as outlined above), such that the majority of the trustee board was being remunerated. Therefore, not all the conditions, under section 185 of the Act were met and as a result, significant funds were expended, in breach of the charity’s governing document and constituted unauthorised benefits. The inquiry was also not satisfied that the decisions relating to these payments were properly taken, in the best interests of the charity.
Trustee B and trustee C were responsible for the initial authorisation and governance of the SGIS contract. Both left the charity on 1 April 2016. A subcommittee comprising of the newly appointed trustees - trustee D, E and H governed the continuation of the SGIS contract and authorised the ongoing payments to it. Trustees D, E and H were also involved in the authorisation of the expenditure involving trustees F and G. The former trustees and the former Chair failed to discharge their trustees’ duties when making these decisions. This is misconduct and/or mismanagement in the administration of the charity.
The current trustees were not involved in the authorisation and administration of any of the payments to trustees, as set out above.
On the 18 July 2019 an Interim Manager (‘IM’) was appointed under section 73(3)(g) of the Act to consider whether there were potential claims against the former trustees of the charity, for breach of their duties resulting in the unauthorised or unjustifiable expenditure. (For more details on the IM appointment see Interim Manager section below).
On the 2 March 2020 the IM presented their recommendations regarding potential litigation to recover the consultancy fees to the current trustees. On the 15 November 2021 the current trustees reached a settlement agreement with the former Chair recovering substantial sums. The settlement agreement is confidential to the parties with no admission of liability. However at the Tribunal Hearing [footnote 1] (as referred to below), the former Chair confirmed £165,000 had been paid by insurers to the charity in full and final settlement, under an insurance policy the charity had taken out in order to provide cover to the charity’s trustees for any liability that arose in connection with their role as trustees.
Conclusions
The Commission concluded that there has been serious misconduct and/or mismanagement in the administration of the charity by the former trustees and the former Chair. They breached their legal trustee duties and responsibilities by failing to act in the best interests of the charity and acting outside the powers of the governing document, in particular the objects of the charity.
A large proportion of the charity’s income was expended on strategic development and a speculative property deal which did not go ahead – funds which could have been used to further the Objects of the charity. The former trustees and the former Chair failed to exercise the requisite care and skill in managing the charity’s resources.
Regulatory action taken
The inquiry interviewed former trustees and third parties with personal knowledge and/or holding information relevant to the scope of the inquiry.
On the 26 April 2019, the inquiry met with trustees, in post at the relevant time, to discuss regulatory concerns and future governance matters. The charity was represented by Trustee J and L.
On 18 July 2019, the inquiry issued an Order, under section 84 of the Act, directing the trustees (in post at the relevant time) to review the charity’s objectives and ensure that its charitable activities were within scope of its objectives.
Appointment of an Interim Manager
On 18 July 2019, the inquiry used its protective power under section 76(3)(g) of the Act, to appoint Helen Briant and Lucy James of Trowers & Hamlins LLP as Interim Managers. Their appointments were to the inclusion of trustees (in post at the relevant time) with a limited scope to evaluate the strength of any claim against former trustees and provide the current trustees (who had no part in the administration of the service contracts or the strategy development or the Re-development opportunity) with an appropriate level of support, independent oversight and transparency, in relation to these matters.
On 21 February 2020, the Interim Managers determined that the charity had a good legal claim against the former trustees who had authorised the relevant contracts and payments to the former Chair.
Section 15(2) advice and guidance was provided to the charity trustees on 23 March 2020 to consider and review the Interim Managers’ advice and consider options for recovery.
The inquiry being satisfied with assurances provided by the charity trustees (in post at the relevant time) that they were willing and able to take steps to progress legal claims for restitution on behalf of the charity, the Interim Managers were discharged on the 23 March 2020 by virtue of section 337(6) of the Act.
The costs of the IM’s appointment were met out of the charity’s funds. The total costs of the IM’s appointment amounted to £10,149.88 plus VAT.
On the 15 November 2021 the current trustees reached an agreement with the former Chair under which she agreed to repay £165,000 to the charity in order to settle the litigation. The agreement was in full and final settlement and no further action was considered/taken against other former trustees who had authorised the relevant contracts and payment to the former Chair.
The disqualification of Suzanne Goodband
On the 19 December 2022, the inquiry made an order under section 181A of the Act which disqualified the former Chair from being a trustee for all charities generally [footnote 2]. The order also disqualified her from holding any office or employment with senior management functions in charities.
Ms Goodband challenged the decision and submitted representations. A Decision Review upheld the decision to disqualify her for a period of 12 years but decided to make an exception and not also disqualify her from holding office or employment with senior management functions in charities. Ms Goodband subsequently appealed the disqualification to the First Tier Tribunal General Regulatory Chamber (Charity). In a decision dated 19 January 2024, the Tribunal upheld the Commission’s decision to disqualify Ms Goodband (from being a charity trustee), but having taken into account the 5 year period that had elapsed since Ms Goodband had ceased to be a trustee of the charity, a disqualification period of 7 years was considered more proportionate.
Ms Goodband’s name has been added to register of removed trustees.
Issues for the wider sector
Trustees must always act in the best interests of the charity. Conflicts of interest or loyalty can lead to decisions which are not in the best interests of the charity and can lead to difficulties and damage to the reputation of the charity.
A conflict of interest is any situation in which a trustee’s personal interests or loyalties could, or could be seen to, prevent them from making a decision only in the best interests of the charity.
Trustees must recognise and manage conflicts of interest and loyalty as they arise. They must be mindful of mixing their role with the charity and their private business affairs, particularly when a benefit may be inferred to that business or the trustee whether directly or indirectly. Trustees must follow any conflict of interest or loyalty provision in their governing document.
The law states that trustees cannot receive any benefit from their charity in return for any service they provide to it or enter into any self-dealing transactions unless they have the legal authority to do so. This may come from the charity’s governing document or, if there is no such provision in the governing document, the Commission or the Courts. The Commission’s guidance on Trustee expenses and payments (CC11) is available on GOV.UK.
All charities must have an effective trustee body to control and administer the charity in accordance with a charity’s own governing document, charity law and Commission guidance. Public trust and confidence depend on the conduct of trustees and how they safeguard charity funds and undertake the objects and activities of the charity.
Trustees have a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects.
The findings and conclusions of the inquiry as set out in this report are those of the Commission and not necessarily agreed by all former trustees.