Decision

Charity Inquiry: Newham Community Leisure Trust

Published 12 April 2023

Applies to England and Wales

The Charity

Newham Community Leisure Trust (‘the charity’) is a charitable company limited by guarantee and incorporated on 4 February 1992. It was registered with the Commission on 10 March 1992. The charity’s objectives are to benefit the inhabitants of the Borough of Newham by way of provision of a sports centre and ancillary facilities.

The charity was originally known as Clapton Trust Limited but changed its name to Newham Community Leisure Trust on 4 May 1993. According to Companies House information it changed its name again on 28 October 2013, to Newham Community Leisure Limited, however, the Commission wasn’t notified of that change.

According to the Commission’s records the charity’s trustees have changed over the years but one trustee, Vincent McBean has played a central role in the administration of the charity acting as a trustee charity from 8 January 2000 until October 2022.

A Court Order to wind up the charity was issued in February 2018. Before this, the charity was in voluntary liquidation following a resolution to wind up passed by its members on 1 March 2017. The compulsory liquidation remains ongoing.

The charity was removed from the Register of Charities (‘the Register’) on 6 February 2023 as it does not operate.

Background

The charity held fixed assets consisting of land and buildings and previously leased the ‘Old Spotted Dog’ football ground (‘the Ground’) and operated from there. The Ground is the historic home of ‘Clapton Football Club’ (‘the Football Club’). The charity lost the leasehold to the Ground in 2019.

The Commission previously investigated the charity by way of a statutory inquiry under Section 8 of the Charities Act 1993 that was opened on 19 September 2002 (‘the First Inquiry’). The First Inquiry made findings that little to no charitable activity was being undertaken, an adjoining warehouse owned by the charity was derelict and couldn’t be used for charitable purposes without considerable expenditure, and two trustees of the charity (including Vincent McBean) were also directors of the Football Club, which gave rise to the potential for unmanaged conflicts of interest.

The trustees at the time gave an undertaking that the Ground would not be used solely for the Football Club but would be opened up for charitable use and plans had been made to develop the warehouse to enable charitable activity to be undertaken. A formal licence was to be entered into between the charity and the Football Club. The Commission also advised that transactions between the charity and the Football Club should be at arm’s length. The First Inquiry was closed on 23 June 2003.

The Commission opened its second statutory inquiry (‘the Second Inquiry’) under section 46 of the Charities Act 2011 (‘the Act’) on 18 December 2013. The Second Inquiry is the subject of this report. It opened following concerns about potentially disqualified trustees continuing to act as trustees, concerns about the charity’s relationship with the Football Club and other companies, and concerns about the financial management and governance of the charity.

The scope of the inquiry was:

• examining the transactions between the charity and Clapton Football Club
• the administration, governance and management of the charity by the trustees
• the financial controls and management of the charity
• whether or not the trustees had complied with and fulfilled their duties and responsibilities as trustees under charity law

As records were not kept and the Register not updated as required, there is inconsistent information about who was a trustee of the charity.

According to information available to the Commission at the time of the opening of the Second Inquiry, Vincent McBean, Kazz Harris and Rashford Angus were trustees of the charity. A number of other individuals also purported to be trustees of the charity however, the inquiry was only able to establish meaningful contact with Vincent McBean.

Vincent McBean is the CEO of the Football Club.

Findings

Failure to register with the Commission

The charity was dissolved at Companies House on 11 November 2003. It was subsequently removed from the charity Commission’s Register (the Register) in August 2007. Vincent McBean applied to restore the charity to the register of companies at Companies House and restoration took place on 7 January 2009. No application was made to the Commission to reinstate it to the Register.

In accordance with section 30 of the Act, a charity is required to register with the Commission if its income exceeds £5,000 in the preceding financial year. Trustees of a charity must apply to the Commission for registration when their charity meets the registration requirements as set out in section 35 of the Act.

Accounts submitted to Companies House in August 2009 for the years 2001 – 2008, and subsequent filings for the years 2009 – 2011 state that the company is a charity and quote its charity registration number. They also show that following restoration with Companies House the charity had an income over £5,000 per annum. This means the trustees at the time had a duty to re-register the charity with the Commission when it was restored at Companies House in 2009.

The charity was eventually reinstated on to the Register on 21 November 2013 by the Commission as the trustees failed to re-register the charity with the Commission despite the Commission repeatedly engaging with the then trustees on the issue.

Allowing a disqualified trustee to act

Under section 178 of the Act, a person is disqualified from being a charity trustee or trustee of a charity if they have been removed from office by an order of the Commission under section 79(2)(a) or under a relevant earlier enactment, or by the High Court.

Records available at Companies House show that Kazz (AKA Kass) Harris was a Director of the charitable company and therefore a trustee of the charity from 21 April 2001 to 15 May 2015. As part of a statutory inquiry into a different charity, Kazz Harris was removed as a charity trustee by the Commission on 5 May 2005 under section 18(2) of the Charities Act 1993. He is therefore disqualified from being a trustee of any charity. In accordance with s.183 of the Act, acting whilst disqualified is an offence.

Minutes of trustee meetings for the years 2008 to 2014 show that Kazz Harris continued to act whilst disqualified. In a letter sent to the charity dated 20 December 2013, Vincent McBean and the other trustees – including Kazz Harris – were informed that Kazz Harris was disqualified and unable to act as a trustee. However, no immediate action to remedy the situation was taken and Kazz Harris was not removed from his position by the trustees or resigned himself until 15 May 2015.

Inquorate decisions

The charity’s governing document sets out the provisions regarding the number of trustees required to properly administer the charity, the number of members and the composition of that membership. It also sets out the quorum provisions for trustee and general meetings.

Article 29 of the charity’s governing document states that the board of trustees shall comprise of not less than 9 trustees and not more than 15. Article 45 states that the required quorum for a trustee meeting is three or such greater number as the trustees may determine.

Records provided to the Second Inquiry show that from December 2008 to December 2014, 16 trustee meetings were held.

Between February 2008 and February 2015, Companies House records show that there were only four trustees in post, one of those being Kazz Harris (who as set out above was disqualified) and therefore there were only three properly acting trustees.

Out of the 16 trustee meetings held, 14 of those were inquorate due to the fact that either Kazz Harris formed part of the quorum, or other individuals in attendance were not trustees of the charity. Consequently, the decisions taken by the trustees during this period were not quorate and therefore not valid.

Even if the number of trustees at a meeting meant that the meeting was quorate, the fact that there was an insufficient number of trustees overall is a breach of the governing document and failure to properly administer the charity.

Failure to submit accurate financial information

Trustees have a statutory duty to prepare accounts and annual reports and, where required, submit these to the Commission within 10 months of the charity’s financial year end. Even where a charity is not automatically required to submit accounts or annual reports to the Commission, they must keep such records and provide them if requested to do so. Any charity with a gross income of over £10,000 must prepare and submit an annual return to the Commission.

As part of the charity’s restoration to the Companies House Register, accounts and annual returns were filed for the financial years ending 31 December 2001 to 2008. These documents were signed by Kazz Harris. Accounts provided to Companies House in 2012 for the financial years ending 31 December 2009 and 2010 were signed by Vincent McBean.

No similar documents were provided to the Commission until after the opening of the Second Inquiry in 2013. The charity’s required annual returns for the financial years ending 31 December 2011 to 2014 were not submitted until September 2016, nearly 3 years later. The charity had a gross income of over £10,000 for these years.

Analysis of the charity’s income and expenditure as recorded in the charity’s annual returns submitted to the Commission, the charity’s bank accounts, and the charity’s accounts as submitted to Companies House, and annual accounts submitted to the Commission, showed that there were significant discrepancies in the charity’s income and expenditure as variously reported by the trustees. The extracted figures are below.

Financial year end (FYE)	Annual Return		Companies House Accounts		Charity Commission Accounts
	Income	Expenditure	Income	Expenditure	Income	Expenditure
31 Dec 2015	£9,961	£20,610	£9,961	£16,145	£9,961	£20,610
31 Dec 2014	£19,761	£19,146	£19,761	£19,146	£20,961	£22,418
31 Dec 2013	£18,381	£21,120	£19,421	£40,308	£18,381	£19,085
31 Dec 2012	£15,131	£16,385	-	-	-	-
31 Dec 2011	£13,561	£17,475	£6,321	£9,025	-	-

The accounts provided to the Commission for the financial years ending 31 December 2013 – 2015 were signed by Vincent McBean on 31 October 2016. The accounts submitted to Companies House for the same period were also signed by Vincent McBean and were signed on the 29 September 2014, 30 September 2015, and 6 September 2016 respectively.

While the accounts submitted to the Commission and the accounts submitted to Companies House were produced by the same accounting firm, there are discrepancies in the reported income and expenditure.

An examination of the accountant’s working papers which the Second Inquiry acquired for FYE 31 December 2008 to 2014, do not explain the discrepancies, nor do they properly account for funds which the Football Club purported to hold and expend on behalf of the charity (as outlined further in the next sections). For instance, expenditure and income is not supported by invoices and it is unclear from the documents how sums held and expended by the Football Club on behalf of the charity have been arrived at.

The Commission has seen no evidence that the trustees, other than Vincent McBean, knew at any time how much the Football Club held as the charity received no accounts or other financial information from the Football Club.

Although it may be legitimate for the Football Club to act for instance as the charity’s managing agent, this does not absolve the trustees from fulfilling their legal duties and the trustees still have a duty to accurately and transparently account for their charity’s funds.

Failure to manage conflicts of interest and / or loyalty appropriately

A conflict of interest is any situation in which a trustee’s actual or perceived personal interest or loyalty could, or could be seen to, prevent them from making a decision in the best interests of the charity.

The charity and the Football Club were closely connected. During the course of the Second Inquiry, Vincent McBean explained to the Commission that the activities of the charity were managed by the Football Club, and that funds derived from these activities, which included the use of the Ground, were held by the Football Club and expended in furtherance of the charity’s purposes. This relationship would have required careful managing as Vincent McBean was both a trustee of the charity and the CEO of the Football Club.

In line with the Commission’s guidance Conflicts of interest: a guide for charity trustees (CC29), Vincent McBean should have declared that he was conflicted and absented himself from any trustee meetings where decisions were taken regarding any transactions or dealings between the charity and the Football Club. This would ensure that for the decisions of the charity, they were taken only in the best interest of the charity.

Furthermore, Vincent McBean should have also recognised that he was conflicted and absented himself from any decisions about transactions between the charity and himself, such as the loans he made to the charity which are detailed below.

However, the Commission has not seen any evidence to demonstrate that the conflicts of interest in relation to Vincent McBean were managed appropriately and as is outlined below, the affairs of the Football Club and the charity were not adequately separated.

Analysis by the inquiry of minutes of trustee and general meetings conducted between 2008 and 2017 show that conflicts of interest and/or loyalty were not properly managed. Despite there being significant dealings between the charity, the Football Club and Vincent McBean, which presented conflicts, the Commission has not been provided with any documentation such as conflicts of interest register or policy to demonstrate that conflicts of interest and/or loyalty were declared, recorded and appropriately managed.

Failure to separate activities of the Charity and the Club

During the First Inquiry the trustees, which included Vincent McBean, were given advice by the Commission that all transactions between the charity and the Football Club should be at “arm’s length”. A formal licence between the charity and Football Club was also to be entered into shortly after the First Inquiry closed.

In a meeting with the Second Inquiry on 24 April 2015, Vincent McBean explained that in 2002/2003 the Football Club, which he is the CEO of, had reached an agreement with the charity. The Football Club was maintaining the Ground and associated assets, as the charity couldn’t afford to do so. An offset rent agreement was made whereby the charity would charge the Football Club £300 per month rent and the Football Club would charge the charity £300 per month for services. The Second Inquiry has seen no documentary evidence of the ‘offset rent agreement’. It has also seen no evidence that the trustees ever considered whether this agreement was or continued to be in the best interests of the charity.

The ‘offset rent agreement’ is also not referenced in the Service Level Agreement (‘SLA’) dated 28 February 2008, which is the first formal written agreement between the charity and the Football Club that the Second Inquiry has been provided with. The SLA sets out the Football Club’s responsibilities which mainly relate to the administration and maintenance of the Ground and associated facilities (including payment of utility bills). The SLA also enables the Football Club to “Obtain and receive all income generated from use of the asset of Newham” and sets out how the club will account to the charity.

While the SLA goes some way towards addressing the advice provided during the First Inquiry, it is apparent from the charity’s records that there was still no clear distinction between the charity and the Football Club and that the agreement was not effective or properly administered.

For instance, Vincent McBean explained to the Second Inquiry that the activities of the charity were managed by the Football Club, and that funds derived from these activities, which included the use of the Ground, were held by the Football Club and expended in furtherance of the charity’s purposes.

While a charity may outsource the management of its assets to another organisation, the nature of the agreement between the parties needs to be such that it furthers the interests of the charity and not the managing agent. However, no evidence was made available to the Commission to show that the trustees properly considered the SLA to ensure that it was or continued to be in the best interests of the charity.

Furthermore, the Football Club entered into a number of ground sharing agreements with another football club for the 2013/2014, 2014/2015 and 2016/17 seasons. Although fees were due to the Football Club, which under the terms of the agreement for the 2013/2014 seasons was £5,400, no sum of money was transferred to the charity’s bank account as a result of this agreement. There is no evidence that the trustees took any steps to review this activity to identify if any funds were due to the charity. There is also no evidence demonstrating how they held the Football Club to account, as was required under the terms of the SLA, to ensure that funds obtained are properly accounted for and spent in furtherance of the charity’s purposes.

The SLA is also not clear as to whether services provided by the Club would be at the Football Club’s expense or the charity’s. Minutes of trustee meetings refer at various times to maintenance related expenses being paid for by the Football Club in line with the SLA. However, there are also examples of the charity incurring large debts related to maintaining the Ground (as is set out in more detail below). Some of this maintenance is for the Ground to obtain and/or maintain a standard which enables the Football Club to play league football. The Commission has seen no evidence of how and why the trustees considered that maintaining the Ground at a standard which permitted the Football Club to play league football was in furtherance of the charity’s objects or in its best interest.

Loans

During the Second Inquiry, the Commission has been provided with information which shows that the charity has received loans from Vincent McBean and other individuals who were not trustees. Five of these loans are documented. The Second Inquiry has seen evidence of further loans which are not documented. Vincent McBean’s loans are set out in two loan agreements which operate on an accrual basis with additional amounts being added over time. Both contain amounts which were advanced before and after the agreement dates.

In relation to each loan, the reasons for the loans are stipulated in the agreements as follows:

• loan agreement dated 27 July 2002 from Vincent McBean “…to assist in the development and implementation of its strategy to maintain and develop the Spotted Dog Ground, however, it does not have sufficient liquid resources.” (‘Loan A’)
• loan agreement dated 21 February 2004 (from Person A) “Newham requires a loan to carry out building and repair works to the Old Spotted Dog Ground. However, it does not have sufficient resources”
• loan agreement dated 23 February 2008 from Vincent McBean “Newham Community Leisure Trust requires funding to assist in the development and implementation of its strategy to maintain and develop the Spotted Dog Ground, however, it does not have sufficient liquid resources.” (‘Loan B’)
• loan agreement dated 27 July 2009 (from Person A) “Newham requires funding to fight a court action against [a company] against Newham [sic]. However it does not have sufficient liquid resources”
• loan agreement dated 27 July 2009 (from Person B) “Newham required funding to assist in the security and the maintenance of the ground, however, it does not have sufficient liquid resources”

All but one of the five loans are made for the purpose of maintaining and developing the Ground and they are all made on the basis that the charity has insufficient resources to undertake activities. Considering the loan schedules cover the period 2000 to 2013, this indicates insufficient funding to undertake its activities for over a decade. This pattern continued beyond 2013, and before entering liquidation in 2017, the charity had debts due to long term loans of £203,478 according to documentation filed with Companies House.

The schedules to the two loans from Vincent McBean contain 43 separate transactions, 28 of which predate 2008. According to Vincent Mc Bean, there is no documentary evidence to support those transactions due to a fire which destroyed the charity’s records. Trustee meeting minutes for the period 2008 to 2017, only make reference to nine of the remaining 15 loan transactions.

In addition, there are items on the loan schedules which are focussed on maintaining standards for the Football Club rather than for the provision of charitable activity. For example, in the schedule to Loan A, Vincent McBean made a loan of £33,500 the details of which state “Built with drawings Changing [sic] rooms to Ryman Specifications”: this transaction is dated Jan 2000 – 27 July 2002. This means that Mr McBean lent the charity money so that it could build changing facilities which met the necessary specification so that the Football Club could play in the Ryman football league. Similarly, on the schedule to Loan B there is a transaction dated Jan – Dec 2003, for the sum of £2,500 the details of which state “Build new stand (For standing) Ryman League specification”.

When accepting the loans, minutes of the trustee meetings do not show that the trustees considered why the charity needed the money for the stated purposes, how the charity would obtain the funds to repay the loans and whether the loans were in the best interests of the charity. The Commission has also seen no evidence of how the trustees considered that this expenditure was necessary and/or in the best interests of the charity. Furthermore, the SLA states that the Football Club is required to maintain the pitch: “… to ensure it is in a fit condition and suitable for use by a club in the Ryman League or such other league organization.”

It is also unclear why the charity received loans for costs which under the terms of the SLA should have been the responsibility of the Club and not the charity.

Clause 3 of the SLA states that the Club will:

• maintain and keep in a state of good repair, the clubhouse
• annually, or as and when needed repaint and keep in good repair, the dressing rooms
• paint and repair the fencing around the pitch
• cut and maintain the trees around the pitch
• carry out inspections of the utilities and to maintain the connection of all services

It also states that the Club will “do all other services needed for the safety and administration of the facility”.

However, the schedule to Loan B shows that the charity was for instance loaned £1,500 to prune trees, £600 to paint & decorate the changing rooms and clubhouse, £2,100 to re-seed and fertilise the pitch, £700 to repaint clubhouse and changing rooms, £540 to repair the floodlights, £350 for a floodlight certificate, £490 for floodlight bulbs, £1,800 for unspecified ‘ground improvements’, £300 to cart away debris, and £460 for new fencing. No supporting evidence is available for this expenditure for which the charity was indebted.

Furthermore, there is no evidence that the trustees considered the conflicts of interest that arose from Vincent McBean being a trustee of the charity and a CEO of the Club. It is also not clear how the trustees could enter into the loans as the charity was inquorate. This raises questions about the validity of the charity’s debts and in particular the loans Vincent McBean gave to the charity, when the charity had no clear way of repaying the debt without liquidating its fixed assets.

The loans are being examined by the Insolvency Service as part of the charity’s liquidation.

Conclusions

The Commission concluded that there has been serious misconduct and/or mismanagement in the administration of the charity over a sustained period of time in particular by Vincent McBean. Vincent McBean was disqualified from being a charity trustee for 12 years on 4 October 2022.

It also concluded that the charity was poorly governed, poorly managed, and had poor financial management since it was reinstated at Companies house in 2009.

The misconduct and/or mismanagement in the administration of the charity eventually led to the charity’s winding up due to the long-term debts that the charity appears to have accrued.

The Commission concluded that the trustees had not complied with or fulfilled their duties as trustees under charity law and failed to:

• ensure the charity carried out its purposes for the public benefit
• comply with the charity’s governing document and the law, including failing to register the charity with the Commission and to file accurate accounting information on time
• act only in the charity’s interest and ensure that conflicts of interest were identified, recorded and managed
• manage the charity’s resources responsibly and ensure sufficient financial controls and procedures were in place to protect the charity’s property and assets
• act with reasonable care and skill in the execution of their roles and to manage the charity’s resources responsibly solely in the best interests of the charity
• ensure the charity was accountable and follow proper decision-making processes

While the liquidation remains ongoing, the charity’s main assets have already been acquired by a community group and the Ground is now operated by The Old Spotted Dog Ground Trust (charity no 1199417).

Regulatory action taken

The Commission’s information gathering powers under section 47(a) and (b) and section 52 of the Act were used throughout the Second Inquiry. The Second Inquiry also directed the trustees to attend at a specified time and date to meet with the inquiry under section 47(c).

The Second Inquiry made an order under section 76(3)(d) of the Act on 20 December 2013 which had the effect of freezing all of the charity’s bank accounts. The freezing order was discharged on 15 November 2021 and the funds in the bank accounts transferred to the Insolvency Service.

The Second Inquiry suspended Vincent McBean from all of his trusteeships on 16 February 2022 under sections 181B(4) of the Act. He was subsequently disqualified for 12 years under section 181A on 4 October 2022.

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.

An effective charity is run by a clearly identifiable board or trustee body that has the minimum number of trustees.

Trustees must take decisions in a way that meets the requirements of charity law and their governing documents.

Trustees are under a legal duty to ensure funds are used only in furtherance of their charity’s purposes and are legally responsible and accountable for their proper use.

Trustees must ensure that their charity has adequate financial and administrative controls in place, and that the funds of their charity are applied for the benefit of the public for which it has been set up.

If a charity is to achieve its aims, then the trustees need to ensure that assets are properly used, that its funds are spent effectively and its financial affairs are well managed.

Charities must never lose sight of why they exist and must demonstrate how their charitable purpose drives everything they do.