Decision

Charity Inquiry: The Albayan Education Foundation Limited

Published 3 March 2022

This decision was withdrawn on 7 March 2024

This report has been archived in line with our policy as it is over 2 years old.

Applies to England and Wales

The charity

The Albayan Education Foundation Limited (‘the charity’) was entered onto the register of charities (‘the register’) on 16 February 2009. It was a charitable company governed by a Memorandum and Articles of Association (the ‘governing document’) which was incorporated on 4 June 2008 as amended by special resolution dated 21 January 2009.

The charity’s objects were ‘(a) to relieve persons who are in conditions of need or hardship or who are aged or sick (particularly but not exclusively those who are sick, orphaned, destitute or impoverished) of persons living in the United Kingdom or overseas, (b) to advance education by such means as the trustees may consider appropriate, and (c) for such other charitable purpose or purposes as the trustees shall in their absolute discretion think fit’.

One of the charity’s primary activities was the provision of education through the running of an independent school, the Birmingham Muslim School (‘the school’) which was located in Birmingham. The school catered for pupils between the ages of 4 to 11. The school’s proprietors were the trustees of the charity, and as the school was a registered independent school, it was regulated and inspected by Ofsted and the Department for Education (‘the DfE’). The charity also worked internationally to prevent and relieve poverty – including in Syria.

The school was de-registered by the DfE on 16 November 2019.

The charity was removed from the register on the basis that it does not operate, on 21 February 2022. The charity will be dissolved as a charitable company and cease to exist once the liquidation is completed.

Trustees

When the Commission first engaged with the charity and consequently opened its inquiry the charity had three trustees:

• Ms Janet Louise Laws (trustee from 11/11/2013 to 25/06/2020)
• Mr Ahmed Abdulhafeth (trustee from 11/11/2013 to 25/06/2020)
• Mr Ali Qasem (trustee from the inception of the charity, 16/09/2009 to 25/06/2020)

Issues under investigation

The Commission had engaged with the charity since March 2014 owing to persistent failures on the part of its trustees to file the charity’s statutory returns – both accounts and Annual Returns – and owing to concerns regarding the charity’s participation in aid convoys and activities in Syria, a high-risk environment. On 16 June 2016 an Action Plan under section 15(2) of the Charities Act 2011 (‘the Act’) was issued to the charity’s then trustees requiring them to complete a series of actions to address deficiencies in the charity’s governance including trustee record-keeping, risk management, due diligence and monitoring of (overseas) expenditure.

On 16 February 2018, the Commission re-engaged with the trustees of the charity to test their compliance with the previously issued Action Plan. On 22 May 2018, the Commission revisited the charity and identified further regulatory concerns regarding the trustees’ management and administration of it – this included a failure on the part of the trustees to fully comply with the Action Plan.

In the interim period between the Commission issuing its Action Plan to the charity’s trustees and its follow-up inspection, the trustees continued to file the charity’s statutory returns late and operate in high-risk environments internationally.

The Commission was also aware that the school had been subject to several critical reports following inspections by Ofsted between May 2014 – January 2017. The school was found not to have met the Independent School Standards on each of these inspections and was subsequently issued with notices under section 114(5) of the Education and Skills Act 2008.

Scope of the Inquiry

On 13 December 2018 the Commission opened a statutory inquiry, under section 46 of the Act, into the charity.

The scope of the inquiry was to examine:

• whether or not the trustees have complied with and fulfilled their duties and responsibilities as trustees under charity law
• compliance by the trustees with the requirements of other regulators, particularly the DfE
• the conduct of Ms Laws in respect of the issues raised by the DfE
• the financial controls and management of the charity’s funds and accounting procedures

The inquiry closed with the publication of this report.

Findings

Whether or not the trustees have complied with and fulfilled their duties and responsibilities as trustees under charity law

The inquiry found that, over time, the trustees failed to comply with and fully discharge their duties and responsibilities as trustees under charity law. These failures included not (i) complying fully with the charity’s governing document, (ii) accounting fully for the charity’s income and expenditure, (iii) submitting the charity’s statutory returns within 10 months of its financial year end, and (iv) complying fully with all of the actions set out in the Commission’s Action Plan issued to the trustees under section 15(2) of the Act.

The DfE served on the school, on five occasions, between 22 July 2010 and 14 November 2018, notices under section 114(5) of the Education and Skills Act 2008. The Commission considered these notices to be serious incidents as they were an adverse event which resulted in and posed a risk of harm to the charity’s work and reputation. If a serious incident takes place within a charity the trustees are required to make a prompt, full and frank disclosure to the Commission as a report of a serious incident (‘RSI’). On each occasion the trustees failed to notify the Commission of the notices and failed to submit an RSI.

The inquiry found that, whilst the trustees had taken some positive steps to address and respond to the concerns that the Commission had identified, progress was piecemeal, inconsistent and where improvements were made, they were not sustained and often at the expense of another legal duty and responsibility.

Compliance by the trustees with the requirements of other regulators, particularly the DfE

The primary activity of the charity included the provision of the school. The school was, whilst run by the charity, subject to the Independent School Standards as set by DfE and inspected by Ofsted. Published Ofsted inspection reports relating to the school show that since 2007 various inspections rated the school as being either ‘inadequate’ or ‘requires improvement’ which are the two lowest ratings that Ofsted can award to an institution.

The most recent standard inspection conducted by Ofsted (25 September 2018) stated that the overall outcome was that ‘The school does not meet all of the independent schools’ standards that were checked during this inspection.’ Trustees are required to comply with both charity law, the law in general and the law as it relates to their charity.

A number of Ofsted inspection reports found that the quality of education provided by the school, and the quality of leadership and management of the school, were deficient. The inquiry found that there were parallels in the trustees’ failure to comply with Ofsted and the DfE in respect of the school and their failure to comply with charity law duties and responsibilities.

The charity’s trustees failed to comply with their legal duties – both compliance with charity law and compliance with the relevant law relating to the activities of the charity, which are related to educational activities carried out for the purposes of furthering the objects of the charity. These failings were not isolated, have taken place over a period of time and the trustees were either incapable or unwilling to take the necessary actions themselves to remedy these failings.

As an independent school, the school was required to be registered with the DfE’s Register of Independent Schools (‘RIS’). On 14 November 2019, the Secretary of State for Education (‘the SoS’) issued notice of their intention to remove the school from the RIS; the consequence of removal from the RIS is that it is a criminal offence to operate an independent school which is unregistered. No representations were made by the trustees of the charity – who were also the proprietors of the school – in response to the notice issued by the SoS; consequently, the school was de-registered and removed from the DfE’s RIS on 16 December 2019.

The conduct of Ms Laws in respect of the issued raised by the DfE

The inquiry found that Ms Laws, along with the charity’s other trustees, was responsible for various failings in relation to the management and administration of the charity – both in relation to the school and by failing to identify, manage and mitigate risk. The inquiry found that Ms Laws had greater culpability for the misconduct and/or mismanagement because in addition to being the chair of trustees she was also the headteacher at the school. Although, in the context of this charity and the school, the role of headteacher was an unpaid position, Ms Laws failed to discharge her duties in respect of both roles to the required standards expected by two regulatory bodies.

The financial controls and management of the charity’s funds and accounting procedures

For the Financial Years Ending (‘FYE’) 30 June 2014, 2015, 2016 and 2017 the trustees failed to comply with the charity’s governing document, as they are legally required to, in relation to filing accounts and Annual Reports with the Commission within 10 months of the charity’s FYE. The trustees also failed to comply with the statutory filing requirements in accordance with the Act. The charity’s returns were filed late for each of those years. It is also an offence, by virtue of section 173 of the Act, to fail to file statutory returns with the Commission within 10 months of a charity’s financial year end. The failure of the then trustees to file the charity’s statutory returns was not an isolated failure to comply with the charity’s governing document and/or obligations under the Act but a persistent repeated failure to comply with their legal duties.

With the exception of the charity’s statutory returns for the FYE 30 June 2018 (which were filed on time), previous returns were deficient in a number of ways, including the failure to provide a Trustees’ Annual Report and to differentiate between restricted and unrestricted income.

In addition to operating the school, the charity collected donated goods, items and funds for the purpose of providing relief to those in need. Prior to and during the inquiry, the charity sent goods and funds to Turkey and Syria to provide relief to those affected by the ongoing Syria crisis. An employee of the charity (‘the employee’), confirmed to the Commission in September 2018 that he had travelled to Turkey and onwards to Syria on behalf of the charity. This was contrary to FCDO guidance at the time and that provided by the Commission in previous correspondence and meetings with the charity. The Commission had, in 2015, as part of the Action Plan issued to the trustees, required them to implement a written risk management policy – with specific regard to the charity’s international activities. When asked for a copy of this, the trustees confirmed that they had not prepared one. The trustees failed to adequately manage the actual and/or potential risks to its trustees, employees and volunteers who conduct activities for or on behalf of the charity. The inquiry obtained images, taken from devices seized from the home of the employee and Trustee A by Counter Terrorism Policing West Midlands. The trustees confirmed that their representative was in the images and was apparently assembling firearms at the Atma refugee camp in Syria. The content of these images raised further concerns regarding the charity’s overseas activities and what oversight and controls the trustees have over them. This raises concerns for the Commission in respect of those with whom the trustees are partners with to facilitate their work overseas.

On 6 September 2019 the Commission appointed an Interim Manager (‘IM’) to the charity – see ‘Interim Manager appointment’ below; the scope of the IM’s appointment was to make a determination as to the future viability of the charity. On 18 December 2019, the IM sent the Commission a report entitled ‘Note on the foreign aid activity undertaken by Albayan Education Foundation Limited’ which provided their assessment on this aspect of the charity’s work and level of oversight and management of this by the charity’s trustees. The IM’s assessment was that none of the charity’s trustees appeared to have direct oversight of the management of this work and that the employee appears to be key to the management of these operations. The IM’s report noted that although there are some good written procedures and controls in place – some of which had only recently been adopted - they had not seen evidence of these being applied in practice.

Repeated requests were made by the IM for a list of overseas partners, and the due diligence checks in place on those partners, but the IM was told that these did not exist. The charity confirmed to the IM that it engaged an individual to oversee its international aid activities; the individual collected goods donated by the charity from a port in Turkey and transported them to the refugee camps in Syria. The IM’s report stated that it is not clear that any formal due diligence has been carried out on the individual and/or that the charity is protected from risk in this arrangement; the IM finds that this arrangement is inadequate. In their conclusion, the IM has stated that the trustees are not sufficiently skilled or qualified to manage the risks associated with overseas activity nor do they appear to have the capability to adopt an effective compliance infrastructure to manage this area of work. Despite discussing this issue with them, the trustees appeared to have failed to grasp the IM’s concerns around the management of risks associated with this area of work and appeared determined to continue with it despite their inadequate oversight. The Commission agrees with the IM’s findings and made similar findings regarding the lack of oversight by the trustees of the overseas activities. Such failings are further evidence of misconduct and/or mismanagement in the charity’s administration by the trustees.

Conclusions

The trustees of the charity repeatedly failed to discharge their legal duties as trustees which resulted in multiple instances of repeated and persistent misconduct and/or mismanagement within the charity’s administration which placed its assets and beneficiaries at risk. Despite various interventions by the Commission to provide the trustees with regulatory advice and guidance to remedy their failings, they proved to be incapable and/or unwilling to act on and implement this guidance and demonstrate that they discharged their legal duties and responsibilities.

Regulatory Action Taken

During the inquiry, the Commission liaised closely with multiple agencies including the police and the DfE. Information was exchanged with them, on multiple occasions, via the statutory gateway, under sections 54 and 56 of the Act.

The Commission used its information gathering powers under sections 47 and 52 of the Act on multiple occasions to obtain information and copies of documents from various sources, including from the trustees.

On 4 February 2019 the inquiry exercised the Commission’s regulatory power under section 84 of the Act to direct the trustees to undertake a number of specific actions.

On 6 September 2019, the inquiry exercised the Commission’s regulatory power under section 76(3)(g) of the Act to appoint an IM to the charity (see Interim Manager Appointment below). The IM was discharged on 25 February 2022.

On 14 January 2020 the Commission gave notice to the three individuals who together had been the trustees of the Charity at the time the Commission opened its inquiry, of its intention to disqualify them as trustees and from holding an office or employment with senior management functions of all charities in England and Wales under section 181A of the Act. After considering representations from the trustees the Commission disqualified them on 20 April 2020 under section 181A of the Act. On 2 June 2020, they were entered onto the Register of Disqualified Individuals:

• Ms Janet Louise Laws for a period of 12 years
• Mr Ahmed Abdulhafeth for a period of 10 years
• Mr Ali Qasem for a period of 10 years

On 15 January 2020 the inquiry exercised the Commission’s regulatory power under section 84A of the Act to direct the trustees not to take specific actions without its prior consent. The action was to prohibit the trustees from sending or allowing to be sent any of the charity’s funds or donated items to its agent in Turkey/Syria. This followed the concerns raised by the IM and shared by the Commission in respect of the charity’s international aid activities.

On 14 April 2020 the inquiry exercised the Commission’s regulatory power under section 76(3)(d) to order the bank with which the charity held its account not to part with any of its property without the Commission’s prior consent, in order to protect the charity’s funds.

On 21 February 2022 the charity was removed from the register of charities under section 34(1)(b) of the Act on the basis that it does not operate.

The charity will be dissolved as a charitable company and cease to exist once the liquidation has been completed.

Interim Manager Appointment

On 6 September 2019 the inquiry exercised the Commission’s power under section 76(3)(g) of the Act to appoint Ms Emma Moody, of Womble Bond Dickinson LLP, as IM of the charity. The IM was appointed to assess whether the charity had a viable future and to take whatever action(s) they considered to be in the best interests of the charity based on that assessment. The IM’s appointment was initially to the inclusion of the charity’s trustees, the trustees continuing to oversee the management of the school in particular.

On 29 April 2020 the Inquiry varied the Commission’s IM order to expand the scope of their appointment so that they had all of the powers and duties of the trustees to the exclusion of the trustees.

The IM undertook a review of the charity’s governance documents, written processes and systems, and its recent records. They also met with the trustees. Whilst the IM considered that the charity may have had a viable future if the trustees had adequately re-modelled its activity, working more locally with the community, the trustees were unable to demonstrate that they could or would remodel/reshape the activity in this way.

The IM subsequently determined therefore that the charity was not viable. Having determined this, the IM recommended the charity should be wound up and dissolved. In light of the potential unknown debts and liabilities of the charity, on 29 November 2020 the IM appointed a liquidator to undertake the winding up exercise. The liquidators were appointed to undertake the creditors voluntary liquidation. The charity is in the process of being dissolved – once this is complete the charity will cease to exist. The IM was discharged on 25 February 2022.

The cost of the IM’s appointment was £28,153.61. The cost of the IM appointment was indemnified by the Commission.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry 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 comply with all their legal obligations. An important part of their duties is following their charity’s governing document and the wider law, but it also extends to complying with other regulators and law enforcement agencies depending on the type of charity that they manage and the type of beneficiaries that the charity serves. Not complying with the legal requirements of another agency may be regarded as misconduct and/or mismanagement in the administration of the charity and prompt regulatory action by the Commission.

All registered charities are required by law to provide annual returns and accounts to the Commission and to keep their information on the public register up to date. The duty to file annual accounts and the Trustees’ Annual Report with the Charity Commission applies to all registered charities whose gross income exceeds £25,000 per year. The way in which each charity must maintain, prepare, and report its annual accounts depends on its income and expenditure, gross assets, and constitution. Further information about the accounting and filing requirements can be found on GOV.UK.

When choosing partners to work with, trustees must conduct adequate due diligence checks to ensure that:

• the activities they intend to carry out through their partners are in furtherance of their charity’s purposes
• their partners are and continue to be appropriate for the charity to work with
• the trustees have taken reasonable steps to monitor the use of funds to make sure that:
• their partners can and will apply their funds for proper charitable purposes
• the funds reach their partners and end beneficiaries

Trustees are custodians of their charities. They are publicly accountable, and have a responsibility and duty of care to their charity which will include taking the necessary steps to safeguard their charity and its beneficiaries from harm of all kinds, including links to or associations with terrorist activity and organisations or terrorist abuse:

• the Commission expects trustees to be vigilant to ensure that a charity’s premises, assets, staff, volunteers or other resources cannot be used for activities that may, or appear to, support or condone terrorist activities
• trustees must not engage in conduct or activities which would lead a reasonable member of the public to conclude that the charity or its trustees are associated with a proscribed organisation or terrorism generally
• where a charity representative or a charity’s activities may give, or appear to give, support to any terrorist activity, the Commission expects the charity’s trustees to take immediate steps to dissociate the charity from the activity