Decision

Fazal Ellahi Charitable Trust (formerly a registered charity)

Published 3 May 2019

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

The charity

Fazal Ellahi Charitable Trust (‘the Charity’) was entered onto the register of charities (‘the Register’) on 28 April 2003. It was governed by a declaration of trust dated 1 July 2002. The Charity ceased to exist following its dissolution on 20 February 2019.

The Charity’s objects were “the education of all people particularly children and young people in the Muslim religion and Urdu language and the advancement of the Muslim religion through the provision of collective prayer meetings and otherwise”.

The Charity operated a mosque, known locally as the Tunstall Mosque (‘the Mosque’) and was based in Stoke-on-Trent.

On 25 November 2009, the Charity was removed from the register for the reason that the Charity Commission (‘the Commission’) considered that it had either ceased to exist or no longer operated. Various correspondence sent by the Commission to the individuals recorded as the trustees of the Charity was not responded to.

Despite its removal from the register, the Charity continued to operate.

Issue under investigation

In February 2017, Mr Kamran Hussain, who was the Imam of the Mosque operated by the Charity (‘the Imam’), was arrested on suspicion of various terrorism offences in relation to a series of sermons he gave at the Mosque between June – September 2016.

Following a criminal prosecution, the Imam was subsequently sentenced to six and a half years imprisonment in September 2017 for six counts of encouragement of terrorism, contrary to section 1(2) of the Terrorism Act 2006 and two counts of encouraging support for a proscribed organisation (Islamic State), contrary to section 12(3) of the Terrorism Act 2000.

In July 2017 the Commission also received information from Stoke on Trent City Council that supported concerns that the Charity was continuing to operate despite not being registered with the Commission.

The Commission obtained information from the West Midlands Counter-Terrorism Unit (‘the Police’) in relation to its investigation into the Imam and obtained further information, by order under section 52 of the Charities Act 2011 (‘the Act’) about the Charity’s financial activities.

The Commission contacted all of the individuals last recorded as being trustees of the Charity – this included an unannounced visit to the premises from which the Mosque operated and personally delivering correspondence to the addresses of the individuals last recorded as trustees of the Charity.

A meeting with Mr Fazal Ellahi (‘Trustee A’), and others was held in March 2018. During that meeting the Commission sought to obtain a response from the trustees to the conviction of the Charity’s (now former) Imam, what activities the Charity was undertaking and why the trustees had failed to respond to the Commission’s previous correspondence which resulted in the removal of the Charity from the register in 2009.

During the meeting it was confirmed that Trustee A and another individual, Mr Isbar Ellahi (‘Trustee B’), who is the son of Trustee A, were the only trustees of the Charity.

Trustee A, through his representatives, expressed an intention to appoint additional trustees to the Charity. It was also confirmed that both the Imam and Trustee A had provided educational classes for children (both boys and girls); Trustee A confirmed that as at the time of March 2018 meeting, he continued to lead such classes but only for boys.

The Commission requested various documents from Trustee A, these were not provided; the Commission was advised that various records maintained by the Charity were seized by the Police as part of the criminal investigation.

The Commission also requested records maintained by the trustees after the Police’s search of the Charity’s premises in February 2017 until the date of the Commission’s visit in March 2018; these were not provided. The Commission also requested access to the Charity’s premises which was denied.

The Commission opened a statutory inquiry (‘the Inquiry’) on 16 April 2018 under section 46 of the Act. The scope of the Inquiry was to examine:

• the management and oversight of staff, use of the Charity’s premises and safeguarding procedures by the trustees
• whether the trustees have properly exercised their legal duties and responsibilities under charity law in the administration of the Charity
• the financial management of the Charity, particularly in regards to maintaining and preserving accounts records
• whether there has been misconduct and/or mismanagement by the trustees, including failure to comply with the Charity’s own governing document

Shortly after opening the Inquiry, the Commission exercised a number of its regulatory powers to protect the Charity’s assets and its beneficiaries. These are set out in more detail under ‘Regulatory Action Taken’. The Inquiry closed with the publication of this report.

Findings

The Inquiry found that the Charity’s premises had been misused, by the Imam, to encourage terrorism and encourage support for a proscribed organisation, namely Islamic State. The fact that the sermons delivered by the Imam which resulted in his conviction were delivered over a number of months compounds the failure on the part of the Charity’s trustees to ensure that the Charity and its property were not used for criminal purposes.

The trustees failed to respond to the Inquiry’s question and requests for documents regarding the sermons delivered by the Imam; during the March 2018 meeting, Trustee A advised that he was not aware of what the Imam had said and that there had been no complaints made about him by those in attendance at the Mosque.

It is unclear whether the trustees were present for some or all of the Imam’s sermons between June – September 2017 which resulted in his conviction; irrespective of whether or not either or both of the trustees were present, the Inquiry found that the trustees failed to manage the Charity’s resources appropriately and that their failure to do so facilitated their use for terrorist purposes.

The Inquiry established that the size of the congregation worshipping at the Mosque was small – press reporting suggested that the daily prayers at the Mosque were attended by some 40 people.

Despite repeated requests for copies of safeguarding procedures and policies, including by direction under section 47 of the Act, none were provided.

The Inquiry also obtained a list of documents and records seized by the Police from the Charity’s premises; documents and records seized by the Police were minimal and did not include any policies or procedures relating to safeguarding or otherwise.

The Inquiry therefore concluded that no such policies or procedures existed. The Inquiry sought confirmation, given that both the Imam and Trustee A had contact with children, whether Disclosing and Barring Scheme (DBS) checks were completed; no confirmation was provided to the Inquiry.

Failing to undertake adequate checks for individuals in contact with children amounts to a failure to act in the best interests of the Charity and is misconduct and/or mismanagement in the administration of the Charity.

Both Trustee A and Trustee B failed to comply with Directions under section 47 of the Act and an Order under section 52 of the Act. Failure to do so is misconduct and/or mismanagement. Whilst the Charity was on the register, both Trustee A and Trustee B failed to comply with their duties to file the Charity’s statutory returns with the Commission; this is further evidence of misconduct and/or mismanagement and a breach of duty to comply with the Charity’s Declaration of Trust and the law.

The Commission obtained copies of the Charity’s bank statements prior to the opening of the Inquiry. Analysis of these identified that regular deposits were being made into the account of varying amounts with few withdrawals being made.

It is not possible to determine the total income of the Charity owing to the failure of its trustees to maintain and preserve accounting records in accordance with sections 130-131 of the Act and relevant provisions of the Charity’s Declaration of Trust.

For at least three of the years between January 2011 and October 2017 (the period for which the Commission obtained copy bank statements), the deposits into the Charity’s bank account put its annual income over £5,000 which is the threshold for registration with the Commission.

It is likely that the Charity’s income was greater than that deposited into its bank account; the Inquiry is aware that the Imam received a salary, however, there are no records relating to this or evidence that his salary was paid from the Charity’s bank account – either by cheque or bank transfer and therefore it is likely that it was paid from cash donations before the remainder was banked.

Conclusions

The Commission concluded that the Charity was mismanaged by Trustees A and B and that their failure to properly manage, administer and protect the Charity, and its resources, resulted in it being used to facilitate terrorism offences.

Additionally, both Trustees A and B failed to comply with a number of their legal duties and responsibilities including complying with Orders and Directions of the Commission, the duty to register with the Commission and maintain and preserve accounting records and to comply with the Charity’s Declaration of Trust.

Regulatory action taken

Various orders and directions were issued to obtain information in the form of copy documents and answers to questions. None of the Directions or Orders compelling Trustees A and B to answer questions and/or provide copy documents were complied with.

On 20 April 2018 the Inquiry exercised the Commission’s power under section 84A of the Act directing Trustees A and B not to take certain actions. Specifically, the Commission’s Order directed that the trustees must not directly, or indirectly, provide educational classes, including but not limited to, the provision of a madrassah or any recreational activities which constituted regulated activity with those under the age of 18.

Regulated activity is work which involves close and unsupervised contact with vulnerable groups including children. The full legal definition of regulated activity is set out in Schedule 4 of the Safeguarding Vulnerable Groups Act 2006, as amended by the Protection of Freedoms Act 2012 On 22 May 2018 the Inquiry exercised the Commission’s power under section 76(3)(d) of the Act to ‘freeze’ the Charity’s bank account; at that time the balance on the account was c£160,000.

On 5 July 2018, the Inquiry exercised the Commission’s powers under section 76(3)(a) of the Act to suspend both Trustee A and Trustee B as trustee, officer and/or agent of the Charity pending consideration of their removal. On the same day, the Inquiry also issued notice of the Commission’s intention to remove both Trustee A and Trustee B as trustee, officer and/or agent of the Charity.

The Commission is required to give one month notice of its intention to removal an individual by Order under section 79(4) of the Act. Both Trustee A and Trustee B were subsequently removed by Orders under section 79(4) of the Act on 6 August 2018.

Both Trustee A and Trustee B are now disqualified from acting as trustee of holding senior management function of any charity in England and Wales irrespective of whether it is registered with the Commission. It is an offence to act as a trustee whilst disqualified.

On 23 July the Inquiry was informed that, Trustee A and Trustee B appointed three new trustees to the Charity prior to their suspension. The Inquiry did not consider that these appointments took legal effect due to a technical failure to comply with a provision in the Charity’s Declaration of Trust and therefore had minimal interaction with them.

On 6 August 2018, the Inquiry exercised the Commission’s power under section 76(3)(g) of the Act to appoint Mr Jonathan Burchfield of Stone King LLP as Interim Manager (‘IM’) of the Charity – see the Interim Manager Appointment for more information. Once the IM confirmed that he had taken control of the Charity’s bank account the Inquiry discharged the Commission’s Order under section 76(3)(d) of the Act ‘freezing’ the Charity’s bank account.

The Police shared information with the Inquiry relating to the documents seized from the Charity’s premises; amongst the records seized was a paying in book for another bank account. The Inquiry issued directions to the bank in which the account was held to obtain additional information.

On 26 November 2018 the Inquiry exercised the Commission’s power under section 76(3)(d) of the Act to ‘freeze’ this account as, at that time, the Inquiry considered that the funds in the account were the property of the Charity or otherwise charitable.

The Inquiry also issued Directions under section 47 of the Act to the signatories to the account – which included Trustees A and B – seeking answers to questions and copy documents relating to the account and the purpose(s) on which any funds within it were held.

Following representations from the signatories, the Inquiry took no further action in respect of these funds on the basis that they were not charitable and discharged the Commission’s Order.

The Interim Manager appointment

On 6 August 2018, following a tender exercise, the Commission appointed Mr Jonathan Burchfield of Stone King LLP as IM of the Charity, to the exclusion of the Charity’s trustees.

The IM was appointed to manage and administer the Charity, to identify any and all assets and liabilities held by the Charity and to determine whether the Charity had a viable future. In the event that the IM determined that the Charity was not viable, he was to take action to dissolve the Charity and apply its remaining assets to other charities.

The costs of the IM’s appointment (August 2018 – February 2019) were met out of the Charity’s funds and are itemised as follows:-

• Interim Manager fees (including VAT) - £22,465
• disbursements (expenses, for example, travel, accommodation etc) - £445.70

The IM met with a representative of the family of Trustees A and B and one of the individuals the Inquiry was advised had been appointed as ‘trustee’ of the Charity in July 2018.

Ultimately, the IM determined that the Charity did not have a viable future and sought to identify other charities in the Stoke-on-Trent area with similar charitable objects to that of the Charity. Prior to the Charity’s dissolution grants totalling over £132,000 were made to 5 registered charities in the Stoke-on-Trent area.

The IM was discharged on 24 February 2019 following the Charity’s dissolution.

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.

Trustees are custodians of their charities. They are publicly accountable, and have a responsibility and duty of care to their charity which will include taking the necessary steps to safeguard their charity and its beneficiaries from harm of all kinds, including from terrorist abuse.

Trustees must therefore not engage in, or otherwise allow, conduct or activities which would lead a reasonable member of the public to conclude or infer that the charity or its trustees are associated with or otherwise support a proscribed organisation or terrorism generally. This includes allowing a charity’s premises to be used to facilitate or commit terrorist or other criminal offences.

Links between a charity and terrorist activity corrode public confidence in the integrity of charity. Links include, but are not limited to, fundraising, financial support or provision of facilities and formal or informal links to proscribed organisations or support of them.

Trustees are under a duty to act prudently and at all times to act exclusively in the best interests of their charity and to discharge their duties in accordance with their duty of care.

In consequence it is essential that charities engaged with children or vulnerable people (a) have adequate safeguarding policies and procedures which reflect both the law and best practice in this area, (b) ensure that trustees know what their responsibilities are and (c) ensure that these policies are fully implemented and followed at all times.

Trustees must therefore regularly review the steps that are taken to provide them with assurance on the fitness for purpose of their policies and the extent of compliance in the charity’s practice with those policies. Any failure by trustees to safeguard children or vulnerable adults and to manage risks to them adequately would be of serious regulatory concern to the Commission and it may consider this to be misconduct or mismanagement, or both, in the administration of the charity.

Charity trustees, employees, officers, agents or any other interested parties should cooperate with the Commission’s inquiry as requested. Obstruction of its investigation, for instance, by refusal or delay in providing information without good reason, or a lack of full and frank disclosure, may in itself be evidence of mismanagement in the administration of a charity.

It’s your responsibility to show that you’ve complied with the Commission’s requests: rather than for the Commission to prove you have not. So, if partial, inadequate or no responses at all are received, the Commission may have to conclude that you haven’t discharged your legal duties and/or use it as evidence of your collective failure, incapacity or unwillingness to do so.

The courts have made clear that they expect charity trustees to cooperate with the Commission irrespective of whether it uses its legal powers to request information.