Decision

Charity Inquiry: The Sikh Channel Community Broadcasting Company Limited

Published 28 February 2025

Applies to England and Wales

The Charity

The Sikh Channel Community Broadcasting Company Limited (‘the charity’) was a private company limited by guarantee, incorporated on 25 September 2009. It was entered onto the register of charities (‘the register’) on 2 June 2010. The charity was governed by its memorandum and articles of association dated 5 March 2010. The charity is in the process of dissolution and will be removed from the register once completed.

The charity had objects to ‘further the religious and charitable work of the Sikh religion and community. To advance knowledge and awareness of the Sikh faith but not exclusively by means of broadcasting the teachings from the Shiri Guru Granth Sahib and the ten Gurus messages of an evangelistic and teaching nature’.

Background and Issues under Investigation

To further its objects the charity operated a television channel which was based in Birmingham. It also carried out several other activities, including fundraising for international aid programmes and the provision of a centre examining issues around the sexual exploitation and grooming of children.

In July 2019 the Commission wrote to the charity outlining its concerns about the charity’s fundraising partnership with an unregistered organisation (Organisation A) as charitable funds held by Organisation A had been subject to a statutory inquiry. As part of the inquiry into funds connected with Organisation A, the Commission had identified two fundraising partnerships between the charity and Organisation A:

• a fundraising event in 2018 following which over £30,000 was transferred from the Charity to Organisation A
• fundraising relating to the centre examining issues around the sexual exploitation and grooming of children, announced on the charity’s TV channel by Organisation A, with an amount over £240,000 raised, including Gift Aid

The charity had a trading subsidiary called The Sikh Channel Trading Company Limited (Co. Number 08764660) (‘the trading subsidiary’) and also had links to a private company called The Sikh Channel Aid (Co. Number 10253058) of which the charity’s CEO was the sole director. In 2019 the Commission received a complaint about the relationship between the companies and the charity, alleging financial misconduct.

The Commission met the charity’s then trustees on 2 October 2019 to carry out a compliance visit and inspection (‘the compliance visit’) and investigate the matters outlined above. The compliance visit raised serious regulatory concerns relating to unauthorised trustee remuneration, financial links to the connected companies and the activities of the charity.

Due to the regulatory concerns identified, the Commission opened a statutory inquiry (‘the inquiry’) into the charity under section 46 of the Charities Act 2011 (‘the Act’) on 13 November 2019.

The inquiry was opened to assess the following regulatory issues:

• the financial management of the organisation
• whether there has been private benefit to the trustees or former trustees of the charity
• the charity’s activities and partnerships with other organisations
• the conduct of the trustees
• whether the trustees have properly exercised their legal duties and responsibilities under charity law in the administration of charitable funds held by the organisation

The inquiry closed with the publication of this report.

Findings

The financial management of the organisation

Whether there has been private benefit to trustees or former trustees of the charity

The inquiry found that the CEO Mr X had considerable autonomy in his management of the charity. Between 12 February 2011 and 25 January 2019 Mr X had been a trustee of the charity. Mr X had worked as an unpaid CEO for several years before October 2018 in which he appointed himself as the charity’s paid CEO without an open recruitment process, and later set himself a salary of £40,000 per annum for the role in around April/May 2019.

Mr X’s appointment as CEO was a breach of the charity’s governing document, which prohibited remuneration of a trustee, and wider charity law, as there was no legal basis for the appointment to be made. The decision making by the then trustees failed to recognise various conflicts of interest and/or loyalty created by Mr X’s relationships with all the other then trustees. This included Trustee A who is the sister of Mr X; Trustee B who is Mr X’s brother-in-law and married to Trustee A, Trustee C who is Mr X’s nephew and the son of both Trustee A and B and Trustee D who is Mr X’s daughter. At the time Mr X was appointed as CEO, the trustee board were all related to Mr X and could not have made an un-conflicted quorate decision and was a further breach of the charity’s governing document, which strictly prohibits the remuneration of connected parties.

Following Mr X’s resignation as a trustee he continued to act as a de facto trustee and exercised authority over the charity’s administration. As a result, the salary paid to Mr X throughout his time as CEO was unauthorised and a beach of the charity’s governing document. This demonstrated a failure of the then trustees to comply with their legal duties including failing to act in the charity’s best interests, not managing conflicts of interest and failing to manage the charity’s resources responsibly.

In addition to salary payments, the inquiry found that on 7 August 2019 the charity made a bank transfer for £654 to a private company called Colmore Creative Limited jointly owned and directed by Mr X and another individual at the time the invoice was paid. The charity’s payment was authorised and signed by Mr X. This payment, as a benefit to a trustee that was not properly authorised, was a further breach of the charity’s governing document. The then trustees advised that they only became aware of the payment after it had been made - there were no meeting minutes available to evidence a decision by the trustees or Mr X supporting the payment or declaring a conflict of interest. The payment of the invoice showed a lack of financial control at the charity which is misconduct and/or mismanagement by the then trustees and Mr X.

The charity’s annual accounts for year ending 30 September 2018 showed that the trading subsidiary owed the charity £147,309. By the year ending 30 September 2020 the annual accounts show the trading subsidiary owed the charity £120,535, and in the year ending 30 September 2021, owed £67,947. As of the year ending 30 September 2022, the subsidiary owed the charity £34,356, showing that the charity has made efforts to reduce the debt. The trading subsidiary has transferred all of its remaining liabilities to the Sikh Channel Community Interest Company (SCCIC) on 5 August 2022. Further detail is provided about SCCIC below. During the compliance visit the then trustees could not answer questions about the connection between the charity and the trading subsidiary or how the decision to loan this money to the trading subsidiary was in the best interests of the charity. Mr X was also unable to answer questions about the charity’s links to this company. As Mr X was listed as the sole director of the trading subsidiary it was reasonable to expect him to hold this information. Trustees must be able to justify financial support for a trading subsidiary as an appropriate investment of their charity’s resources. In all cases the interests of the charity must be paramount.

The inquiry found that the charity was not properly managed by the then trustees with little in place in terms of policies or controls to assist them to manage the charity effectively. The then trustees had a disregard for, and a lack of understanding of, the importance of proper financial controls and accountability in respect of the charity’s funds. The trustees at the time had failed to put in place effective controls, and had insufficient control and oversight of Mr X, which directly led to the failures outlined above. The then trustees failed to properly govern the charity which resulted in a failure to manage conflicts of interest, effectively oversee staff or the charity’s trading subsidiary, and a breach of trust through unauthorised trustee remuneration.

This was misconduct and/or mismanagement in the administration of the charity by the trustees at the time. All of the then trustees resigned by 27 January 2020, and a new board of trustees were appointed (‘the new trustees’). Since their appointment the new trustees have taken steps to improve the financial controls and oversight of the charity.

The inquiry also found that there had been misconduct and/or mismanagement in the administration of the charity by Mr X. As a result of the inquiry’s findings, Mr X gave a formal undertaking^{[footnote 1]} that he would not act, be appointed, or accept a position as a trustee or senior manager of any charity including non-registered charities and would refrain from acting as a trustee or senior manager for a period of ten years without the express written permission of the Commission.

The Charity’s activities and partnerships with other organisations

The charity entered into a formal fundraising partnership with Organisation A in 2018. Chapter two of the Commission’s Compliance Toolkit, Charities: due diligence, monitoring and verifying the end use of charitable funds sets out the steps trustees should take to protect charitable funds. This includes performing due diligence on prospective partners and ensuring the onward monitoring of funds given to partners. Trustees also have a legal duty to manage the charity’s resources responsibly.

The compliance visit on 2 October 2019 found that the then trustees were not able to demonstrate due diligence was performed in advance of the charity’s partnership agreement being signed with Organisation A. The then trustees did not document their decision to enter into a partnership with Organisation A in trustee meeting minutes. Neither the trustees nor Mr X assessed the risks of working with Organisation A as a partner at the time the partnership agreement was signed.

The inquiry established that a contract was signed by Mr X and an individual representing Organisation A. The contract set out that 40% of the donations received, including Gift Aid, was to be given to the charity during the fundraising appeal. The then trustees explained that the funds retained by the charity were for administrative/running costs. However online appeals for donations stated the funds would be used to pay for three support workers at Organisation A - it was not made clear to members of the public that 40% of their donations plus Gift Aid would be kept by the charity for its general expenditure; the then trustees accepted that this was misleading. Given the fundraising drive was for a specific purpose, any funds raised would have been restricted and could only be used for this specific purpose. 

The inquiry established that the then trustees were unable to evidence the end use of charitable funds following large payments to Organisation A. This was despite the fact that Organisation A was not a registered charity, and the charity needed to ensure the funds were used for activity within its charitable purposes. For example, the charity paid Organisation A over £31,000 in 2018. The inquiry found that this payment was a transfer of funds raised by the charity for Organisation A. However, the trustees at the time were unable to explain what the payment was specifically for, or evidence how it was used by Organisation A. The trustees at the time were unable to provide evidence of an audit trail between the charity and Organisation A or copies of monitoring reports detailing the end use of funds given to Organisation A to ensure the funds were used as intended and in line with the charity’s objects.

The inquiry found that the then trustees’ failure to conduct due diligence on Organisation A, failure to monitor the end use of the charity’s funds, and the misleading nature of the fundraising appeal were all misconduct and/or mismanagement by the trustees of the charity at the time.

Whether the trustees have properly exercised their legal duties and responsibilities under charity law in the administration of charitable funds held by the organisation

Conduct of the trustees

Trustees have a legal duty to submit their charity’s annual returns within 10 months of the end of their charity’s financial year. Failure to do so is a breach of the trustees’ statutory obligations under sections 162^{[footnote 2]}, 163^{[footnote 3]}, 164^{[footnote 4]} and 169^{[footnote 5]} of the Act and it is a criminal offence under section 173^{[footnote 6]} of the Act to fail to submit annual accounts or returns on time to the Commission.

The charity’s annual return and accounts were repeatedly submitted late to the Commission - the annual return submission was 63 days late for year ending 30 September 2018 and 185 days late for year ending 30 September 2017; the annual accounts were late by 63 days and 123 days over the same period). Furthermore, their annual returns and accounts were filed 91 dates late for year ending 30 September 2019, 345 days late for year ending 30 September 2021. The only year in which the charity filed their annual return and accounts on time was for the year ending 30 September 2020 in which interim managers were appointed by the Commission, as detailed below. The repeated failure by the trustees at the time to comply with these requirements is misconduct and/or mismanagement in the administration of the charity.

The inquiry found that there was misconduct and/or mismanagement in the charity’s administration by its trustees when the conduct referred to throughout this report took place. The trustees at the time could not demonstrate they had effectively overseen the charity’s CEO, undertaken any due diligence before the charity entered into the partnership agreement with Organisation A or managed and monitored the partnership appropriately and repeatedly filed the charity’s statutory returns late. There were failings relating to the trustees’ financial management and overall governance of the charity.

As a result, the inquiry found that the trustees at the time had not complied with or fulfilled their duties and responsibilities as trustees under charity law and fell below the standard that the Commission expects.

The inquiry found that Mr X was particularly culpable for the failings within the charity, having acted as a trustee, de facto trustee, and CEO. This was partly because Mr X is a qualified solicitor and was practicing over the period of his trusteeship. The charity is a company and as such its directors are its charity trustees – they have the company law duties of directors and the charity law duties of trustees which by and large are very similar. Under Section 174 of the Companies Act 2006^{[footnote 7]} a higher duty of care was expected of Mr X as a director because he is legally qualified. General charity law imposes a duty on trustees of charities to exercise such care and skill as is reasonable in the circumstances. The duty will be greater if a trustee has (or claims to have) any special knowledge or experience, or if their business or profession means they can reasonably be expected to have special knowledge or experience^{[footnote 8]}. As detailed above Mr X has signed a voluntary undertaking to not act as a trustee for a period of 10 years.

Appointment of Interim Managers

The inquiry made an Order dated 19 March 2020 under section 76(3)(g)^{[footnote 9]} of the Act to appoint Mr Philip Watts and Ms Sarah Tomlinson of Anthony Collins Solicitors to act as Interim Managers (‘the IMs’) for the charity from the date of that Order.

A Notice of Appeal dated 28 April 2020 was submitted to the Charity Tribunal First Tier (‘the Tribunal’) in which the new trustees appealed against the appointment of the IMs.

The Tribunal determined that the legal test was met, namely that the inquiry was open and ongoing into the charity, and that there had been mismanagement in the charity. However, the Tribunal did not consider in their discretion that an interim manager should be appointed, and instead considered that additional trustees could be appointed to strengthen the trustee board. As such, the trustees’ appeal against the Order was allowed and the IMs appointment therefore immediately ceased on 31 July 2020.

Future of the charity

Over the course of the inquiry the new trustees established SCCIC, which was incorporated on 9 December 2020. The new trustees made the decision to transfer the Charity’s remaining funds to the SCCIC on 5 August 2022 and the Charity therefore ceased to operate. The Charity is in the process of being dissolved. The new entity will be overseen by the Regulator of Community Interest Companies.

Conclusion

The Commission concluded that there was misconduct and/or mismanagement in the administration of the charity by the then trustees and Mr X.

The Commission concluded that the then trustees were either unable or unwilling to discharge their legal duties and responsibilities and act in the best interests of the charity.

The Commission recognised the improvements made to the governance and administration of the charity by the new trustees.

Regulatory Action Taken

The inquiry exercised the Commission’s regulatory powers under section 47 of the Act on multiple occasions to obtain information and copy documents, including from the trustees and the charity’s bank.

As a result of the inquiry’s findings, Mr X gave a formal undertaking that he would not act, be appointed, or accept a position as trustee or senior manager of any charity including non-registered charities and would refrain from acting as a trustee or senior manager for a period of ten years without the express written permission of the Commission.

As detailed above, on 19 March 2020 the inquiry made an Order under section 76(3)(g) of the Act appointing the IMs, which was later appealed by the new trustees. The Tribunal agreed that there had been misconduct and/or mismanagement in the charity but took a different view in how to address this. The Tribunal determined that the appeal against the IM appointment Order was allowed and the IMs’ appointment immediately ceased on 31 July 2020

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry 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.

Trustees’ accounting and financial duties

Trustees must ensure that their charity has adequate financial controls in place. It is important that the financial activities of charities are properly recorded, and their financial governance is transparent. Charities are accountable to their donors, beneficiaries, and the public. Donors to charity are entitled to have confidence that their money is going to legitimate causes and reaches the places that it is intended to, this is key to ensuring public trust and confidence in charities.

The Commission has produced guidance to assist trustees in implementing robust internal financial controls that are appropriate to their charity. Internal Financial Controls for Charities (CC8) is available on the Commission’s website. There is also a self-check-list for trustees which has been produced to enable trustees to evaluate their charity’s performance against the legal requirements and good practice recommendations set out in the guidance.

Due diligence, monitoring, and verification

Charity trustees are legally responsible for ensuring charitable funds are used properly for legitimate charitable purposes and not misused for financial crime, terrorist, or other criminal purposes. Trustees are publicly accountable and have duties and responsibilities under charity law to safeguard their charity, its funds, property, and beneficiaries.

Due diligence is an important part of trustee duties and is essential in order to be assured of the provenance of charitable funds and confident that they know the people and organisations the charity works with and can identify and manage associated risks. It is vital that trustees have robust due diligence processes and ensure that these are consistently implemented.

Monitoring is a vital step in ensuring that a charity’s funds or property reach their proper destination and are used how the charity intended. The type and depth of monitoring may vary depending on the type of project, the location and the sums of money involved. It is vital that trustees have robust monitoring process in place including documentation (reports, receipts invoices) in addition to photographs and video.

The Commission has published guidance for trustees in respect of due diligence, monitoring and verifying the end use of charitable funds.

Governance

Trustees are representatives of the charity they govern or the charitable funds they are responsible for, in the charity sector. Trustees must be aware of and act in accordance with their legal duties. The conduct of trustees can be a key driver of public trust and confidence in the charity sector. When the conduct of trustees falls below the standards expected there can be damage to the reputation of individual trustees, the charity and possibly the wider charity sector.

All charities should have appropriately tailored internal policy documents which address the specific risks associated with the kind of activities that are undertaken. A failure to implement internal policies (and follow them) can put assets, beneficiaries, and a charity’s reputation at risk.

1. This voluntary undertaking was accepted before the Commission stopped accepting such undertakings as an alternative to disqualification several years ago. ↩

2. Charities Act s162 ↩

3. Charities Act s163 ↩

4. Charities act s164 ↩

5. Charities Act s169 ↩

6. Charities Act s173 ↩

7. 174 Duty to exercise reasonable care, skill and diligence

   (1) A director of a company must exercise reasonable care, skill and diligence.

   (2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with—

   (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and

   (b)the general knowledge, skill and experience that the director has. ↩

8. The essential trustee: what you need to know, what you need to do (CC3) ↩

9. Charities Act s76 ↩