Decision

Charity Inquiry: World Holocaust Forum Foundation

Published 14 December 2023

Applies to England and Wales

The charity

World Holocaust Forum Foundation (the ‘charity’) was a private company limited by guarantee, incorporated on 5 March 2021. It was entered onto the register of charities (the ‘register’) on 18 May 2021. The charity was governed by its memorandum and articles of association dated 4 March 2021, as amended on 10 May 2021.

The charity had objects which included promoting mental and moral improvement by remembering and reflecting upon the Holocaust, advancing the education of the public in relation to the Holocaust, and promoting religious and racial harmony by commemorating the Holocaust.

The charity ceased to exist following its dissolution and was removed from the register on 4 August 2023.

Background and issues under investigation

His Majesty’s Treasury’s (‘HMT’) Office for Financial Sanctions Implementation (‘OFSI’) is the authority responsible for ensuring financial sanctions are properly understood, implemented, and enforced in the UK. Financial sanctions include restrictions on designated persons, such as freezing their financial assets, as well as wider restrictions on investment and financial services.

On 6 April 2022, Dr Viatcheslav Kantor, a trustee and member of the charity, was named as a ‘designated person’ for the purposes of the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/855) (the ‘Russia Regulations 2019’).

The Russia Regulations 2019 were made under the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’). These should be considered with the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2020 and the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 4) Regulations 2020. These enable the Secretary of State to designate a person, which can result in the freezing of funds and economic resources of certain persons, entities or bodies involved in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine or obtaining a benefit from or supporting the Government of Russia.

Pursuant to regulation 6(1) of the Russia Regulations 2019, the Secretary of State may not designate a person unless there are (i) reasonable grounds to suspect that a person is an “involved person”, and (ii) the designation of the person is appropriate. An “involved person” means a person who:

• is or has been involved in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty, or independence of Ukraine
• is owned or controlled directly or indirectly by a person who is or has been so involved
• is acting on behalf of or at the direction of a person who is or has been so involved, or
• is a member of, or associated with, a person who is or has been so involved

Regulation 6(3)(a) to (g) of the Russia Regulations 2019 sets out the ways a person is involved in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty, or independence of Ukraine. Examples include providing financial services, or makes available funds, economic resources, goods, or technology that could contribute to destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine and the person obstructs the work of international organisations in the Ukraine.

By virtue of Dr Kantor’s designation, it is a criminal offence for him to hold, access or manage the property of a charity, or for anybody to do so at his direction.

On 7 April 2022, the Commission opened a compliance case into the charity and wrote to Dr Kantor to require him to provide a written response to his designation as it related to his trustee role. In its letter, the Commission explained that it was of the view that Dr Kantor was unable to act as a trustee of the charity – or any other – because of his designation which prevented him from holding, accessing and/or managing funds.   

On 11 April 2022, a response was provided to the Commission from the charity. However, the response did not address the Commission’s substantive regulatory concerns about Dr Kantor remaining as a trustee. Instead, the reply simply informed the Commission that one of the charity’s other trustees had resigned on 6 April 2022 with immediate effect. The reply made no mention of Dr Kantor and his intentions.

On 12 April 2022, the Commission further wrote to the charity to reiterate its regulatory concerns and required the trustees to provide a response by midday on 13 April 2023 as to whether it was Dr Kantor’s intention to remain a trustee of the charity. No response was received from the charity, and the Commission’s records continued to show Dr Kantor as a trustee of the charity.

Given the Commission’s regulatory concerns surrounding Dr Kantor’s designation and his role at the charity, the Commission opened a statutory inquiry (the ‘inquiry’) into the charity on 13 April 2022 under section 46 of the Charities Act 2011 (the ‘2011 Act’).

When making the decision to open the inquiry, the Commission factored in the real risk that HMT could act to freeze the assets of the charity following the designation of Dr Kantor, if he remained in his position as a trustee.

The scope of the inquiry was to consider:

• whether the charity could continue to operate and was viable following sanctions being imposed on Dr Kantor; and
• the conduct of the trustees and whether they have discharged their legal duties and responsibility in their management and administration of the charity

After opening the inquiry, a range of the Commission’s regulatory powers were exercised. Further information is provided below under ‘Regulatory action taken’.

Findings

Whether the charity could continue to operate and was viable following sanctions being imposed on Dr Kantor

Taking into account the sanctions imposed on Dr Kantor, and other factors related to the charity, the inquiry concluded that the charity was no longer viable and should be wound-up and dissolved.

The charity’s registration application to the Commission, which was submitted in March 2021, set out that its estimated gross annual income was to be more than £2 million. The charity had expected this income to come from grant funding provided by various charities with which Dr Kantor was associated at that time.

Having exercised the Commission’s information gathering powers, the inquiry ascertained that the charity’s assets totalled £5,000. These funds were donated to the charity by Dr Kantor (prior to his designation) and were being held, in the charity’s name, with the law firm that represented the charity as part of its application to register. The inquiry further ascertained that the charity had not carried out any activities in pursuit of its objects since its inception, nor did it have a bank account or any other assets or sources of income.

In May 2023, the inquiry concluded that the charity was no longer viable and that it should be dissolved. The inquiry reached this view having taken into consideration several factors, which included:

• the reputational damage to the charity by virtue of Dr Kantor’s designation;
• the charity’s limited assets
• the charity being inquorate following the resignation of two trustees (following Dr Kantor’s designation) and action being taken by the inquiry to remove Dr Kantor from his trustee position. This left a single trustee (the ‘remaining trustee’) in post who could only act to appoint additional trustees; and
• the inquiry judged it highly unlikely that the charity would be able to recruit suitable trustees and/or secure funding to pursue the charity’s purposes

The remaining trustee shared the inquiry’s view that the charity was no longer viable and should be wound-up.

On 11 July 2022, having been satisfied that it was expedient in the interests of the charity, the inquiry exercised the Commission’s power under section 105 of the 2011 Act to give the remaining trustee the authority to wind-up and dissolve the charity.

On 17 October 2022, and in compliance with the order made under section 105 of the 2011 Act, the remaining trustee passed a resolution to dissolve the charity. The resolution set out that the charity’s funds, totalling £5,000, were to be transferred to an unconnected charity (the ‘recipient charity’) with similar purposes and which was registered with the Commission. In earlier correspondence, the Commission had given its prior written consent that it was content with the funds being transferred to the recipient charity.

The remaining trustee attempted to initiate the transfer of the charity’s funds held by the law firm to the recipient charity. However, the law firm (and their banking provider) determined that the funds were subject to Dr Kantor’s asset freeze, making it necessary for consent, in the form of a licence, to be sought from OFSI before the transfer could take place.

Under the Sanctions Act, a General Licence allows for specified activities to be undertaken which would otherwise be prohibited by financial sanctions. On 30 May 2022, OFSI issued General Licence INT/2022/1834876 which allows for an Interim Manager, appointed by the Commission, to act as receiver and manager in respect of the property and affairs of a charity. In practice, this means an Interim Manager (appointed by the Commission) can lawfully act to apply charitable funds that have been frozen because of the Russia Regulations 2019.

Having liaised with OFSI and the law firm, the inquiry took the view that the situation could most effectively be resolved in a timely manner with the appointment of an Interim Manager under section 76(3)(g) of the 2011 Act. Once appointed, the Interim Manager would be able to rely on the above General Licence to transfer the funds to the recipient charity.

On 18 May 2023, the inquiry appointed Thomas Murdoch of Stone King LLP to take all actions necessary to facilitate the transfer of the charity’s funds held on trust by the law firm to the recipient charity. The funds were transferred successfully to the recipient charity on 3 July 2023.

Having completed the scope of his appointment, Mr Murdoch was discharged from his appointment on 11 July 2023. The inquiry is grateful to Mr Murdoch for his assistance in this matter and for carrying out the work on a no fee basis.

The charity was dissolved at Companies House on 1 August 2023 and subsequently removed from the register on 4 August 2023.

Conduct of the trustees and whether they have discharged their legal duties and responsibilities in their management and administration of the charity

Dr Kantor

The inquiry found that the conduct of Dr Kantor fell below that which the Commission expects of trustees and that Dr Kantor was responsible for misconduct and/or mismanagement in the administration of the charity.

The legal consequences of being designated make it, in the Commission’s view, impossible for a designated person to be a trustee. This is because it is a criminal offence for funds or economic resources to be made available to a designated person.

Trustees have a legal responsibility for the administration of their charity. They are custodians of charitable funds and hold them on trust for their charity. They have control over the management and administration of the charity and therefore, its assets.

Therefore, a designated trustee would be unable to act in the administration of the charity without committing an offence unless licensed to do so by OFSI. Conversely, if the trustee in question did not deal with charity funds, then they would be failing to discharge their legal duties as a trustee in the management and administration of a charity. In either scenario, this amounts to misconduct and/or mismanagement in the administration of a charity. If a trustee becomes designated, then they must resign from their position immediately or they will be in breach of charity law.

Once designated, Dr Kantor became prohibited from holding, accessing, or managing the charity’s property. However, despite his designation, Dr Kantor did not resign from his position and ignored and failed to respond to the Commission’s regulatory concerns about his continued involvement and role in the charity.

A charity’s reputation is a valuable asset, and forms part of its property, that trustees have a duty to safeguard. Dr Kantor’s designation negatively impacted the charity’s reputation, ability to operate and exposed it to increased risks, given his public association with activities in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine or obtaining a benefit from or supporting the Government of Russia. Such links between a charity and a designated person erode public trust and confidence in the charity and the charitable sector as a whole.

Dr Kantor’s failure to resign and thus safeguard the reputation of the charity constitutes misconduct and/or mismanagement in the administration of the charity. Moreover, his lack of cooperation with the Commission further adds to his misconduct and/or mismanagement.

On 14 April 2022, the inquiry exercised the Commission’s powers under sections 76(3)(a) and 83 of the 2011 Act to suspend Dr Kantor from his roles as a trustee and member of the charity. On 30 May 2022, the inquiry further exercised the Commission’s power under section 79(4) of the 2011 Act to remove Dr Kantor from his trustee position. For more details on the regulatory actions taken, refer to the section titled ‘Regulatory action taken’ below.

The charity’s other trustees

In addition to Dr Kantor, the charity had three other trustees before his designation. Two of these trustees resigned from their positions on 6 April 2022 and 4 May 2022, respectively. Their resignations from the charity were in response to Dr Kantor’s designation.

Following action taken by the inquiry to remove Dr Kantor in May 2022, the remaining trustee ceased to be a trustee of the charity following its dissolution on 1 August 2023.

Throughout the inquiry, no evidence was found to question the conduct of these three trustees. Additionally, there was no evidence suggesting that they failed to fulfil their legal duties and responsibilities as trustees of the charity.

Conclusions

Where misconduct and/or mismanagement occurs within a charity, the Commission will ensure that those responsible are held accountable for their actions and/or inaction. Where required, the Commission will take robust regulatory action to address the situation.

The inquiry concluded that Dr Kantor failed to discharge his legal duties and responsibilities and was responsible for misconduct and/or mismanagement. This led to his removal as a trustee of the charity.

The inquiry also concluded that the charity was no longer viable and facilitated its dissolution after its remaining assets were applied to another charity with similar objects.  

On 4 September 2023, Dr Kantor made representations to the Commission as part of the process relating to the publication of this report. In his representations, which was the first contact the Commission had had with Dr Kantor, Dr Kantor denied being responsible for misconduct and/or mismanagement. Dr Kantor also explained that the decision to designate him was “flawed” and that he is in the process of challenging this.

In his representations, Dr Kantor explained that in May 2022 he had appreciated and understood that it was necessary for him to step down from involvement entirely and absolutely within the Charity. Whilst the Commission notes this admission, Dr Kantor did not convey this view to the Commission at that time.

The Commission considered with care Dr Kantor’s representations and substantively responded to these on the points raised. The Commission concluded that the representations put forward did not amount to a change that was material to reconsider the Commission’s findings and conclusions which Dr Kantor had been informed of in April and May 2022 as part of the legal process to suspend and then remove him as a trustee of the Charity. Dr Kantor did not appeal the Commission’s decisions in this regard.

Regulatory Action Taken

The inquiry exercised the Commission’s information gathering powers under section 47 of the 2011 Act, to obtain information and copy documents from a variety of sources.

On 14 April 2022, the inquiry exercised the Commission’s power under section 76(3)(d) of the 2011 Act; this order prohibited the charity’s trustees from parting with any property that they held on behalf of the charity without the prior written consent of the Commission.

On 14 April 2022, the inquiry exercised the Commission’s powers made under section 76(3)(a) and section 83(2) of the 2011 Act and made orders to suspend Dr Kantor as a trustee, charity trustee, officer, agent, member, and employee of the charity. On the same day, the inquiry gave the required statutory notice (as prescribed by the 2011 Act) to Dr Kantor of the Commission’s intention to remove him as a charity trustee.

Having received no representations from Dr Kantor, an order under section 79(4) of the 2011 Act was made on 30 May 2022. The consequence of removal is automatic disqualification from being a trustee of or for any other charity without a waiver from disqualification from the Commission or the courts. It is an offence to act as a trustee or hold a senior management position in any charity in England and Wales whilst disqualified. Dr Kantor’s name has been added to register of removed trustees.

By virtue of the charity’s articles of association, Dr Kantor’s membership of the charity was terminated with immediate effect following his removal under section 79(4) of the 2011 Act.

On 11 July 2022, the inquiry, upon being satisfied that it was expedient in the interests of the charity, exercised the Commission’s power under section 105 of the 2011 Act to issue an order, authorising the remaining trustee in office to act for the purpose of winding up and dissolving the charity within a specified period. The order stipulated that the charity’s remaining assets be transferred to such other charity as is agreed with the Commission, in advance in writing, as having the same or similar purposes as those of the charity.

On 18 May 2023, the inquiry exercised the Commission’s power under section 76(3)(g) of the 2011 Act to appoint Mr Murdoch of Stone King LLP as Interim Manager of the charity – for the sole purpose of facilitating the transfer of its remaining assets to the recipient charity – in accordance with the terms of the OFSI General Licence – INT/2022/1834876.

On 3 July 2023, the charity’s funds (in their entirety) were transferred to the recipient charity. Having successfully completed the scope of his appointment, Mr Murdoch was discharged from his appointment on 11 July 2023.

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.

Financial sanctions

Financial sanctions are generally imposed to:

• coerce a regime, or individuals within a regime, into changing their behaviour (or aspects of it) by increasing the cost on them to such an extent that they decide to cease the offending behaviour
• constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation
• signal disapproval, stigmatising and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally; and/or
• protect the value of assets that have been misappropriated from a country until these assets can be repatriated

Whilst the Foreign, Commonwealth and Development Office (FCDO) is responsible for the UK’s international sanctions policy, His Majesty’s Treasury’s Office for Financial Sanctions Implementation (OFSI) is the authority responsible for implementing financial sanctions. OFSI helps to ensure that financial sanctions are properly understood, implemented, and enforced in the UK. They have produced a factsheet for charities which provides answers to frequently asked questions on financial sanctions.

The main implication of being designated is that the designated person or entity is subject to financial restrictions. Financial sanctions come in many forms but one of the most common types of financial sanctions is a targeted asset freeze. This means that it is a criminal offence for a person (including the designated person) to deal with funds or economic resources belonging to, or owned, held or controlled by a designated person. It is also a criminal offence to make funds or economic resources available, directly, or indirectly, to or for the benefit of, a designated person or entity.

Trustees have a legal responsibility for the administration of their charity. They are custodians of charitable funds and hold them on trust for their charity. They have control over the management and administration of the charity and therefore, its assets.

If a serving trustee becomes a designated person, they would be unable to act in the administration of the charity without committing an offence (unless licensed to do so by OFSI). Conversely, if the trustee remained but did not deal with charity funds, then they would be failing to discharge their legal duties as a trustee in the management and administration of a charity. In either scenario, this amounts to misconduct and/or mismanagement in the administration of a charity. If a trustee becomes designated, then they must resign from their position immediately or they will be in breach of charity law.

If the trustee does not resign, the charity’s other trustees should see if they have the power under the charity’s governing document to remove them from office. If the trustees do not have this power, they should immediately seek the Commission’s advice. If the designated person does not resign as a trustee and the charity’s other trustees cannot or do not remove them, the Commission will consider using its legal powers to do so.

If trustees fail to promptly take steps to remove a designated person or neglect to inform the Commission when lacking the authority to do so, it will constitute misconduct and/or mismanagement in the charity’s administration. In addition to the designated person, the Commission would assess the need to exercise its legal powers to address the trustees’ inaction.

If a charity has appointed a designated person as a trustee, or a trustee is subsequently designated, this should be reported to OFSI and the Commission immediately as a serious incident.

The Commission has produced a quick guide for cross-checking trustees with the consolidated list of financial sanctions targets.