Decision

Fatimiyya Trust (formerly a registered charity)

Published 1 August 2019

This decision was withdrawn on 27 January 2022

This report has been archived as it is over 2 years old.

The Charity

Fatimiyya Trust (‘the Charity’) was registered with the Charity Commission (‘the Commission’) on 20 March 2007.

It was governed by a Trust Deed dated 16 March 2007 (‘the governing document’). The objects that the Charity had can be found on the Commission’s register of charities (‘the register’).

The Charity was removed from the register on 9 December 2016, as it ceased to operate.

The inquiry into the Charity was closed with the publication of this report.

Issues under investigation prior to the inquiry

In October 2013, whilst examining allegations into another charity, The Light (formerly registered charity number 1121546), the Commission identified links between both charities, which necessitated enquiries to examine their relationship.

Further information about the regulatory actions taken by the Commission in relation to The Light can be found in our published statement of the results of an inquiry.

To explore these concerns the Commission used its information gathering powers (under Section 52(1)(a) and (b) of the Charities Act 2011) to obtain the Charity’s bank statements.

When analysed and compared with the income and expenditure figures published in the Charity’s accounts for the period 1 April 2010 to 31 March 2013, the Commission identified significant discrepancies, set out below:

Income	Per accounts	Per bank analysis	Difference
Total	£295,950	£82,758	£213,192

Expenditure	Per accounts	Per bank analysis	Difference
Total	£280,149	£73,360	£206,789

The Inquiry

Opening

The Commission opened a statutory inquiry under section 46 of the Charities Act 2011 (‘the act’) on 27 June 2014, to examine the following serious regulatory concerns about the governance and management of the Charity:

• whether the trustees of the Charity committed offences under section 60 of the Charities Act 2011 by knowingly or recklessly providing the Commission with information which is false or misleading
• whether the trustees complied with their legal duties and responsibilities in relation to the financial governance of the Charity
• the accuracy of the Charity’s accounts, reports, and annual returns submitted to the Commission and whether funds can be accurately accounted for as having been applied for a charitable purpose, in pursuance of its objects and for the public benefit
• the general administration and governance of the Charity, given that all three trustees appeared to reside outside the UK and whether they are capable of fulfilling their legal duties and responsibilities

Collaboration with other regulator

Given HMRC’s ongoing investigation into a former trustee, the Commission met with HMRC on 22 July 2014 to consider next steps.

The Commission agreed to postpone its inquiry and not inform the trustees that it had opened an inquiry into the Charity, until HMRC’s investigation had been concluded, to prevent interference with the conduct of a criminal investigation, which could hamper the possibility of obtaining a successful prosecution.

The current trustees were informed of the opening of our inquiry in May 2015, the former trustee of the Charity was convicted of fraud by false representation on 12 April 2016.

Consequently, the Commission’s inquiry was paused from 27 June to 1 December 2014.

Information-gathering and analysis

The inquiry used the Commission’s information-gathering powers under s52 of the act between September and December 2014 to obtain further copies of the Charity’s bank statements and account mandates.

The Commission received a large amount of financial material about the Charity from HMRC in June 2015, through its information-sharing gateway (under sections 54 to 59 of the act).

The inquiry also identified that the addresses the trustees had provided to the Commission were all in Pakistan. This seriously called into question the trustees’ capacity to properly manage and administer a UK-based Charity, whilst living abroad and overall, the continuing viability of the Charity’s operations.

Trustee engagement

In May 2015, the inquiry issued an opening letter to each trustee, including a Direction under section 47(2) of the act. The Direction directed them by law to provide information about the Charity’s management and bank accounts, the frequency and method of trustee meetings (whether face-to-face and/or via Skype, etc.) and the trustees’ residential addresses.

The trustees did not respond to the Commission’s Direction. Failure to comply with an Order of the Commission is considered misconduct and/or mismanagement in the administration of the Charity.

An unannounced visit was scheduled to the Charity’s registered address in May 2016, to try to establish if the Charity was still operational. A preliminary inspection of the premises revealed that there was no evidence of the Charity operating there. A follow-up meeting was arranged with the office manager of the premises shortly afterwards, who confirmed that the Charity had vacated the premises in early 2014.

In July 2016, the inquiry wrote to the three trustees at their Pakistan addresses to request current information about the Charity’s operations and finances and an explanation of why the trustees had not complied with a Commission Direction. However, no responses were received.

Closing action

The fact that there was no evidence the Charity was operating, the trustees all lived abroad and were not responding to the Commission’s enquiries meant that it would be a disproportionate use of the Commission’s resources to continue with the investigation.

In November 2016, the inquiry issued an Order under section 80(1)(e) of the act, removing all three trustees on the basis that they were outside England and Wales and their absence or failure to act impeded the proper administration of the Charity.

The Charity was removed from our register on 9 December 2016, using our powers under section 34(1)(b) of the act. At this point, the substantive phase of the inquiry was closed and the Charity’s bank and HMRC were informed that the Charity had ceased to operate and had been removed from the register.

The former trustees who were convicted of fraud are as a result subsequently disqualified from acting as a charity trustee.

Regulatory action taken

Throughout the course of the inquiry, the Commission used a wide range of regulatory powers, including under the following sections of the act:

• 47(2) and 52(1)(a) and (b), ordering the provision of documents/information to the Commission
• 54 to 59, disclosing to a relevant public authority any information received by a public authority, for the purpose of enabling or assisting a public authority to discharge any of its functions
• 80(1)(e) of the act, removing the trustees from trusteeship on the basis that they are is outside England and Wales and their absence or failure to act impedes the proper administration of the charity.
• 34(1)(b) of the 2011 act, removing the charity from our register

The substantive part of the investigation was concluded in 2016, the length of the inquiry has been affected by:

• an investigation undertaken by another regulator into a former trustee of the Charity, suspected of making fraudulent gift aid applications on behalf of the Charity, taking precedence
• the need for the Commission to analyse in detail substantial amounts of information/documentation from various sources, in the course of its investigation
• the trustees’ lack of co-operation with the Commission throughout the inquiry by failing to provide essential information/documentation

Issues for the wider sector

Charity trustees are responsible for governing the charity and making decisions about how it should be run. Making decisions is one of the most important parts of the trustees’ role. The courts have developed 7 principles for reviewing decisions that the trustees must make:

• act within their powers
• act in good faith and only in the interests of the charity
• make sure they are sufficiently informed
• take account of all relevant factors
• ignore any irrelevant factors
• manage conflicts of interest
• make decisions that are within the range of decisions that a reasonable trustee body could make

It is important that charity trustees apply these 7 principles when making significant or strategic decisions, such as those affecting the charity’s beneficiaries, assets or future direction. Trustees’ must be able to show that they have followed these principles and keep adequate records to evidence that their decisions have been properly made, particularly for important or controversial decisions.

Further information and guidance about trustee decision making can be found on GOV.UK.

The trustees of a charity are collectively responsible for its proper management and need to make decisions about the charity together. They should act together, in accordance with the requirements of their governing document and the general law, and they must always bear in mind their overriding duty to take decisions that are in the best interest of the charity.

Trustees need to critically and objectively review proposals and challenge assumptions in making decisions in the charity’s best interest. Trustees who simply defer to the opinions and decisions of others aren’t fulfilling their duties. Things can go wrong when trustees place too much reliance on individuals, and don’t implement sufficient safeguards to ensure accountability.

Trustees are under a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects. They must also be able to demonstrate that this is the case.

Part 8 of the 2011 act requires trustees to keep accounting records for their charity irrespective of their income level. Every charity’s accounting records must be sufficient to show and explain its transactions and disclose with reasonable accuracy its financial position.

Therefore, in order to show that they are complying with their legal duties, trustees must keep records and an adequate audit trail to show that the charity’s money has been properly spent on furthering the charity’s purposes for the public benefit.