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This publication is available at https://www.gov.uk/government/publications/rabia-educational-trust-inquiry-report/rabia-educational-trust
A statement of the results of an inquiry into Rabia Educational Trust (registered charity number 1082410).
Published on 23 June 2017.
Rabia Educational Trust (‘the charity’) was registered on 13 September 2000. It is governed by trust deed dated 12 September 2000.
The charity’s objects are to advance the education of boys and girls in accordance with the Holy Quran and the Hadith according to Sunni Islam. The charity’s principal activity is the operation of an independent Islamic school, The Rabia Girls’ and Boys’ School, in Luton, Bedfordshire.
The charity’s entry on the register of charities can be found on GOV.UK.
Issues under investigation
The Charity Commission (‘the Commission’) had been in contact with the charity’s trustees since 2012 in connection with the trustees’ persistent late submissions of the charity’s accounts and annual returns and had previously carried out visits to the charity in May 2013 and July 2014 to assess its internal controls and meet with its trustees. An additional compliance visit was conducted in January 2015 leading to the Commission issuing an action plan to the charity’s trustees in September 2015 having identified additional matters of regulatory concern in relation to the charity’s internal governance, decision making processes, financial record keeping and its compliance with other regulators.
The action plan required the trustees to submit the charity’s 2014 accounts and annual return which were overdue and make other improvements to the charity’s governance. The trustees were given until 28 March 2016 to comply with the action plan.
On 31 March 2016 the Commission wrote to the trustees and required them to provide a written response and evidence of their compliance with the action plan. The Commission also required the trustees to provide a written response in relation to concerns raised in the media about the charity and its hosting of guest speakers at the school.
The trustees did not respond to the Commission by the deadline the trustees were given and their eventual response did not address all the actions required of the trustees as set out in the action plan. Therefore, on 2 May 2016, the Commission opened a statutory inquiry under section 46 of the Charities Act 2011 (‘the act’) and exercised its legal powers to compel the trustees to provide information and documents regarding the charity to the Commission.
At the time the inquiry was opened the Commission was also aware of the (then) recent findings made by Ofsted as a result of an unannounced inspection of the charity’s school, The Rabia Girls’ and Boys’ School, and Her Majesty’s Chief Inspector of Education, Children’s Services and Skills, Sir Michael Wilshaw’s letter to the Secretary of State for Education about the school1. Whilst the Commission does not investigate matters relating to education standards in schools, it is the responsibility of the trustees to ensure that the charity complies with other laws that relate to the charity and its activities. The Ofsted report and Sir Michael Wilshaw’s letter raised the level of the Commission’s concerns about the charity and its management by the trustees.
The inquiry sought to investigate the:
- administration, governance and management of the charity by the trustees
- financial controls and management of the charity
- conduct of the trustees and whether or not they had complied with and fulfilled their duties and responsibilities as trustees under charity law - including compliance with other laws relevant to the charity and its activities
The inquiry closed on 23 June 2017 with the publication of this report.
The administration, governance and management of the charity by the trustees
The Commission’s action plan of September 2015 set out specific shortfalls in the charity’s administration, governance and management and required the trustees to rectify those shortfalls.
In particular, the Commission had found that the trustees could not demonstrate compliance with the charity’s governing document with regard to decision making, had not submitted accounts and annual returns to the Commission within the 10 month statutory deadline and could not demonstrate sufficient accounting records to explain all the charity’s financial transactions. The failure to file accounts and annual returns within the statutory timeframe was also a failure to comply with relevant provisions under the act and an example of mismanagement within the administration of the charity. The Commission was also concerned about the failure of the trustees to meet the requirements of other regulators, specifically Ofsted and the Department for Education.
The inquiry found that the trustees were slow to respond to the Commission’s requests for updates when it re-engaged with the trustees in March 2016 and their subsequent responses lacked sufficient detail on the actions the trustees had taken to address the Commission’s previous concerns. The trustees explained that their delay in responding was because the school had been the subject of an unannounced inspection by Ofsted which had diverted their attention. The inquiry took the view that the trustees were under an obligation to discharge all of their legal duties to respective regulators rather than place one above the other. The behaviour of the trustees in this respect fell below that which the Commission expects.
However, once the inquiry had been opened, the trustees cooperated fully with it and responded to the enquiries and requests for information made of them.
The trustees have demonstrated to the Commission that they have been meeting regularly in order to address the numerous concerns present, have properly recorded their decisions in accordance with the provisions of the charity’s governing document and were taking seriously their obligations to comply with charity law and the requirements of other regulators such as Ofsted and the Department for Education.
The trustees regularised their previous non-submission of the charity’s accounts and annual returns and, at the date of this report, the trustees are compliant with their duties to file the charity’s statutory returns to the Commission, although this was only addressed after the further intervention of the inquiry. The trustees have demonstrated to the inquiry that they have put in place measures to ensure that future statutory returns will be filed on time in accordance with their legal duties. The trustees have been reminded that failing to file statutory returns is misconduct and mismanagement in the administration of the charity.
The inquiry found that the trustees had taken positive steps to improve the charity’s internal governance through better record keeping, compliance with the charity’s governing document and the adoption of various policies, although additional concerns were identified relating to various property related transactions when the inquiry scrutinised the charity’s records:
The trustees explained that the charity rented out part of its office space to a nursery linked to its chair with the nursery paying the charity £24,000 per annum in rent. The nursery is a private business and not an activity of the charity. The trustees explained that this amount was above market rate to address any concerns regarding conflicts of interest and preferential rates. Evidence was provided to the Commission to confirm the same. However, any disposal of charity property to a connected party requires the Commission’s consent under section 117 of the act, which the trustees did not seek or receive.
Similarly, the trustees explained that they had disposed of the charity’s interest in an old public house to another registered charity on a 99 year lease at a rental of £24,000 per annum. The fact that the lease is longer than 7 years means that this lease should have been registered on the title deeds at the Land Registry but had not. It also appeared to the inquiry that the lease had been drawn up without legal or professional advice, questioning its validity. The trustees explained that they had negotiated continued access for the school but the lease was silent on this provision.
The trustees have also disposed of a gym operated by the charity to a Community Interest Company (CIC) connected to one of its trustees. The CIC appears to have taken over the charity’s rent payments on the building used for the gym, however the charity appears to have retained the lease on this property.
The inquiry finds that the trustees still have steps to take to improve the charity’s internal governance, management and administration in relation to the preceding paragraph and there are matters that they are required to address to regularise the issues raised. The inquiry has, by order under section 84 of the act, directed the trustees to take a number of specified actions. Further information can be found under ‘Regulatory action taken’.
The financial controls and management of the charity
When the Commission previously visited the charity in January 2015, it identified a number of weaknesses in the charity’s financial controls including that the charity was not banking all of its income (approximately 40% of income was estimated as not being banked), and was paying some of its staff in cash.
When the inquiry revisited the trustees to test for improvements in September 2016 it found that the trustees had implemented improvements to the charity’s internal financial controls. The inquiry found, from the charity’s records that it reviewed, that all cash income is now banked intact with the charity’s nominal ledger agreed to the statutory accounts and all entries from the nominal ledger traced to invoices.
The inquiry finds that the charity’s internal financial controls are now satisfactory, although the inquiry was concerned about the length of time it took for the trustees to address the shortfalls identified particularly given the extensive regulatory advice and guidance previously provided to the trustees.
The conduct of the trustees and whether or not they had complied with and fulfilled their duties and responsibilities as trustees under charity law - including compliance with other laws relevant to the charity and its activities
The Commission has engaged with the charity’s trustees over a number of years and found numerous examples of misconduct and mismanagement by them, including the persistent failure to submit accounts and annual returns to the Commission within the timescales required by law. The trustees also failed to comply with a Commission action plan which in itself is an example of misconduct and mismanagement within the administration of the charity.
The Commission’s concerns relating to the management and administration of the charity were raised further when Ofsted reported that ‘[Her Majesty’s Inspectors] were so concerned about the behaviours modelled by the leaders of this school… that the school would remain in the inadequate category’ because ‘the school insisted on segregating men and women through the use of a dividing screen across the middle of the room [at a meeting with the inspectors]’2.
The trustees have explained to the inquiry that this was an isolated issue and they do not permit segregation on gender lines at internal meetings unless the meeting is clearly in a religious setting. Having been referred the matter by the Department for Education, The Equality and Human Rights Commission (EHRC) has confirmed to the inquiry that it is satisfied that the segregation of staff took place on one occasion because a meeting was held in a prayer hall. In light of the trustees’ assurance that such future meetings will not be held in the prayer hall so staff will not be segregated the EHRC has decided that no further action was appropriate in relation to that issue. The EHRC noted that male and female pupils are segregated at the school. It has indicated to the trustees that it may revisit this issue when the law on segregation of pupils has been clarified by the Court of Appeal in July 2017.
In May 2014, January 2015 and April 2016 the charity was subject to unannounced Ofsted inspections of its schooling provision. The subsequent reports can be found on Ofsted’s website. On each occasion the charity’s school was judged to be ‘inadequate’. The Commission was, and continues to be, concerned about the trustees’ inability to make sufficient improvements to address the regulatory requirements of Ofsted.
In its report of April 2016 Ofsted noted that ‘Leaders and governors, through their actions, undermine the school’s work to promote fundamental British values’ and ‘school leaders acknowledge that some guest speakers to the school have not been vetted with sufficient rigour’. Whilst the Commission does not investigate matters relating to educational standards in schools, it was of concern to the Commission that the trustees were not discharging their duties to protect the charity’s beneficiaries from potentially harmful views and attitudes.
In response, the trustees confirmed to the inquiry that they were open to addressing these shortfalls. The trustees have adopted a speaker policy and made a decision to no longer allow any speakers from abroad as they consider that it is more difficult to conduct due diligence on such individuals. The trustees have also decided that no religious speakers will be permitted to attend the charity. The inquiry examined the charity’s record keeping in respect of its vetting of external speakers and the risk assessments completed and found that records were retained to show that some checks of potential speakers had been made.
However, the inquiry found that the charity’s policy should go further than it did to ensure that any speakers sign a declaration to confirm that they have read and understood the charity’s policy and agree to abide by it. The inquiry also advised the trustees to improve the approval process for deciding whether to allow a speaker to attend the charity’s premises or not as the inquiry took the view that there was ambiguity in the policy leading to the possibility that a speaker be authorised by a member of staff without trustee oversight. The trustees confirmed that they would improve the charity’s policy to address these shortfalls. The inquiry has attempted to test the charity’s record keeping following the improvements being made but was advised that ‘there have been no external speakers that have attended the charity’s premises from the start of the year (ie, from 1 January 2017)’ - therefore it has not been possible, as part of the inquiry, to test the trustees’ adherence to this policy.
On 10 January 2017, Ofsted undertook a further unannounced inspection of the charity’s schooling provision. That report can be found on Ofsted’s website. The report is clear that some improvements have been made by the trustees to satisfy the Independent School Standards and the ‘provision of information’ standard is ‘now met’. However, the ‘quality of education provided’ standard and ‘quality of leadership in and management of schools’ remain unmet3.
The Department for Education has confirmed to the inquiry that the school continues to be under regulatory action and will be until it meets all of the Independent School Standards.
The inquiry was concerned that, given that a substantial period of time has elapsed since Ofsted first raised its concerns, the charity’s schooling provision is still not meeting the required educational standards. As a result, it directed the trustees under section 84 to address the remaining concerns of Ofsted and the Department for Education by appointing someone with expertise in the Independent School Standards to ensure the charity’s schooling provision is fit for purpose.
The Commission concluded that there had been mismanagement and misconduct in the administration of the charity because the trustees:
- have repeatedly failed to submit the charity’s accounts and annual returns to the Commission within the required timescales in breach of their legal duties
- failed to address the concerns of the Commission and did not comply with the action plan issued in September 2015
- failed to respond in a meaningful way when the Commission contacted the trustees for an update in March 2016
- had not complied with the legal requirements to obtain the Commission’s consent when disposing of charitable assets to connected parties
- failed to comply with the legal requirements and regulations of another regulator
The Commission concludes that the charity’s administration, governance and management was not fit for purpose but that the trustees have now taken appropriate steps to address the shortfalls initially identified. The trustees are now compliant with their duty to file the charity’s accounts and annual returns.
The Commission concludes that there is still work for the trustees to do in order for the Commission to be satisfied that this is a charity that is capable of operating the school in a way which meets the Independent School Standards prescribed in regulation and in addressing the deficiencies identified in the agreements with third party organisations. The Commission has directed the trustees to make the required improvements by way of an Order under section 84 of the act.
Regulatory action taken
The inquiry used its powers under section 52 of the act to obtain copies of the charity’s bank statement from its bank.
The inquiry directed the trustees to provide information and documents to the inquiry under section 47 of the act when they initially did not comply with the Commission’s request for information and copy documents relating to the actions taken to comply with the action plan issued.
The inquiry directed the trustees by order under section 84 of the act to take specific actions to ensure compliance with the regulatory requirements of Ofsted and the Department for Education and also to regularise the deficiencies identified in the agreements with third party organisations. The Commission will carefully monitor compliance with this Order and take appropriate regulatory action in the event of a default.
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.
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 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.
Charity trustees are under a legal duty to cooperate with the Commission and the Courts have been very clear about this. Whether they do so or not maybe a relevant factor in assessing whether misconduct or mismanagement may have taken place in a charity and considering whether any regulatory action is proportionate.
Charity trustees should ensure there are robust and adequate financial controls in place to properly manage and protect the property of the charity. An effective charity has the financial and other resources needed to deliver its purposes and mission, and controls and uses them to achieve its full potential. 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 GOV.UK. 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.
Charity trustees must ensure that any disposal of property to a connected person (including a lease) is properly authorised and reported in the charity’s accounts as a related party transaction.
Many charities further their charitable purposes by arranging events and meetings involving speakers. In most cases, this causes no problems. However, there have been occasions when terrorists, and those with extremist views who encourage and support terrorism and terrorist ideology, have used charity events to make those views known. Charity trustees and managers need to be aware of, and actively manage, activities which give rise to the risks that speakers may break the law (by, for example, encouraging or glorifying terrorism, inciting racial or religious hatred, inciting criminal acts or public order offences), be outside of the charity’s objects, put the charity’s reputation or other assets at risk or be otherwise inappropriate under charity law because, for example, it breaches charity law rules on carrying out political activities or not be for the public benefit.
Charity trustees must comply with all of 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 mismanagement and misconduct in the administration of the charity and prompt regulatory action by the Commission.
The Department for Education have confirmed that this issue in itself did not breach the Independent School Standards and there were other failings against the standards. ↩