Decision

Charity inquiry: Charr Yarr Welfare Foundation Limited

Published 9 April 2024

Applies to England and Wales

The Charity

Charr Yarr Welfare Foundation Limited (the ‘Charity’) is a charitable company limited by guarantee, incorporated on 13 August 2013. It was entered onto the Register of Charities (the ‘Register’) on 15 April 2014. The Charity is governed by a memorandum and articles of association dated 12 August 2013, as amended by special resolution on 2 October 2023.

The Charity’s objects are the promotion of education and the relief of poverty throughout the world by the establishment of centres of education and the promotion of self-sustaining initiatives in impoverished areas, including but not exclusively those related to farming, manufacturing, and health projects and to do all such ancillary things which support the aforementioned objectives.  

To further its objects, the Charity provides funds to a Non-Profit Organisation in Pakistan, ‘Char Yaar Welfare Foundation’ (the ‘Pakistan NPO’). The Pakistan NPO is registered as a Charity in Pakistan with the Federal Board of Revenue. Some of the Charity’s former trustees have served or are currently serving as directors of the Pakistan NPO.

Background and issues under investigation

On 1 November 2018, the Charity Commission (the ‘Commission’) undertook a monitoring inspection at the Charity’s premises and met with one of the Charity’s then trustees. The Charity was proactively identified for an inspection due to its international operations in a high-risk area, namely Pakistan. Charities which operate internationally can be more vulnerable to abuse or harm because of where and how they operate.

The inspection sought to review the Charity’s policies and financial records and to ensure the trustees were complying with their legal obligations in exercising control and management over the Charity and its activities overseas.

Separate to the Charity’s overseas work, the Commission noted that the trustees, as they were at that time, had failed to comply with their legal requirements to ensure that the Charity’s accounts, Trustee Annual Report, and Annual Return (‘annual accounting documents’) for the Financial Year Ending (‘FYE’) 31 August 2016 and 31 August 2017 had been filed within the statutory time frame. Additionally, the Charity’s accounts for the FYE 31 August 2016 had been qualified (by an Independent Examiner) as the Charity was unable to provide receipts for more than £27,000 transferred to Pakistan.

At the time of the Commission’s inspection, the following were trustees of the Charity (hereinafter collectively referred to as the ‘former trustees’):

• Mr Azka Mashadi (‘Mr A Mashadi’)
• Mr Zulfiqar Syed Muhammad Irfan Mashadi (‘Mr Z Mashadi’)
• Mrs Maryam Irfan Mosvi (‘Mrs Mosvi’)

On 26 February 2019, the Commission wrote to the former trustees expressing its concerns that the sole trustee who was present at the inspection on 1 November 2018, Mr A Mashadi, displayed a lack of knowledge in respect of the Charity and its administration and was unable to sufficiently answer all of the Commission’s questions. As a result, the Commission held a further meeting with Mr A Mashadi and Mrs Mosvi on 25 April 2019; the Commission’s attempts to secure the attendance of Mr Z Mashadi were unsuccessful.  

On 5 August 2019, the Commission issued the former trustees with an action plan (the ‘Action Plan’) under section 15(2) of the Charities Act 2011 (the ‘Act’) which sought to address regulatory concerns the Commission had with the Charity’s management and administration. The former trustees were required to provide a report on their progress with the Action Plan by no later than 1 November 2019. When issuing the Action Plan, the Commission made it clear to the former trustees that failure to comply with the Action Plan could result in further regulatory action.

Having received no response from the former trustees in relation to the Action Plan and considering that there was a further overdue filing of the Charity’s annual accounting documents for the FYE 31 August 2018, the Commission on 11 December 2019 gave notice to the former trustees of its intention to issue the Charity with an Official Warning under section 75A of the Act. No representations were received from the former trustees and as a result the Official Warning was issued to the Charity on 9 January 2020. The Official Warning required the former trustees to take steps to:

• ensure the Charity’s annual accounting documentation for Financial Year Ending 31 August 2018 was filed in accordance with the Act by no later than 1 March 2020, and
• comply with the Action Plan and provide the Commission with evidence of compliance and a progress report by no later than 1 March 2020

On 19 May 2020, the Commission opened a Statutory Inquiry (the ‘Inquiry’) into the Charity in accordance with section 46 of the Act. The Inquiry was opened, in part, following the trustees’ failure to comply with the rectification action issued in the Official Warning. The opening of the Inquiry was communicated to the former trustees on 4 June 2020 and was publicly announced on 22 June 2020.

The scope of the Inquiry, in broad terms, considered:

• the administration, management, and governance of the Charity by the trustees; and
• the conduct of the trustees

Following its opening, the scope of the Inquiry was widened to consider Mr Z Mashadi’s conduct outside of the Charity following statements made by him which, in the Commission’s view, promoted or encouraged religious violence or fostered hatred.

Findings

The administration, management, and governance of the Charity by the trustees

The Inquiry found that the Charity was poorly managed and not properly administered by the former trustees who also failed to fully comply with the Action Plan and the rectification action issued in the Official Warning. Both were issued to assist the former trustees to improve the management and administration of the Charity, and to ensure that the former trustees complied with their legal duties and acted in the best interests of the Charity.

The Inquiry also found that the Charity had little governance infrastructure in place or policies or controls to assist the former trustees to manage the Charity. 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.

The inability or unwillingness of the former trustees to act in accordance with their legal duties and in the best interests of the Charity is misconduct and/ or mismanagement in the administration of the Charity.

The former trustees’ failures in this regard resulted in the Inquiry exercising the Commission’s powers to disqualify them, in accordance with section 181A of the Act, from acting as a charity trustee or trustee for a charity for a specified period - see ‘Regulatory action taken’ below for further details.

Following the opening of the Inquiry, in August 2020 the former trustees appointed new trustees to assist in the management and administration of the Charity (hereinafter collectively referred to as the ‘current trustees’). Since their appointment, the current trustees have taken remedial action to put the Charity on a proper footing. This work continues.

Financial management

The Inquiry found that the former trustees had a complete disregard for, and/ or lack of understanding of, the importance of proper financial controls and accountability in respect of the Charity’s funds.

Despite the Commission’s regulatory intervention, including the issuing of regulatory advice and guidance, the former trustees failed to implement sufficient controls in respect of their management of the Charity’s finances, including the use of personal bank accounts and cash couriering to transfer the Charity’s funds to the Pakistan NPO.

The Commission discovered £1,400 of the Charity’s funds had been transferred to one of the former trustees, Mr Z Mashadi. The former trustees were unable to provide evidence to the Commission why Mr Z Mashadi received this money when the Inquiry asked them. Additionally, as set out in the ‘Background and issues under investigation’ section, the Charity’s annual accounting documents for the FYE 31 August 2016 were qualified by an Independent Examiner because the former trustees could not provide receipts for transfers to Pakistan that totalled more than £27,000. Failure to keep adequate accounting records is a breach of the trustees’ legal obligations under section 130 and 131 of the Act and constitutes misconduct and/ or mismanagement in the administration of the Charity.

The former trustees were also found to have accepted large donations and interest free loans without conducting any due diligence or maintaining records of such – this practice further added to the Commission’s regulatory concerns in relation to the Charity’s financial management. The former trustees provided no evidence that they ceased to operate in this way following the opening of the Inquiry.

Following the Commission’s intervention the sum of £1,400 (which had been transferred to Mr Z Mashadi) was repaid to the Charity. Furthermore, the intervention also led to evidence being provided to show how the Charity’s funds (totalling more than £27,000) had been expended in Pakistan during the FYE 31 August 2016.

The Commission has identified regulatory concerns relating to the Charity’s ongoing financial governance, which the current trustees have recognised as points of continued improvement that they are seeking to address. The Commission has issued the current trustees with regulatory advice and guidance on managing the Charity’s resources responsibly and will continue to monitor how they manage the Charity’s finances, as part of its post Inquiry supervision.

The conduct of the trustees

The Inquiry found that the conduct of the former trustees fell below the standard that the Commission expects of trustees and that there had been misconduct and/ or mismanagement in the administration of the Charity.

The conduct of the current trustees also fell below the standard that the Commission expects of trustees (although to a lesser extent than that of the former trustees) due to the misconduct and/ or mismanagement in the administration of the Charity that has occurred during their trusteeship. However, the Commission acknowledges that remedial action has been taken by the current trustees.

Mr Z Mashadi’s conduct outside the Charity

During the Inquiry, the Commission became aware of a series of speeches delivered by Mr Z Mashadi between 2009 and 2016. Upon careful consideration of the statements made by Mr Z Mashadi in these speeches, the Commission is satisfied that he justified the use of violence, including murder, in the name of religion, and denigrated other faiths. It is the Commission’s view that these statements meet the UK Government’s then 2011 definition of extremism. At the time the Commission formed its view, the Government defined extremism as “the vocal or active opposition to our fundamental values, including democracy, the rule of law, individual liberty and the mutual respect and tolerance of different faiths and beliefs.”  This definition was replaced in March 2024 with a new definition.

In summary, Mr Z Mashadi’s statements denigrated specific Islamic faiths, incited violence, and advocated for the murder of blasphemers. Additionally, he glorified the actions of Malik Mumtaz Hussain Qadri, who, in January 2011, murdered the then Governor of Punjab (Salman Taseer) due to his opposition to blasphemy laws in Pakistan. Mr Qadri was charged under Pakistan’s terrorism legislation and subsequently convicted. In one of his speeches, uploaded to YouTube in 2012, Mr Z Mashadi prayed for Mr Qadri’s acquittal and referred to him as a warrior. In another speech, Mr Z Mashadi said that the Governor was “arrogant” and that he was “rightfully killed”.

On 20 June 2020, the Inquiry met with Mr Z Mashadi and the other former trustees. When questioned about the speeches, Mr Z Mashadi offered no response, while one of the other former trustees claimed that Mr Z Mashadi “had never preached about those things.” This statement is contrary to the speeches reviewed by the Inquiry.

On 19 October 2020, the Inquiry directed Mr Z Mashadi, in accordance with section 47 of the Act, to provide responses in relation to the statements made by him. In response, Mr Z Mashadi explained that his message has always been to “express peace and harmony” and that the speeches had been taken out of context. Excluding his statements about Mr Qadri, Mr Z Mashadi did not provide specific details on how his speeches were misconstrued.

Mr Mashadi also informed the Inquiry that:

“Any views which I have mentioned are narrated and any Islamic law or punishment can only be carried out in an Islamic state and the rules and regulations that I have mentioned in my speeches only apply in Islamic states and most of these lectures were given in Islamic states where the Islamic law is applied. Most importantly, by no means can these be carried out in non-Islamic states including the United Kingdom or any other country and nor have I ever promoted this, but I have only narrated what has been written in contest by previous scholars and what is within Islamic Judiciary…”

However, the Inquiry found Mr Z Mashadi’s explanation at odds with the words he had spoken. Notably, his praise for Mr Qadri shows his seemingly unconditional approval for Mr Qadri’s criminal actions.

As part of his written response to the direction under section 47 of the Act, Mr Z Mashadi agreed to be interviewed by the Inquiry concerning the comments attributed to him. While the Inquiry acknowledged Mr Z Mashadi’s offer, the Inquiry noted that when the Commission met with him on 20 June 2020, he provided no response to the allegations that he had advocated for the murder of blasphemers and/ or glorified the actions of Mr Qadri. Furthermore, the other former trustees said that Mr Mashadi had not said those things and Mr Z Mashadi made no attempt to correct them and/ or explain how his comments had been misconstrued.

The Inquiry also established that in 2016, Mr Z Mashadi, along with other religious scholars, were banned from speaking in Islamabad ahead of the Ashura religious period due to their “habit of making inflammatory” and objectionable speeches on sectarian issues. This ban was subsequently reimposed in 2017, 2018, 2019, and 2021 by the Islamabad authorities.

Mr Z Mashadi’s statements exhibit a consistent pattern of behaviour that promotes or encourages religious violence and fosters hatred. The Inquiry has determined that these views align with the UK Government’s 2011 definition of extremism.

The Commission assesses that Mr Z Mashadi’s statements do not reflect the actions of a well-meaning person who may have made an honest mistake in good faith or had good intentions but erred in judgment. The Commission believes it would be reasonable to expect Mr Mashadi to appreciate the impact of his statements, given the sensitive nature of the subjects he addresses. Furthermore, the Commission found no evidence that Mr Z Mashadi took reasonable care in identifying and managing the associated risks and consequences of his statements.

Being a trustee is a position of trust, where beneficiaries, donors, and the public rely on individuals to fulfil their legal duties. Consequently, the Commission considers Mr Z Mashadi’s conduct in this regard makes him unfit to act as a charity trustee or trustee for a charity generally.

Conclusions

Trustees play a crucial role in the governance of charities and are required to use their skills, knowledge, and experience to run their charity well and in its best interests. In relation to the former trustees, the Commission found that this did not happen.

The Commission concluded that there was misconduct and/ or mismanagement in the administration of the Charity by the former and current trustees.

Since the Commission’s intervention in opening the Inquiry, the current trustees have taken a number of positive steps to address the failures and weaknesses in the Charity’s governance. The current trustees have also shown a willingness to take on board regulatory advice and guidance provided by the Commission. Since being appointed, the current trustees have co-operated throughout the Inquiry as they are expected to, including providing information and updates to the Commission as required.

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.

On 5 May 2023, the Inquiry gave formal notification of its intention to disqualify the former trustees under section 181A of the Act. The proposed disqualifications would prevent the former trustees from being a charity trustee or trustee for a charity and holding an office or employment with senior management functions in any charity in England and Wales throughout the period of their disqualification.

On 23 June 2023, the Inquiry proceeded with the disqualification orders under section 181A of the Act, as it had not received any representations from the former trustees regarding the notice of intention to disqualify them.

The disqualification orders took effect on 5 August 2023, Mr A Mashadi and Mrs Mosvi have both been disqualified for a period of 2.5 years, while Mr Z Mashadi was disqualified for 5 years.

In compliance with section 182 of the Act, the names of the former trustees were officially entered into the Register of Removed Trustees.

On 1 August 2023, the Inquiry exercised the Commissions power under section 84 of the Act to direct the current trustees to prepare relevant missing annual accounting documents for the Charity for the FYE 31 August 2022 and provide copies of these documents to the Commission by 1 September 2023. The current trustees complied fully with the Order.

On 20 December 2023, the Inquiry exercised the Commission’s power to issue the Charity with an official warning under section 75A(1) of the Act.

The official warning was issued to the Charity in respect of the current trustees’ failure to ensure that they complied with charity law and the Charity’s governing document in respect of the submission of the Charity’s annual accounting documents. The Official Warning set out that the current trustees must ensure that future annual accounting documents are submitted on time, in accordance with charity law and the Charity’s governing document.

A copy of the official warning can be viewed on the Charity’s entry on the Register.

Under section 15(2) of the Act, the Commission provided regulatory advice and guidance to the current trustees to further improve their administration and management of the Charity. The Commission will continue to monitor the current trustees’ progress as part of post Inquiry supervision.

Issues for the wider sector

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.

Charity trustees and controversial views

Trustees have a legal duty to act with reasonable care and skill in the administration of their charity and to act in its best interests. Trustees should also consider, with regards to their seniority and public connection to the charity, how their conduct in a personal capacity may affect their ability to act as an independent trustee of a charity, or the charity’s reputation itself.

Those involved with charities have strong and often controversial or partisan views. In many instances, this is not in itself problematic. There may be some occasions however where expressing strongly controversial or partisan views on a particular issue without due regard to the charity’s position may compromise the charity’s integrity, purposes or activities. This may mean that in some circumstances that individuals are not suitable to act as a trustee, even if those views are expressed in a personal capacity. This is because those views may be such that they conflict with exercising objective judgment in the interests of the charity and therefore the ability to make proper decisions; those views may create risks to the charity’s operations and/or reputation; and, so may undermine the charity’s ability to deliver services to its beneficiaries.

If you a trustee cannot carry out their role and comply with their legal duties, they should resign. If a trustee remains in post but they know that they are unable to comply with their trustee duties, this would be misconduct and/or mismanagement in the administration of the charity.