Decision

Charity Inquiry: The Central Gurdwara (British Isles) London Khalsa Jatha

Published 2 March 2021

This decision was withdrawn on 7 March 2023

This report has been archived in line with our policy as it is over 2 years old.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 charity was registered on 11 April 1969. The charity is governed by a Scheme of the High Court dated 13 April 1992, as amended by Orders dated 2 October 1992 and 9 June 1993 (‘the governing document’).

The charity’s objects include the advancement of the Sikh religion, the maintenance of the Gurdwara and the advancement of education for members of the Sikh community.

The charity’s details can be found on the Register of Charities.

At the time the inquiry was opened there were fifteen trustees (‘the former trustees’). A new committee (‘the new trustees’) of fifteen trustees were appointed on 1 March 2020 following an election.

Background and issues under Investigation

In December 2012, the Commission opened an operational compliance case into the charity, due to concerns about poor internal governance and a trustee dispute. This case resulted in the former trustees being issued with an action plan in February 2014, under section 15(2) of the Charities Act 2011 (‘the Act’).

In July 2014, the Commission opened a monitoring case to establish if the former trustees had followed the regulatory advice and guidance issued in the action plan.

The monitoring case concluded the former trustees had failed to fully comply with the action plan. The Commission was therefore concerned that the former trustees were apparently unwilling to take the action necessary to protect the charity and to remedy the regulatory concerns so, on 20 July 2015 a statutory inquiry was opened under section 46 of the Act to examine:

• whether the former trustees had fully complied with the action plan issued by the Commission in February 2014
• whether the former trustees had properly administered the charity in accordance with its governing document
• the financial management of the charity
• whether there had been any private benefit to the former trustees with regard to the operation of the charity’s properties and whether any arising conflicts of interest had been properly managed
• whether or not the former trustees had complied with and fulfilled their duties and responsibilities as trustees under charity law, in particular in relation to whether they had made decisions in the best interests of the charity
• whether there had been any misconduct and/or mismanagement by the former trustees

Findings

Whether the former trustees had fully complied with the action plan issued by the Commission in February 2014

The inquiry found the former trustees had not complied with the action plan. The inquiry found the longstanding dispute between the trustees to have impeded the implementation of the action plan and impacted the extent to which the former trustees were able to improve the governance of the charity.

Whether the former trustees had properly administered the charity in accordance with its governing document

The inquiry found that there were two groups within the former trustee body who were in a longstanding dispute. Factions and/or individuals within the committee were trying to gain and/or retain undue influence, which disrupted collective decision making.

Clause 19 and 20 of the charity’s governing document states that at every second annual general meeting, trustees shall retire from office. At these meetings, members then elect the next committee of trustees. However, the inquiry found that although elections had been called for 2015 and a list of those eligible to vote had been prepared, the elections did not take place, largely due to a dispute regarding membership and the eligibility of members to vote.

On 23 March 2016 the inquiry issued the trustees a Direction under section 47 of the Act to provide evidence and copies of documents to demonstrate improvement in the management of the Charity. The inquiry found, although the former trustees’ responses indicated that some of the challenges were being addressed, the responses revealed ongoing division between the former trustees.

The inquiry found that determining the charity’s membership to facilitate an election of new trustees would help to resolve the regulatory issues faced by the charity and to bring it back onto a proper footing. However, some of the former trustees appeared to be unwilling or unable to determine the membership themselves. Therefore, on 26 January 2017, an Interim Manager (“IM”) was appointed under s76(3)(g) of the Act with a limited scope to determine the membership of the charity.

The financial management of the charity

The inquiry found that the charity’s accounting information (annual return, accounts and trustees’ annual report) has been submitted late for the last five financial years - some of which remains outstanding. The inquiry found that the dispute contributed to the delay in filing accounts and overall failing to effectively manage the charity’s finances by the former trustees. The inquiry formally advised the new trustees (under section 15(2) of the Act) to ensure that all the charity’s accounting information is brought up to date, as a matter of priority.

Whether there had been any private benefit to the former trustees with regard to the operation of the charity’s properties and whether any arising conflicts of interest had been properly managed

Due to the volume and complexity of conflicting and uncorroborated information being made available to the inquiry, it was not possible to determine whether there had been any private benefit to the former trustees with regard to the operation of the charity’s properties, or if any arising conflicts of interest had been properly managed.

Whether or not the former trustees had complied with and fulfilled their duties and responsibilities as trustees under charity law, in particular in relation to whether the trustees had made decisions in the best interests of the charity

The inquiry found that the former trustees did not always act appropriately during meetings. Meetings would often be disruptive and several ended with the police being called. This demonstrated to the inquiry that the former trustees were unwilling and unable to work together to make collective decisions, or act in the best interests of the charity.

The inquiry liaised with the IM who said, when determining the membership, he had noted the conduct of some members and the ongoing disputes were significantly more disruptive than had been experienced in other, similar work he had conducted.

It was decided the election of the new trustees was the most proportionate and efficient solution to resolving the long running issues. However, in view of the evidence the inquiry had seen in respect of the trustees’ behaviour, it was concluded that the former trustees could not be relied upon to conduct an election themselves, in particular one where the results would be accepted and respected by all parties.

On 12 April 2019, the IM’s appointment was varied under section 337(6) of the Act to enable the IM to facilitate a trustee election. The election, which was supervised by Popularis (independent specialist company in the management of ballots and elections), went ahead on 1 March 2020.

The IM reported that fifteen trustees had been elected, 11 of which were not one of the former trustees. The three candidates, who received the highest numbers of votes, were declared to be the President, Vice President and General Secretary respectively. The new trustees agreed on the other roles in accordance with the governing document. The IM informed the inquiry that he considered the new trustees to be capable and willing to put the charity back on a proper footing.

Conclusions

The inquiry concluded that disputes between the former trustees had a negative impact on the governance of the charity and they were unable to effectively manage the charity’s finances. This amounted to misconduct and/or mismanagement in the administration of the charity by the former trustees.

Despite having been made aware of the risk to the charity and being provided guidance, the former trustees failed to resolve their differences and implement the guidance. This amounted to misconduct and/or mismanagement in the administration of the charity by the former trustees.

The new trustees are capable of acting in the best interests of the charity and the Commission has confidence they will take steps to implement recommendations the inquiry made, as provided in the advice and guidance under section 15(2) of the Act.

The new trustees can, if they consider it is in the best interests of the charity, consider if the charity has lost money as a result of the conduct of the former trustees and seek to recover any money lost due to breach of trust/duty by the former trustees.

Regulatory Action Taken

The inquiry used its information gathering powers under sections 52 and 47 of the Act throughout the inquiry.

The inquiry appointed an Interim Manager under section 76(3)(g) of the Act on 26 January 2017. The appointment was varied on 12 April 2019 under section 337(6) of the Act. The appointment was discharged on 26 November 2020.

The inquiry provided advice and guidance to the new trustees under section 15(2) of the Act on 27 November 2020.

The IM appointment

The total cost of the IM appointment to determine the membership and facilitate the election was £45,198.

The work for which the IM was appointed was significantly more complicated and extensive than originally anticipated. The IM informed the inquiry that he had not charged for time incurred above the agreed cap, which would have come to an additional £33,791.

Issues for the wider sector

Trustees are expected to follow the requirements and recommendations in the charities SORP when preparing annual reports and accounts. A charity’s annual report and accounts should help users of the information to understand what the charity is set up to do, the resources available to it, how these resources have been used and what has been achieved as a result of its activities. More information is available from Charity reporting and accounting: the essentials (CC15c)

Charity trustees are responsible for governing their charity and making decisions about how it should be run. Making decisions is one of the most important parts of the trustees’ role.

Trustees can be confident about decision making if they understand their role and responsibilities, know how to make decisions effectively, are ready to be accountable to people with an interest in their charity, and follow the 7 principles that the courts have developed for reviewing decisions made by trustees. Trustees must:

• act within their powers
• act in good faith and only in the interests of the charity
• make sure they are sufficiently informed
• take account of all relevant factors
• ignore any irrelevant factors
• manage conflicts of interest
• make decisions that are within the range of decisions that a reasonable trustee body could make

It is important that charity trustees apply these 7 principles when making significant or strategic decisions, such as those affecting the charity’s beneficiaries, assets or future direction.