Decision

Worldwide Ummah Aid (formerly a registered charity).

Published 16 April 2019

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

The Charity

The Charity was entered onto the Register of Charities (‘the register”) on 30 January 2012. It was governed by a trust deed dated 23 January 2012. The Charity was removed from the register pursuant to section 34(1) (b) of the Charities Act 2011 (“the Act”) on 22 March 2018, as it ceased to exist.

The Charity’s entry on the register of charities can be found on GOV.UK (‘the Register’).

The Charity’s objects were:

(i) To relieve poverty and sickness by the provision of goods/services which they could not otherwise afford through lack of means

(ii) The relief of financial need and suffering among victims of natural or other kinds of disaster in the form of money (or other means deemed suitable) for persons, bodies, organisations and/ or countries affected

(iii) Such other purposes as the trustees may from time to time determine that are for the public benefit and are charitable according to the laws of England and Wales

The Trustees

During the Charity Commission’s (’the Commission’) engagement with the Charity there have been a number of trustees:

• trustee A – for the period 30 January 2012 to 21 October 2014
• trustee B – for the period 30 January 2012 to 13 August 2015
• trustee C – for the period 30 January 2012 to 13 August 2015
• trustee D – for the period 15 September 2014 to January 2015
• trustee E – from 9 October 2014
• trustee F – from 18 December 2014
• trustee G – unknown

Background

On 18 August 2014, the Commission opened a Statutory Inquiry (‘the inquiry’), under section 46 of the Act, to investigate regulatory concerns arising from a cash seizure of charitable funds conducted by the Metropolitan Police (‘the Police’) under the Proceeds of Crime Act 2002 (‘POCA’).

The Police informed the Commission that on 10 March 2014, Trustee A was stopped at Heathrow Airport when he was on his way to board a flight to Istanbul, Turkey. Trustee A was accompanied by Trustee B.

Trustee A initially told the Police that the purpose of his travel was for tourism and he was carrying £3500 cash which was from an insurance claim. Trustee B who was spoken to separately and at the same told the Police that they were both travelling to Turkey on behalf of the Charity. As a result Trustee A then amended his account and admitted to carrying a further £10,000 in Charity funds raised from collections outside Regent’s Park Mosque, London. It was apparent that Trustee B had no knowledge of the amount of cash Trustee A had in his possession.

The Police had concerns about the sum of money and its provenance and decided to seize it. The Police applied to Westminster Magistrates Court for a Detention Order pursuant to section 295 of the POCA. On 17 October 2014 an application for forfeiture of the money seized was made by the Police which was unopposed by the Charity. The total amount of the Charity’s funds seized was £12,100.

Issues under Investigation

The scope of the inquiry was to:

• examine the transactions between the Charity and Trustee A, to determine whether he had obtained unauthorised trustee benefit in breach of trust
• the administration, governance and management of the Charity by the trustees with specific regard to their decision making and due diligence relating to partner organisations that the Charity work with or through and the use of cash couriers to transfer the Charity’s funds overseas
• the Charity’s financial controls and management to determine whether there were sufficient financial controls in place to manage any risk to the Charity’s assets
• whether or not the trustees had complied with and fulfilled their duties and responsibilities as trustees under Charity law

Following the seizure of the money, the Police carried out its own independent investigation.

The Commission’s regulatory concerns were in relation to the extent to which there may have been a breach of Charity law. The purpose of the inquiry was to investigate if and to what extent the seizure of the Charity’s funds resulted in, or was an indication of misconduct and/or mismanagement in the administration of the Charity and if there was a need to protect Charity property.

Misconduct includes any act (or failure to act) in the administration of the Charity which the person committing it knew (or ought to have known) was criminal, unlawful or improper.

Mismanagement includes any act (or failure to act) that may cause charitable resources to be misused or the people who benefit from the Charity to be put at risk.

The inquiry closed with the publication of this report.

Findings

Examine the transactions between the Charity and Trustee A to determine if he had obtained unauthorised trustee benefit in breach of trust

Trustees have a number of duties which are set out in the Commission’s guidance CC3: The Essential Trustee. A trustee must act only in the best interests of the Charity, and must not use their position of trust to further their own interests. Clause 15 of the Charity’s governing document states that no trustee can “receive remuneration, or receive any other financial benefit from the Charity without the prior written approval of the Commission”.

The Commission’s compliance toolkit, Chapter 4 holding, moving and receiving funds safely in the UK and internationally recommends:

“Payments in cash should be kept to a minimum due to the greater risk that handling cash presents, and difficulties that can arise in establishing clarity and control over significant cash transactions.

For more significant or regular amounts trustees need to be sure this is justified in particular or exceptional circumstances; and that consideration has been given to appropriate controls and the regulatory framework in the UK and elsewhere…

As to making payments in cash, given the safeguards that are already in place, charities should use the banking system where possible… If larger payments in cash need to be made, trustees need to be able to demonstrate that there are justifiable reasons for any decisions to make physical cash transfers, bearing in mind their legal duty to protect their Charity’s funds…

Trustees should be aware that in these circumstances, if any cash were lost to the Charity, then the Commission would have serious regulatory concerns about their conduct”.

The inquiry established that Trustee A was the sole signatory of the Charity’s bank account for transactions up to £15,000.

An analysis of the Charity’s bank statements for the period between 9 February 2012 and 11 September 2014 showed total payments of £327,793. The most significant and frequent transactions were cash withdrawals, which came to a total of £185,805 (57% of the Charity’s total income). Whilst the inquiry cannot prove who withdrew the cash, Trustee A was the only person authorised to do so.

The inquiry obtained details of the flights to Turkey taken by Trustee A, from the Police and the Charity’s records. The Inquiry analysed the Charity’s bank statements to identify cash withdrawals around the times of those flights. This showed that between August 2012 and March 2015 a total of £99,000 of the Charity’s funds were withdrawn from the bank in cash in the days immediately preceding the flights taken by Trustee A to Turkey .

It was not clear to the inquiry what the reasons were for the large cash transactions as Turkey has an established banking system and funds could have been transferred by electronic transfer. Trustees B and C said that they did not give Trustee A permission to withdraw and take cash abroad. However, their lack of supervision and failure to identify the large number of cash withdrawals being made from the Charity’s bank account is evidence of their lack of supervision over Trustee A.

The Charity’s records included documentation accounting for only £5,862 expenditure in Turkey. £5,000 of this was for money purportedly given for food aid, which was evidenced by a copy of a receipt generated by the Charity with details of where the money has gone to and who it was received by.

During a books and records inspection at the Charity’s premises on 25 November 2014, the inquiry analysed receipts and invoices which showed a lack of evidence of what the Charity’s funds were actually spent on, in addition to a number of cash withdrawals (amounting to £57,000) that were unaccounted for. Some receipts and invoices appeared to be for the personal expenditure, such as a TV, DVD player and a receipt for dental work carried out on Trustee A.

Whilst there was no evidence that those bills were in fact paid for by the Charity’, the trustees could not demonstrate that those bills were not paid in cash out of the Charity’s funds.

The inquiry found that the Charity was making loan repayments on a Mercedes car which was owned by Trustee A. Trustees B and C were unsure who the car belonged to but were in agreement that Trustee A should have the use of a car. They did not question the payments towards the loan and were unable to explain why such an expensive car was needed to carry out the Charity’s activities.

There was no formal agreement in place in respect of how costs for the running of this car were to be apportioned so as to reflect its use for Charity business and by Trustee A in a personal capacity.

The Charity’s financial controls and management to determine whether there are sufficient financial controls in place to manage any risk to the Charity’s assets, the use of cash couriers to transfer the Charity’s funds overseas and fundraising

Trustees must make decisions which are legally valid, which comply with the Charity’s governing document, Charity law and the law in general. Trustees have a collective responsibility to make sure that they exercise their discretion properly. They must avoid undertaking decisions that might place the Charity’s funds, assets or reputation at undue risk. They are responsible for ensuring that charitable funds are properly used, adequately protected and not misused.

The Charity should also have in place adequate financial controls, which the trustees have a responsibility to implement to manage the Charity’s funds.

As a direct result of Trustee A’s actions, a significant amount of the Charity’s funds were put at risk and were detained under POCA. Those funds could not be applied for charitable purpose The Commission took action to secure the return of funds that were forfeited and the funds were returned to the Charity on 29 July 2015. However, Trustee A had not complied with is duty to adequately safeguard Charity funds.

The inquiry met with Trustees B and C on 28 October 2014, who informed the inquiry that Trustee A was instrumental in setting up and managing the Charity, including dealing with the Charity’s banking activities, and they had little input in the day to day running of the Charity.

The banking responsibilities included depositing funds collected on behalf of the Charity and also being able to withdraw cash sums from the Charity’s bank account. For amounts under £15,000, the two trustees allowed Trustee A to act as the sole signatory. In addition to this, Trustee A opened a second Charity bank account for which he was the sole signatory.

This was in breach of Clause 8.17 of the Charity’s governing document:

“any bank account in which any part of the Trust Fund is deposited ….shall be signed by at least two Trustees, one of whom shall be [Trustee A] for as long as he is a trustee”.

This was an indication of poor financial controls and management. It was also an indication of misconduct and/or mismanagement as it was a breach of the governing document.

Neither Trustee B nor Trustee C were aware of the banking policies in place to deal with cash collections or the systems in place for counting the funds raised. People who assisted with the collections of cash were paid directly from the actual monies collected and this was a system implemented by Trustee A.

The Charity had arranged a number of events at various venues across the UK which were cancelled after the opening of the statutory inquiry. The Charity was unable to update the website to inform guests of the cancellations in a timely fashion, As a result of the cancellations the Charity had to pay a late cancellation fee to the Glasgow Marriott Hotel of £4,200. This gave further rise to concerns about protecting property and funds belonging to the Charity.

The inquiry found that collection tins had been purchased and distributed on behalf of the Charity and neither Trustee B nor Trustee C were aware of where they were placed, or how money was collected and banked. This form of fundraising was left entirely to Trustee A.

Trustees B and C did not give authority for Trustee A to take large amounts of cash out of the country. The inquiry found there was inadequate oversight or management of the Charity’s funds. The trustees did act collectively and did not undertake any checks to satisfy themselves that cash was not being withdrawn from the Charity’s account.

As previously stated, between August 2012 and March 2015 at least £99,000 of the Charity’s funds were spent with no evidence to account for how it was applied. Failure to maintain and preserve accounting records in respect of the Charity’s income and expenditure is evidence of failure on the part of the trustees to comply with the record keeping requirements in sections.130 and131 of the Act and clause 8.10 of the Charity’s governing document.

The administration, governance and management of the Charity by the trustees with specific regard to their decision making and due diligence relating to partner organisations that the Charity work with or personally taking cash abroad to transfer the Charity’s funds overseas

Trustees must ensure that the charitable funds are applied in furtherance of the Charity’s objects and they must have sufficient evidence to demonstrate that this is the case even when they work through overseas partners. This is particularly important when charitable funds are being applied or sent to a high risk area.

The inquiry reviewed the decision making processes of the Charity. Clause 8.16 of the Charity’s governing document enabled the trustees to:

“delegate to any one or more of the Trustees the transaction of any business or performance of any act required to be transacted or performed in the execution of the trusts of the Charity and which is within the professional or business competence of such trustee or trustees: Provided that the Trustees shall exercise reasonable supervision over any trustee or trustees acting on their behalf under this provision and shall ensure that all their acts and proceedings are fully and promptly reported to them”.

The clause clearly states that the power to delegate is subject to the trustees exercising reasonable supervision.

The Inquiry found that the Trustee A was a carrying cash abroad. The trustees did not consent to Trustee A couriering large sums of cash out of the country and there was therefore insufficient oversight of Trustee A’s actions. The inquiry also found that the Charity had no processes in place for the trustees to provide the required oversight and accepted what Trustee A told them without asking for any documentary evidence, in particular of work allegedly carried out overseas.

Trustees B and C relied on images that Trustee A posted on the Charity’s website as evidence of charitable activity/expenditure overseas. The inquiry obtained copies of the photographs used on the Charity’s website. The images on the Charity’s website included pictures that were in fact taken from other websites and at least one was posted online before the Charity even existed.

The inquiry concluded that based on this, certain charitable activity/expenditure overseas purported to be evidenced in the images could not have been funded by the Charity.

The Charity’s website mislead potential donors (and trustees B and C because it gave the impression that the photographs on it had been funded by the Charity. The fact that expenditure depicted in the pictures on the website could not have been funded by the Charity highlights that such records are not, in isolation, a sufficient form of evidence of expenditure and the other Trustees should have taken further steps to monitor the end use of funds.

There were also regulatory concerns in relation to the governance of the Charity. Clause 18.1 of the governing document states:

“The trustees shall hold at least two ordinary meetings each year at least one of which shall involve the physical presence of those trustees who attend the meeting. Other meetings may take such form as the trustees may from time to time by unanimous agreement decide”.

The inquiry found that Trustees A, B and C had never met collectively at a trustee meeting. Trustee A would meet with each trustee separately, make notes and then produce a document purporting to be minutes. These documents would then be signed by each trustee at a later date.

Effectively, these documents would then purport to show all three trustees had met and that each trustee had signed a record of the meeting, including the decisions purportedly agreed regarding expenditure.

The decision making process was not conducted in accordance with the Charity’s governing document.

Whether or not the trustees had complied with and fulfilled their duties and responsibilities as trustees under Charity law

The trustees are responsible for the management and administration of the Charity in accordance with the governing document and Charity law.

Trustees A, B and C’s failure to preserve and maintain accounting records in respect of the Charity’s income and expenditure, is evidence of failure on the part of the trustees to comply with sections 130-131 of the Act.

Trustees have a duty under section 35(3) (a) of the Act to “notify the Commission if…there is any change in its trusts or in the particulars of it entered in the register”, which requires the trustees to update the register to reflect any changes in the trusteeship. They are obliged to provide name, date of birth and contact addresses for all of the trustees.

When the inquiry opened, Trustee A was removed by Trustees B and C. They subsequently appointed 3 more trustees (D, E and F), rented a new office, purchased equipment for it and recruited two salaried staff.

The Register did not reflect this as the trustees had not provided the information to update the Commission. As far as the inquiry was aware, Trustee E was the only trustee remaining and the inquiry made numerous unsuccessful attempts to contact him to discuss the future of the Charity.

The inquiry later established that Trustee E had been abroad for a significant period and had only returned to the UK at the end of September 2015.

The inquiry was not aware that Trustee F and G had been appointed and only established this when we received a letter from one of the employees on 31 May 2015, that stated that there were three trustees, Trustee E who was away on holiday, Trustee F who never attended any meetings and Trustee G who only attended the office on one occasion.

The Inquiry met with Trustees E and G on 18 November 2015, Trustee E confirmed that he had resigned because of his business commitments. It was identified at the meeting that Trustee G had some difficulty understanding English. Trustee F did not attend, and neither of the trustees could confirm or provide his contact details. He had not attended any trustee meetings since his appointment.

When asked why they had not provided the Commission with their details they told the Commission that they “assumed the admin staff would notify us”.

Following this meeting, on 21 December 2015, Trustee E confirmed that the trustees had agreed to dissolve the Charity and that he would continue as a trustee to assist in the dissolution which would include settling all debts and liabilities of the Charity.

The inquiry continued to liaise with Trustee E until the closure of the inquiry.

Due to the language barrier identified for Trustee G, the Commission was assured that Trustee E would ensure Trustee G was fully aware of its correspondence.

Conclusions

The inquiry concluded that there was evidence of misconduct and/or mismanagement in the Charity’s administration by the trustees. This resulted in the Commission taking regulatory action against the trustees A B and C and this is set out in the section below.

There was evidence of poor financial management and governance in the Charity. The funds that were expended between August 2012 and March 2015 were not accounted for. There was no evidence to satisfactorily demonstrate how funds were applied to further to objects and purposes of the Charity.

Whilst the inquiry could not show conclusively that Trustee A had personally benefitted from the cash withdrawals, it found very little evidence of how those funds had been spent.

Trustees B and C allowed large sums of money to be withdrawn and taken in cash overseas by an individual trustee (Trustee A), with no due diligence or checks on the end use of the Charity’s funds, which exposed the Charity’s property to undue risk.

As a result the Commission removed trustees B and C from being trustees of the charity and by virtue of regulatory action in another statutory inquiry, Trustee A was automatically disqualified from acting as a trustee.

Regulatory action taken

The Commission took action to secure the return of funds that were forfeited under POCA in March 2013 and the total amount of £12,114.92 was returned to the Charity on 29 July 2015.

During the course of the inquiry the Commission exercised its powers under the Act.

On 10 and 15 September 2015, an Order under section 76(3) (d) was also issued to the bank not to part with any property held on behalf of the Charity without the approval of the Commission.

Following the seizure of the money at Heathrow Airport an Order under section 76(3) (a) of the Act was issued on 10 September 2015 to suspend Trustee A pending consideration to his removal as a trustee. This Order was revoked on 21 October 2015 when the remaining trustees, Trustee B and C, confirmed that they had terminated his appointment as a trustee.

Following his suspension, the inquiry was informed that Trustee A had established another Charity. That Charity has also been the subject of a statutory inquiry conducted by the Commission, during which the Commission exercised its powers to remove Trustee A from that Charity. This action automatically disqualifies him from acting as a trustee, officer, agent and employee of any Charity or holding a role as a senior manager.

On 4 December 2017 Trustee A appealed the Commission’s decision to remove him but the appeal was dismissed at a Charity Tribunal on 21 June 2018.

On 17 April 2015, in accordance with section 82 of the Act the Commission notified Trustee B and Trustee C of its intention to exercise its formal powers and remove them as trustees of the Charity. Both appealed the decision in accordance with the Commission’s Decision Review process.

The decision to remove was upheld and the review concluded that the decision was reasonable, proportionate and lawful. Trustees B and C were subsequently removed as trustees on 13 August 2015, which automatically disqualifies them from acting as a trustee, officer, agent and employee of a Charity or holding a role as a senior manager in any Charity.

It is a criminal offence under section 183 of the act for any person to act as a Charity trustee or trustee for a Charity while disqualified, and this carries a maximum sentence of two years imprisonment. Both trustees have been added to the Commission’s register of disqualified trustees.

The Commission took action to secure the return of funds that were forfeited under POCA and the funds were returned to the Charity on 29 July 2015

On 22 November 2015 the trustees submitted a dissolution form. The remaining charitable funds, £90,586.74, were transferred to another Charity, Kashmir Relief and Development Foundation (1114625). Following its dissolution the Charity was removed from the Register on 22 March 2018, pursuant to section 34(1) (b) of the Act, as it ceased to exist.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry and the Commission’s assessment of the issues raised publicly that may have relevance for other charities in the sector. 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.

Whatever the Charity’s activities, all Charity trustees are under legal duties to safeguard the Charity’s money and assets and to act prudently.

Trustees also have a duty to avoid undertaking activities that may place their funds, assets or reputation at undue risk. This means that when receiving, holding and moving funds, trustees need to ensure they take proper care to ensure the Charity’s money is held safely, not placed at undue risk and reaches the intended destination for the purposes intended.

There are particular requirements to declare cash to HMRC when leaving or entering the UK, currently above a threshold of 10,000 euros. Details of how to declare to HMRC are set out on GOV.UK.

The trustees of a Charity are collectively responsible for its proper management. 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 over-riding duty to take decisions that are in the best interests of the Charity.

Where financial duties are delegated, information needs to be provided to the trustees regularly to ensure effective monitoring of the Charity’s finances.

Trustees are required to keep accounting records for their Charity. 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 benefit of the public.