Decision

Charity Inquiry: The Ashley Foundation

Published 13 January 2023

Applies to England and Wales

The charity

The Ashley Foundation (‘the charity’) was registered with the Commission on 5 July 1997. It is governed by a Memorandum and Articles of Association incorporated on 7 May 1997 as amended on 29 December 1997. The charity was founded by Lee Dribben who also held the role of CEO from its incorporation until 30 June 2019 when he stepped down.

The charity operates a number of hostels and flats for homeless people in need. The objects of the charity are:

“The relief of poverty by the provision of accommodation to persons in need and in such other ways as the trustees think fit.”

The charity’s entry can be found on the register of charities.

The trustees linked to this inquiry were as follows:

Trustee	Appointed	Resigned
Lisa Edwards	15 May 2019
David Kim	25 March 2011	14 July 2020
Ashley Dribben	3 December 2014	18 December 2020
Trustee D	15 May 2019	25 March 2020
Trustee E	17 February 2020	25 March 2020
Trustee F	30 October 2020
Trustee G	30 October 2020
Trustee H	30 October 2020
Trustee I	30 October 2020
Trustee J	30 August 2017	10 September 2019

Ashley Dribben is the son of Lee Dribben.

Background and Issues under Investigation

On 15 August 2019 the Commission opened a Regulatory Compliance case to examine concerns relating to property transactions that may have resulted in a loss to the charity and possible missapplication of the charity’s funds.

Following this on 12 March 2020 Lisa Edwards successfully applied to the High Court for an interim injunction against Lee Dribben, Ashley Dribben, David Kam and Trustee D which stipulated they could not take any major decisions about the charity’s affairs, alter the charity’s bank account mandate or interfere with the charity’s IT systems by removing entries or preventing the access of said systems by the charity employees. The Commission then subsequently intervened to investigate further. Lisa Edwards raised concerns that the charity had over the period May 2016 to November 2019 reimbursed Lee Dribben for around £840,000 of spending on his personal credit card. This expenditure included large numbers of high spec electrical items including a number of large flat screen TV’s and Apple computer products.

Lisa Edwards also informed the Commission that between August 2016 and January 2020 £129,807 in cash was provided by Lee Dribben to the charity in return for blank cheques drawn on its bank account. It was alleged that this occurred on 36 occassions. Due to the seriousness of these concerns the compliance case was escalated to a statutory inquiry on 20 March 2020 under section 46 of the Charities Act 2011 (‘the Act’).

The issues under investigation were:

• the financial management and controls of the charity and whether funds have been properly expended solely for exclusively charitable purposes and can be accounted for;

• the trustees’ decision making with regard to the disposal of properties and the subsequent agreements entered into with a third party

• if the trustees have avoided or adequately managed conflicts of interest and if there has been any unauthorised direct or indirect trustee private benefit

• whether the charity has suffered any financial loss as a result of any mismanagement and/or misconduct identified by the inquiry

• if the trustees of the charity have complied with their legal duties in respect of their administration, governance and management of the charity

• the trustees’ compliance with legal obligations for the content and preparation of the charity’s accounts and annual returns

The majority of the inquiry’s engagement was with Lisa Edwards, David Kam and Ashley Dribben. The inquiry also sought information and explanations from Trustee D who resigned shortly after the inquiry was opened, and Lee Dribben.

Findings

The trustees’ decision making with regard to the disposal of properties and the subsequent agreements entered into with a third party

The inquiry found that on 15 December 2017 the charity sold three properties to company X for £4 million. The same properties were then sold on the same day to company Y for £6.4 million. Company Y then leased the properties to a third party (Z) who subsequently entered into Management Agreements (‘the Agreements’) with the charity. Under the terms of the Agreements the charity was to manage the properties on behalf of company Z who were the registered provider of social housing (‘RP’).

The inquiry found that the trustees at the time of the sale (David Kam, Ashley Dribben and Trustee J) had first discussed selling the properties during a trustee meeting held on 23 October 2017. The minutes record the proposal at that time was to sell and leaseback the properties from the purchasing company. The minutes from the 3 December 2017 trustee meeting also refer to the proposed sale and leaseback.

However, the inquiry found that the minutes from a subsequent meeting on the 11 December 2017 referred to a sale and the charity then entering into a Management Agreement with a third party. The same minutes record Trustee J questioning why the terminlogy had changed from sale and leaseback to Management Agreement and if there was any distinction between the two. The minutes record that Lee Dribben stated “there was no distinction and the same obligations applied regardless of the terminlogy used, the agreement is effectively the same as a full repairing and insuring lease.”

The inquiry did not identify any minutes that recorded the terms of the Agreements being discussed by the trustees or that the risks, obligations, and liabilities of entering into them had been considerd in advance of the Agreements being signed.

The inquiry obtained copies of the correspondence between the charity and the Chartered Surveyor the trustees had engaged prior to the sale. The Surveyor confirmed to the inquiry that he had been provided with a draft of a lease upon which he provided valuation advice that the total freehold worth of all 3 properties was £885,000. He confirmed that the document he had been provided with by the charity was “a traditional commercial leasing arrangement for what are essentially charitable business premises. I do not give advice on management agreements I only give advice on landlord and tenant/valuation matters in relation to real estate. I have not seen nor am I aware of the management agreement to which you refer, nor did anyone ask me for advice on it.”

The inquiry exercised powers under section 47 of Act to obtain the working papers of the solicitor that was appointed on behalf of the charity to deal with the disposals of the properties. The inquiry was informed that the solicitor was “specifically instructed not to give any consideration at all to the draft agreement because TAF [the charity] had used it on a number of occasions previously and were aware of its terms and conditions and did not require any advice on it.” The solicitor confirmed that this instruction came from Lee Dribben.

The inquiry has evidence that the charity had entered into several Service Level Agreements (SLAs), going back 20 years, for the use of properties it occupied. The inquiry found that these SLAs contained significantly less onerous financial constraints on the charity than the Agreements. In particular the SLAs contained a termination or exit clause unlike the Agreements.

The inquiry obtained all records relating to the transactions from the solicitors used by the charity. These records evidenced that on 7 January 2018, after the Agreements had been signed, legal advice was sought on whether the charty could exit the Agreements. The solicitors subsequently sought Counsel’s advice which confirmed the charity had no legal basis to exit the Agreements.

The Inquiry found the charity has also entered in several similar management agreements for properties based in Sunderland with third party Z.

The inquiry scrutinised these Agreements and found that they were onerous and expose the charity to potentially significant liabilities. The charity did not own or lease the properties it managed on behalf of the registered provider. Nevertheless, the Agreements required the charity to bear all costs relating to the provision of accommodation and support, irrespective of whether or not the costs could be fully recovered from the rents charged to residents and subsequently re-imbursed via housing benefit. The Agreements did not contain any provision for the charity to be able to cancel or withdraw from them save for significant material events such as insolvency or dissolution of the charity. It should also be noted that these Agreements were for a fixed term of 20 years with an additional 5 should the regulated provider opt to extend the term.

The decision to enter into the Agreements has been described by both Lee and Ashley Dribben as a good business decision given the figures involved in selling the properties. Whilst the Commission agrees that charities should be run professionally, with good financial management and governance, they must also comply with the Charities Act and operate for the public benefit. They are not a vehicle to generate profits, they are created to serve their beneficiaries. Any funds that the charity generates itself must be used to fulfil its charitable objects.

The inquiry ordered Lisa Edwards and Ashley Dribben to obtain legal advice on the terms and conditions of the Agreements and the financial impact that it had on the charity and this was subsequently obtained.

The new trustee board (Lisa Edwards, F,G, H, I,) were able to negotiate with company Y, the buy back the properties and as a result the Agreements were terminated on 22 April 2022.

Misappropriation of charitable funds

The inquiry found evidence that the charity’s funds had been spent on the repair and upkeep of properties that did not belong to the charity. The inquiry identified expenditure on properties belonging to Ashley Dribben as well as properties of a company that he was a director and shareholder of along with properties belonging to Lee Dribben.

Property	Linked to	Work undertaken	Amount (£)
Property A	Ashley Dribben (David Kam resided in this property at the time of work undertaken)	19/7/2013	1,666
Property B	Ashley Dribben	7/4/2017	2,650
Property C	Ashley Dribben	1/11/2018	3,428
Property D	Lee Dribben	2/8/2018	4,157
Property E	Lee Dribben	27/8/2018	1,860
Property E	Lee Dribben	27/9/2018	2,450

An employee and a former employee interviewed by the inquiry stated they were instructed by Lee Dribben to attend his premises to ensure contractors carried out works. These employees were told to ensure contractors made invoices out in the name of the charity and not to Lee Dribben and that any invoices which were made out in the name of Lee Dribben were returned to the contractor with an instruction to amend them.

Invoices and records of contractors that carried out works obtained by the inquiry showed that contractors had kept records of individual properties they worked on and what works had been carried out but had submitted general invoices to the charity for payment which did not identify the property in question.

Reimbursement of costs incurred by the former CEO

The inquiry found the charity’s funds had been used to reimburse expenditure incurred on the personal credit card of Lee Dribben, which did not appear to be in furtherance of the charity’s purposes. Examples included but are not limited to:

Item	Cost	Date
Apple iPhone XS 256GB	£1,149.00	10 February 2019
Apple Watch S3 (Pink)	£359.00	21 December 2017
Apple Watch (Gold)	£378.00	21 December 2017
Dyson Supersonic Hairdryer	£299.99	13 November 2017
Spymaster tracking system	£600.00	7 November 2017

The inquiry interviewed Lee Dribben on 3 March 2022, during which he stated - “actual gifts as such, such things like the pink Apple Watch, they were specific for people we thought would be of help to us in the future” and mentioned people within the local authority as an example.

This is not an acceptable or appropriate use of charity funds and raises concerns of questionable practices as to how the charity operated and whether it was compliant with the Bribery Act 2010.

In relation to the Spymaster tracking system, Lee Dribben informed the inquiry that this was a covert listening device that had been used in order to listen to individuals during contract negotiations with the charity, with the aim of the charity gaining information that would strengthen its position. The inquiry did not accept that this was an appropriate use of the charity’s funds. Such covert activity is unacceptable conduct for a charity to be involved in.

The inquiry also found that the charity had reimbursed the purchase of a number of 50-inch flat screen televisions and Dunelm silk sheets and bedding. The Commission found that the purchase of these expensive and luxury items did not further the charity’s objects and was therefore not a proper use of the charity’s funds.

Travel and Subsistence claims

Employees and trustees of charities are entitled to the reimbursement of reasonably and properly incurred expenses.

The inquiry found the charity did not have a formal travel and subsistence policy.

The inquiry found trustee meeting minutes that recorded an agreement that had been reached by the trustees that the charity would meet hotel costs of between £300 - £400 per night. However, it was unclear how the trustees had determined that this was a reasonable limit to set. The inquiry found several expense claims that it considered excessive, and which could not be considered to be in the best interest of the charity. Examples included but are not limited to:

Description	Claimant	Cost
Breakfast for 2 at the Wolseley, Piccadilly, London	Lee Dribben	£55.97
Dinner at J Sheekey, Covent Garden, including £45 on a bottle of wine	Lee Dribben	£258.88
First class travel, accommodation and dining expenses made during a 3-night trip to London for four, including expenditure at Le Caprice and The Terrace at the May Fair Hotel	Lee Dribben	£3,239.97

Conflicts of Interest

Trustees of charitable companies are directors and the inquiry found that Ashley Dribben breached his company director duties by receiving remuneration from third party companies for his role in the property transactions outlined above. The receipt of such remuneration was in breach of the duty found in section 176 of the Companies Act 2006. This section of the Companies Act states that a director may not accept a benefit (e.g., gifts or inducements) from third parties arising from his position as a director or which are intended to induce the director to act in a certain way.

The information obtained by the inquiry evidenced Ashley Dribben received £40,000 for his involvement in the property transactions and the Commission is satisfied that the payments were made to him because he was a director of the charity. Ashley Dribben declared conflicts of interest with regards to the property transactions and minutes from the trustee meetings state he was not involved in the decision making. However, this was not sufficient to properly manage the conflicts of interest and does not change his Companies Act duty not to accept a benefit from a third party.

The inquiry obtained a copy of the charity’s Conflicts of Interest policy. Ashley Dribben signed it on 1 March 2016 acknowledging he received a copy of the policy.

The inquiry obtained an email issued to the charity’s solicitors by Ashley Dribben dated 6 June 2020 instructing them not to act further in an employment tribunal case being brought against the charity by his father Lee Dribben. Any decision about the conduct of this employment matter should have been taken at a quorate meeting of unconflicted trustees.

At such a meeting Ashley Dribben should have declared his conflict of interest and taken no further part in the discussions. The Commission was not provided with any evidence that this happened.

The inquiry also found evidence in the form of minutes of trustee meetings, showing that Ashley Dribben was present at three trustee meetings when matters relating to his father’s role as CEO were agreed. These matters included lifting of the CEO’s temporary suspension, compensation of £1,000 after a period of sick leave and discussing and agreeing the CEO salary. The minutes of these meetings do not record that Ashley Dribben withdrew from the discussions given the conflict of interest present.

Financial controls

The inquiry obtained evidence that David Kam signed blank cheques to be drawn on the charity’s bank account. This practice meant that he could not be certain who they would be paid to or for how much. This practice demonstrates that he was not exercising sufficient management or oversight of the charity’s expenditure which put the charity’s funds at risk of loss.

The inquiry found that Ashley Dribben was aware of a long-standing practice that involved the charity’s staff receiving cash rent payments from the private tenants of Lee Dribben. These payments were banked in the charity’s bank account and passed on to Lee Dribben via cheques for the same amount. This practice was an inappropriate use of charity staff time, was not in furtherance of its purposes and highlighted a lack of separation between the charity and the private interests of Lee Dribben. Lee Dribben disputed this stating none of the private rents were ever processed through the charity.

The inquiry found that the charity did not have a financial controls policy in place. During the inquiry the new trustee board drafted a policy and over the course of the inquiry incrementally addressed the issues and concerns raised and the Commission is now satisfied the appropriate controls are in place to safeguard the charity’s assets moving forward.

Conclusions

The Commission concluded that there had been serious misconduct and/or mismanagement in the administration of the charity by David Kam, Ashley Dribben and Lee Dribben. The failure to ensure adequate financial controls were in place meant charitable funds were misapplied and misappropriated, on occasions for the personal benefit of Ashley and Lee Dribben.

The Commission concluded that the submission of invoices for payment of services carried out on the private properties of Ashley Dribben, including his own home address, property owned by a company of which he is a shareholder and Director and a property occupied by David Kam, as well as property owned by Lee Dribben is a deliberate misuse of the Charity’s funds which is mismanagement and/or misconduct in the administration of the Charity.

The Commission concluded that Ashley Dribben had failed to properly manage conflicts of interest in matters directly affecting his father as CEO, and that the other trustees should have ensured this obvious conflict was properly managed. This failure is mismanagement and/or misconduct in the administration of the charity.

The Commission noted that Lee Dribben held a dominant position at the charity and was a significant driving force in its operation and was responsible for misconduct and/or mismanagement.

The Commission further concluded that issues highlighted above had been prevalent at the Charity for a number of years and that the appointment of Lisa Edwards was a pivotal moment for the charity. Lisa Edwards took a stand to address the mismanagement and misconduct despite being a lone voice on the trustee board and the Commission commends her for her action and conviction to put matters right. New trustees (Trustees F, G, H, I) have been appointed and the charity has now been restored to a secure footing.

The Commission takes very seriously cases where property is lost to charity as a result of serious wrongdoing by charity trustees or others involved with a charity. In accordance with its published restitution policy, the Commission may in appropriate and exceptional circumstances seek to recover lost funds in the public interest. Whilst the Commission will not hesitate to use its powers of intervention and remedy to secure recovery of lost funds if a trustee board is unwilling or unable to do so; it is primarily the responsibility of the trustees to recover the property lost to the charity.

Trustees are responsible for the administration and management of their charity, and this involves them acting to an appropriate standard and taking proper steps to obtain redress when things go wrong. The current trustees should consider what steps to take to recover the property in the best interests of the charity. They should take and consider legal advice, the economic prospects of success and recovery to the charity, and the proportionality of their actions.

Regulatory Action Taken

Protection of the charity’s property

On 20 March 2020 the inquiry exercised its powers under section 76(3)(f) of the Act to prevent Ashley Dribben, David Kam and Trustee D from entering into any transactions in the administration of the charity or permit or authorise any other person to enter into any transaction in the administration of the charity, without the written approval of the Commission.

The Commission exercised its powers under section 76(3)(d) of the Act to order to the charity’s bank not to part with any property it held on behalf of the charity on 20 March 2020.

On 4 August 2020 the inquiry exercised its power under section 84(2) of the Act to direct Lisa Edwards and Ashley Dribben to obtain appropriate advice on the terms of the Agreements, review financial control policies and IT contracts.

Against individuals

Ashley Dribben

On 6 October 2020 the inquiry exercised its powers under section 76 of the Act to suspend Ashley Dribben from the office of trustee.

The Commission issued notice of its intention to remove Ashley Dribben from office on 18 February 2021. During the notice period, evidence was provided to the inquiry, which confirmed that he had ceased to be a trustee on 18 December 2020.

On 25 June 2021 the Commission issued notice of its intention to disqualify Ashley Dribben from trusteeship and senior management functions in all charities in England and Wales under section 181A of the Act for a period of 15 years. Following this notice period on 10 August 2021 the inquiry exercised its powers under section 181A of the Act to disqualify Ashley Dribben for a period of 15 years. This came into effect on 21 September 2021.

David Kam

On 9 July 2020 the inquiry exercised its powers under section 76 of the Act to suspend David Kam from the office of trusteeship.

On 12 January 2021 the inquiry exercised its powers under section 337(6) of the Act to discharge the order made under section 76 of the Act suspending David Kam as it came to the Commission’s attention that he had resigned as a trustee on 14 July 2020.

On 18 March 2021 the Commission issued notice of its intention to disqualify David Kam from trusteeship and senior management functions in all charities in England and Wales under section 181A of the Act for a period of 10 years. Following this notice period on 30 April 2021 the inquiry exercised its powers under section 181A of the Act to disqualify David Kam for a period of 10 years. This came into effect on 11 June 2021.

Lee Dribben

On 9 June 2021 the Commission issued notice of its intention to disqualify the former CEO, Lee Dribben from trusteeship and senior management functions in all charities in England and Wales under section 181A of the Act for a period of 15 years.

On 10 July 2021 Lee Dribben made representations to the Commission regarding the proposed disqualification.

These representations were considered by an independent reviewer as part of the Commission’s decision review procedure. The outcome of the decision review on 5 November 2021 concluded that the notice of intent should be withdrawn pending further consideration and investigation. Following further investigation and consideration the Commission issued a new notice of intention to disqualify Lee Dribben for a period of 15 years on 13 July 2022.

Lee Dribben submitted new representations against his proposed disqualification on 15 August 2022.

These representations were considered by an independent reviewer as part of the Commission’s decision review procedure. The outcome of that decision review was to continue with the disqualification.

On 4 October 2022, the Order to disqualify Lee Dribben was made and this order came into effect on 14 November 2022.

Miscellaneous

On 8 October 2020 the inquiry exercised its powers under section 105 of the Act to authorise Lisa Edwards to take steps to appoint additional trustees to ensure there were sufficient trustees to meet the minimum number and quorum provisions as set out in the governing document.

The inquiry exercised its powers under section 47(2)(a) and (b) of the Act on 25 occasions to obtain information and documentation from a range of third parties between 21 April 2020 and 10 February 2021.

On 9 October 2020 the inquiry referred its concerns of potential criminality, namely fraud and/or theft onto Lancashire police as the Commission is not a prosecuting authority.

Issues for the wider sector

Like any other charity, the trustees must use their charity’s funds and assets in furtherance of the charity’s purposes. This means ensuring the charity funds are used in accordance with the terms of the charity’s governing document and in accordance with the requirements of any contractual obligations.

Every charity needs an effective trustee body which has control over the administration of the charity. 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.

Proper financial controls are a necessary feature of any well-run organisation. Because of the special characteristics of the charitable sector, they play an essential part in helping to show potential donors and beneficiaries that a charity’s property is safeguarded, and that its management is efficient. Trustees are equally responsible for the overall management and administration of the charity.

Trustees have a legal duty to act in their charity’s best interests when making decisions as a trustee. If there’s a decision to be made where a trustee has a personal or other interest, this is a conflict of interest and a trustee won’t be able to comply with their duty unless following certain steps. Conflicts of interest are common in charities – having a conflict of interest doesn’t mean trustees have done something wrong. 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.

A ‘personal benefit’ means a benefit that someone receives from a charity. That ‘someone’ might be an individual or an organisation. Financial benefits might be in the form of cash, grants or other payments. Non-financial benefits or payments in kind might be benefits in the form of goods or services rather than in cash, for example the provision of free accommodation, meals or transport. The law states that trustees cannot receive any benefit from their charity including in return for any service they provide to it unless they have legal authority to do so.

Trustees should be aware of and seek appropriate advice when necessary and at the appropriate time.