Regulator criticises governance at Sikh TV charity
The Charity Commission, the regulator of charities in England and Wales, has found serious failings at Sikh Channel Community Broadcasting Company Limited.
The charity operated a television channel, which was based in Birmingham, to advance the knowledge of the Sikh faith.
An official inquiry report, published today, found that the former trustees of the charity had not sufficiently overseen the actions of the charity’s then CEO, which in turn led to failures in the administration, financial control and governance of the charity.
A new board of trustees was appointed over the course of the inquiry, and they took the decision to wind up and dissolve the charity. Additionally, the former CEO has formally undertaken not to act as a trustee or in a senior role at a charity for ten years.
Background
The Commission began engaging with the charity in 2019, after concerns arose about the charity’s fundraising partnership with the unregistered organisation Sikh Youth UK, an organisation which was already subject to a statutory inquiry.
Concerns were also raised about the relationship between the charity and companies connected to the charity’s CEO.
Findings
In its report, the Commission finds that:
- Trustees failed to manage a clear conflict of interest in relation to the appointment of the CEO of the charity. The CEO, who was also a trustee at the time, appointed himself to the role without an open recruitment process, and in breach of the charity’s governing document. The trustees were all family members of the CEO, and inquiry found that the trustees had insufficient control and oversight of his actions, leading to breaches of charity law. This amounted to misconduct and/or mismanagement by the trustees at the time.
- The CEO, at the relevant times, acted as a de-facto trustee, and set himself a yearly salary of £40,000, which was unauthorised. Additionally, the inquiry found that the charity made a bank transfer for £654 to a private company owned and directed by the CEO. The payments of the unauthorised salary, the bank transfer and loans to a trading subsidiary of the charity showed a lack of financial control by the trustees, and failure to act in the charity’s best interests.
- The charity began a fundraising partnership with an unregistered organisation, Sikh Youth UK. It organised a fundraiser, stating that money raised would pay for Sikh Youth UK support workers. However, the Commission found that it misled members of the public by not stating that 40% of their donations would be kept by the Sikh Channel Community Broadcasting for its general expenditure. The inquiry found that the then trustees’ failure to conduct due diligence on Sikh Youth UK, failure to monitor the 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.
Regulatory action
- The CEO of the charity 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.
Joshua Farbridge, Head of Compliance Visits and Inspections at Charity Commission said:
Our findings serve as a cautionary tale against allowing any one person to dominate and assume control of a charity.
In this case, the trustees failed in their duty to oversee and manage the actions of the CEO, resulting in significant failures in the charity’s administration and governance.
As a result of our intervention, and the identified misconduct and/or mismanagement, the CEO has committed to refraining from acting as a trustee of a charity for ten years.
The full report detailing the findings of this inquiry can be found on gov.uk
ENDS
Notes to editors
- The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society.
- On 13 November 2019, the Commission opened a statutory inquiry into The Sikh Channel Community Broadcasting Company Limited under section 46 of the Charities Act 2011.
- A statutory inquiry is a legal power enabling the Commission to formally investigate matters of regulatory concern within a charity and to use protective powers for the benefit of the charity and its beneficiaries, assets, or reputation. An inquiry will investigate and establish the facts of the case so that the Commission can determine the extent of any misconduct and/or mismanagement; the extent of the risk to the charity, its work, property, beneficiaries, employees or volunteers; and decide what action is needed to resolve the concerns.
- The inquiry made an Order dated 19 March 2020 under section 76(3)(g)11 of the Act to appoint Mr Philip Watts and Ms Sarah Tomlinson of Anthony Collins Solicitors to act as Interim Managers 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 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.
Press office
Email pressenquiries@charitycommission.gov.uk
Out of hours press office contact number: 07785 748787