Decision

Charity Inquiry: Kingdom Life Ministries

Published 29 November 2019

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

The charity

Kingdom Life Ministries (‘the charity’) was registered with the Commission on 25 May 2005. It is governed by a memorandum and articles of association dated 8 November 2004 as amended by Special Resolution passed on 16 May 2005 (‘the governing document’).

The charity’s objects are the advancement of the Christian religion and the education of the public. The charity runs a church in Tottenham, London.

Further details about the charity can be found on the register of charities.

The trustees of the charity have changed during the course of the inquiry. At the opening of the inquiry Emmanuel Owusu Ansah (trustee A), Anthony Osei-Dankwa (trustee B) and Olivia Ansah (trustee C) were the trustees of the charity. They resigned on 30 October 2018 and were subsequently disqualified from being trustees of a charity. They will be referred to as ‘the former trustees’.

New trustees were appointed on 30 October 2018. They will be referred to as ‘the new trustees’.

Issues under Investigation

On 9 June 2017 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 29 November 2019 with the publication of this report.

Before the inquiry was opened, the charity was included in the double defaulters class inquiry (‘the class inquiry’) under section 46 of the Act on 23 May 2016, as it had failed to comply with the statutory duty to file the accounts and annual returns (‘the accounting information’) for financial years ending (‘FYE’) 31 May 2014 and 31 May 2015 on time to the Commission.

The accounting information for FYE 31 May 2014 was submitted 681 days late and 371 days late for FYE 31 May 2015. During the class inquiry the charity additionally failed to file the accounting information for FYE 31 May 2016 on time.

The inquiry was opened to examine the reason for the continuous late filing of accounting information and concerns arising from the information submitted by the charity. The scope of the inquiry was to examine the following:

• the extent to which the trustees are complying with their legal duties in respect of their administration, governance and management of the charity and in particular, their compliance with legal obligations for the preparation and filing of the charity’s accounts and other information returns
• the extent to which the trustees have complied with previously issued regulatory guidance

Findings

Unauthorised trustee remuneration

Clause 5 of the charity’s governing document states that: “no trustee shall be appointed to any office of the charity paid by salary or fees or receive any remuneration or other benefit in money or money’s worth from the charity”. In breach of this clause all of the former trustees received unauthorised payments totalling £456,853.68 between 1 June 2013 and 13 November 2018.

During an inspection of the charity’s administrative and financial records and meeting with the trustees on 17 October 2017, the former trustees explained in relation to these payments that they had decided in 2013 that trustees A and B would receive a weekly remuneration of £200 and that trustee C would receive £90 weekly.

The former trustees stated that the rest of the payments relate to reimbursements for costs they incurred on behalf of the charity and that they had documentation to support the payments. However, at the inspection the inquiry found insufficient records were available in relation to the reimbursements.

The inquiry advised the former trustees at the inspection in October 2017, that the weekly payments should stop immediately. In addition, the inquiry specifically wrote to the former trustees asking them to stop making payments to themselves on 29 March 2018 and 3 April 2018. However, despite the regulatory advice and guidance provided; the payments continued.

Analysis of the charity’s bank statements by the inquiry showed that the last payments to the former trustees were made on 4 April 2018 and that following the meeting the former trustees continued to receive payments, which amounted to £28,971.92.

Subsequently to the inspection in October 2017, the inquiry repeatedly requested the former trustees to provide supporting documentation in relation to their reimbursements. After being informed of the closure of the investigative phase of the inquiry the former trustees submitted a number of invoices relating to construction work, international flights and video production in November 2019.

While the invoices show that funds were spent they cannot be reconciled with the charity’s bank statements. Analysis of the charity’s bank statements shows that the majority of the payments made to the former trustees are round sums. Generally speaking, charities should not be paying round or lump sums to reimburse trustees but the exact amounts incurred.

The inquiry found that the unauthorised remuneration was in breach of the former trustee’s duties and in breach of the governing document. The remuneration was received over a prolonged period of time and the former trustees failed to consider regulatory advice and guidance provided by the inquiry in this regard.

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

Failure to manage conflicts of interest

The charity’s governing document requires a quorum of three trustees to make valid decisions. From FYE 31 May 2007 to 30 October 2018 the charity had three trustees, however trustee A and trustee C are married.

Trustees have a duty to ensure that they do not put themselves in a position where their trustee duties conflict with their personal interest. The inquiry found that in relation to such decisions between FYE 31 May 2007 and 30 October 2018 trustee B was the only independent un-conflicted trustee and decisions were being made without identifying, recording or managing conflicts of interests. In addition the charity had no written policy or procedures to manage conflicts of interest.

An analysis of the charity’s bank statements shows that individuals connected to the former trustees received payments amounting to £38,216 between December 2015 and May 2018. The former trustees explained to the inquiry at the meeting on 17 October 2017 that these payments were salary payments and reimbursements for expenses incurred on behalf of the charity.

The inquiry received and reviewed the meeting minutes of the trustee meeting held on 31 July 2013 at which the former trustees decided on their own remuneration. Due to a lack of unconflicted trustees, the inquiry found that it was impossible for the former trustees to make a valid decision in relation to their remuneration and manage the conflicts of interest and/or loyalty.

Trustees with a conflict of interest and/or loyalty are required to absent themselves from decisions in relation to them, for example their remuneration. However, trustees must ensure that by doing so they are still able to make a quorate decision. The former trustees failed to do this. In any case the decision was made in breach of trust as the governing document does not allow trustees to be remunerated. This is misconduct and/or mismanagement in the administration of the charity by the former trustees.

Poor financial management

The charity has a history of filing accounting information late and despite receiving regulatory advice and being made aware of the statutory requirements to file accounts on time as part of the class inquiry, the previous trustees failed to file the accounting information for FYE 31 May 2016, FYE 31 May 2017 and FYE 31 May 2018 on time and in line with statutory requirements.

At the inspection on 17 October 2017 the inquiry found that the records available did not properly account for the charity’s income and expenditure for FYE 31 May 2013 to 31 May 2017. It also found that the charity was not adhering to its financial controls policy and that the trustees failed to comply with the statutory duty to keep accounting records.

The charity’s bank statements show that cash withdrawals totalling £719,466 were made between 1 June 2013 and 16 August 2016. During the inspection, it was not possible to establish how the cash withdrawals were used in furtherance of the charity’s objects due to a lack of record keeping. The former trustees stated that relevant records were available, however, failed to provide them.

After being informed of the closure of the investigative phase of the inquiry the former trustees submitted a list of estimated expenses which do not match the cash withdrawals made from the charity’s bank account.

The inquiry visited the charity’s premises again on 9 April 2018. While it was noted that the charity’s record keeping had improved, it was still found to be poor and incomplete.

On 21 June 2018 the inquiry made an order under section 76(3)(f) of the Act (‘the payment restriction order’) directing the former trustees not to enter into any financial transactions relating to or otherwise part with any property and/or funds belonging to the charity without the written approval of the Commission.

Orders under section 76(3)(f) of the Act only restrict a charity’s outgoing payments, they have no effect on incoming payments.

The order was made to ensure that the charity’s funds were applied solely for charitable purposes in furtherance of its objects.

As an analysis of the charity’s bank statements showed a significant reduction of deposits into the charity’s bank account following the payment restriction order, the inquiry made an order under section 84 of the Act on 19 October 2018. The order directed the former trustees to pay all existing charitable funds and all future funds coming to the charity into the charity’s bank account.

On 31 October 2018 the former trustees resigned and new trustees were appointed. When the inquiry met the new trustees on 20 March 2019 they confirmed that they were aware of the orders and directions made. With regards to the drop in deposits credited to the charity’s bank account following the issuing of the payment restriction order, they explained that this was a coincidence and that the charity had been experiencing serious cash flow issues.

They noted that no payments were being made other than the debits on the bank account which were subject to authorisation by the inquiry at the time.

Following the appointment of the new trustees and the assurance they provided to the inquiry through, among other things, their compliance with an order under section 84 of the Act made on 29 April 2019, the payment restriction order was discharged on 21 August 2019. The section 84 order directed the trustees to take specific actions in relation to the charity’s accounts and financial management.

The inquiry found that the former trustees breached their trustee duties in the financial administration of the charity, failed to consider regulatory advice provided by the inquiry and during the class inquiry which is evidence of misconduct and/or mismanagement in the administration of the charity.

Failure to comply with the Commission’s Orders and Directions

Over the course of the inquiry the former trustees consistently failed to comply with statutory orders and directions issued by the inquiry. A failure to comply with an order or direction of the Commission, and a failure to remedy any breach specified in an Official Warning under section 75A is considered misconduct and/or mismanagement, in accordance with section 76(1)(a) of the Act.

The former trustees failed to:

• comply with a direction made under section 47 of the Act on 1 September 2017 to provide financial information relating to the charity within the required timeframe
• comply with an order made under section 84 of the Act on 1 September 2017 to conduct a review of policies and procedures of the charity
• comply with a direction made under section 47 of the Act on 20 November 2017 to provide payroll information within the required timeframe
• failed to undertake rectification action outlined in an Official Warning, made in accordance with section 75A of the Act, on 11 October 2018 to:
  • comply with the section 84 order and section 47 directions including providing outstanding information and documents
  • file the annual return and annual report for the FYE 31 May 2017

Conclusions

The inquiry concluded that the former trustees, failed to comply with their trustee duties and were responsible for serious mismanagement and/or misconduct in the administration of the charity. The former trustee’s conduct was of such serious regulatory concern that they were disqualified under section 181A of the Act from being a charity trustee or trustee of a charity and from holding an office or employment in a charity with senior management functions for a period of 10 years each, starting on 24 June 2019.

The charity’s new trustee board has positively engaged with the inquiry and is aware of its duties and the provisions of the charity’s governing document.

Regulatory action taken

On 1 September 2017 the inquiry ordered the former trustees to undertake a review of the charity’s policies and procedures under section 84 of the Act.

On 21 June 2018 the inquiry restricted the charity’s transactions and payments under section 76(3)(f) of the Act.

On 11 October 2018 the inquiry issued the charity with an Official Warning requesting the former trustees to comply with previous orders and directions and to file outstanding statutory accounting information.

On 19 October 2018 the inquiry issued the charity with an order under section 84 of the Act requesting the former trustees pay all of the charity’s existing funds and any of the charity’s future funds into the charity’s bank account.

On 29 April 2019 the inquiry issued the charity with an order under section 84 of the Act requesting the new trustees to take specific actions in relation to the charity’s accounts and financial management.

On 13 May 2019 the inquiry disqualified the former trustees from being charity trustees or trustees of a charity and from holding an office or employment in a charity with senior management functions for 10 years each under section 181A of the Act.

Issues for the wider sector

The trustees of a charity are collectively responsible for its management. They should act together, in accordance with the requirements of their governing document and the general law, and they must always bear in mind their over-riding duty to take decisions that are in the best interests of the charity.

Trustees are under a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects. They must also be able to demonstrate that this is the case in accordance with section 130 of the Act which requires trustees to keep accounting records for their charity.

Every charity’s accounting records must be sufficient to show and explain its transactions and disclose with reasonable accuracy its financial position. Find out further information on Charity Finances.

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.

Further information is available from Trustee expenses and payments (CC11).

Conflicts of interest 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.

The trustees should put in place policies and procedures to identify and manage such conflict. Further guidance and advice is available from our guidance on conflicts of interest.