Decision

Aid and Peace Trust (formerly a registered charity)

Published 30 September 2019

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

The charity

Aid and Peace Trust (‘the charity’) was incorporated as a private company limited by guarantee on 4 November 2010 and registered as a charity on 25 January 2011. It was governed by a Memorandum and Articles of Association as amended by special resolution on 29 December 2010.

The charity’s objects were, “To advance education in Bangladesh for young people who are socially or economically disadvantaged by providing or supporting practical and vocational training.”

The charity ceased operational activity in 2014. It was dissolved as a company on 15 March 2016 and subsequently removed from the register of charities (‘the register’).

Background and issues under investigation

In 2013, the Charity Commission (‘the Commission’) identified that the charity’s website showed that it campaigned to raise funds for Burmese Rohingya Muslims (through a televised appeal in 2012) and the victims of the Savar building collapse in Bangladesh. These activities appeared to be outside of the charity’s objects and the Commission raised the matter with the charity.

On 9 September 2013 the Commission conducted an inspection of the charity’s financial and decision-making records and found that these did not properly account for the charity’s income and expenditure – for the financial years ending 30 November 2011, 2012 and part-year financial records up to July 2013. For example, where the charity had remitted funds to Bangladesh, there was a lack of financial oversight, with funds being transferred into the bank accounts of individual persons and it was unclear how these funds had then been utilised.

The Commission also identified a potential unmanaged conflict of interest due to one of the charity’s trustees being connected to the charity’s co-ordinator (a salaried role, in effect the charity’s chief executive), who was also an employee of the television company used for the 2012 televised appeal.

In order to address these regulatory concerns, the Commission opened a statutory inquiry (‘the inquiry’) under section 46 of the Charities Act 2011 (‘the Act’) on 19 May 2014.

The scope of the inquiry examined:

• the governance of the charity by the trustees, particularly whether the trustees had acted prudently and exercised reasonable care in respect of the day to day running of the charity
• the adequacy of the charity’s governing document and whether the objects were sufficiently broad to cover the activities of the charity
• whether the trustees of the charity had taken steps to address concerns previously highlighted by the Commission, particularly in respect of the charity’s accounting procedures and financial oversight
• whether the charity’s decision making process was adequate, taking account of relevant risk factors, cost implications and safeguarding charitable funds
• examining the charity’s transactions in relation to the television appeal on EURA12
• whether there had been any misconduct and/or mismanagement by the trustees and whether any remedial regulatory action was necessary

The inquiry closed with the publication of this report.

Findings

The governance and management of the charity by the trustees

The charity’s income and expenditure

Trustees must manage their charity’s resources responsibly, reasonably and honestly and properly account for their charity’s income and activities. It is expected that where trustees are not experts they should take appropriate advice from the Commission’s guidance The essential trustee: what you need to know, what you need to do (CC3).

In responding to the inquiry, the chair of trustees accepted being responsible for the delays in providing information on behalf of the other trustees and all of the trustees admitted that they were unable to provide sufficient information to properly account for the charity’s income and expenditure for the period up to July 2013.

The charity’s total income for the Financial Years Ending 2011 and 2012 was £58,970 and the total undocumented/unaccounted for expenditure over the same period was £49, 771.47, equivalent to 84.4% of all expenditure over this period being absent from the charity’s books and records. An annual return submitted on 25 June 2015 for the Financial Year Ending 2013 stated the charity’s income at £10, 237 and its expenditure at £16,048.

The trustees confirmed that the charity did not work with a partner charity or NGO in Bangladesh, rather it worked with a committee of supporters. They explained that funds were transferred into the private bank accounts of committee members in Bangladesh but were unable to show how much money had been sent in this way and were unable to give any assurances or provide documentation to demonstrate how those charitable funds were spent.

As a result, the inquiry found that the trustees had failed to demonstrate how the charity’s resources were used in accordance with its governing document, which was mismanagement and/or misconduct in the administration of the charity.

The inquiry also noted that the charity had submitted no annual returns since 2013, despite several requests to do so. This was a breach of the charity’s governing document (Clause 50 – 51) and a failure in their legal duty to submit accounts and/or returns to the Commission (Sections 130, 132 and 162 of the Charities Act 2011), which was mismanagement and/or misconduct in the administration of the charity.

The charity’s objects

In 2012 the charity expended effort and resources organising a joint televised appeal with other groups, these consisted of two charitable organisations and a non-charitable political lobbying group, for funds to aid Burmese Rohingya Muslims and in 2013 had also transferred funds to a hospital located close to the Savar building collapse in Bangladesh. The inquiry found that both of these activities were outside of the charity’s objects, which were essentially to advance education in Bangladesh.

The inquiry found that the charity had spent a total of £68,442.48 on what appeared to be charitable works that were not within the charity’s objects, which was mismanagement and/or misconduct.

Managing conflicts of interest

The inquiry established that the charity had used its resources in organising a televised appeal on behalf of Burmese Rohingya Muslims. The inquiry saw no record of any discussion or decision-making by the trustees regarding the appeal, no evidence of how the trustees had considered or managed any risk to the charity, or that they had carried out any due diligence on the company and organisations involved in the appeal, which had included a non-charitable political lobbying group.

The inquiry saw no record of any discussion or decision making to consider the conflict of interest which arose from the charity’s co-ordinator being an employee of the television company staging the televised appeal, in addition to being connected to the chair of trustees.

The inquiry found that mismanagement and/or misconduct occurred due to the trustees’ failure to identify and manage potential conflicts of interest.

Conclusions

The Commission concluded that there had been serious mismanagement and/or misconduct in the governance and administration of the charity, in particular as follows:

• failing in their statutory duty to provide financial accounts and/or returns and to act in accordance with the charity’s governing document
• failing to provide and maintain proper financial controls, account for their decision-making, expenditure and end use of charitable funds
• failing to ensure that the charity’s assets were only used in furtherance of its objects
• failing to address conflicts of interest regarding the charity’s co-ordinator being an employee of the company staging the appeal and being connected to one of the trustees

In summary, the charity was not properly governed, managed or administered by its trustees - as a result of those failings its reputation and charitable funds donated by the public to the charity were put at risk.

Regulatory action taken

During the inquiry the Commission exercised its information gathering powers under sections 47 and 52 of the Act on seven occasions. Further Orders were made under section 335(1) to ensure enforcement of a requirement of the Commission and under section 76(3)(d) safeguarding the charity’s property. The Commission exercised its power under section 34 of the Act to remove the charity from the register, as it had been dissolved and ceased to exist.

During the inquiry the trustees took steps to ensure that £16,330 in safeguarded funds remaining in the charity’s bank account was spent in line with the charity’s objects, and each made a voluntary undertaking not to act in the capacity of charity trustee or trustee for a charity for a period of 3 years.

Issues for the wider sector

The Commission’s guidance The Essential Trustee: What you need to know (CC3) explains the key legal duties of charity trustees. Trustees should take all reasonable steps to find out as much as they can about the charity including reading the governing document, and finding out what will be expected of them as a trustee. One of the legal duties of a charity trustee is to ensure that the charity does not breach any of the requirements or rules set out in its governing document and that it remains within the charitable purposes and objects set out in the governing document.

It is important that the financial activities of charities are properly recorded and that 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. Guidance on how to manage your charity’s assets and resources is available in Charity finances: trustee essentials (CC25).

When proposing any changes to a charity’s governing document, trustees must send us the material we ask for to ensure changes are updated properly. If a new charity is being set up, trustees should consider conflicts of interest and trustee remuneration when drawing up governing documents. More guidance can be found in Changing your charity’s governing document (CC36).

When working internationally, working through or with a local partner can be an effective way of delivering significant benefits direct to a local community. It does not, however, shift or alleviate responsibility for ensuring the proper application of the charity’s funds by the local partner. That responsibility always remains with the charity trustees, forming part of their duties and responsibilities under charity law. The need to implement risk strategies therefore remains critical. Further guidance can be found on the Commission’s website: How to manage risks when working internationally.