Decision

Deen Team

Published 21 December 2017

This decision was withdrawn on 20 December 2019

This inquiry report has been archived because it is over 2 years old.

Applies to England and Wales

A statement of the results of an inquiry into Deen Team (registered charity number 1155560).

The charity

Deen Team (‘the charity’) was entered onto the Register of Charities (‘the register’) on 30 January 2014. It was governed by a Trust Deed dated 27 January 2014. On 10 October 2017 the charity was removed from the register, pursuant to section 34(1)(b) of the Charities Act 2011 (‘the act’), as it was no longer operating.

The charity’s objects are:

• the relief of poverty for the public benefit in the United Kingdom, in particular but not exclusively by establishing and maintaining projects that will aid and support homeless people and single parents

• to advance in life and help young people through:

  a) the provision of recreational and leisure time activities provided in the interest of social welfare, designed to improve their conditions of life

  b) providing support and activities which develop their skills, capacities and capabilities to enable them to participate in society as mature and responsible individuals

• 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

The trustees

During its engagement with the charity there have been a number of trustees. These are:

• trustee A, Miss Tabbasam Mustafa, for the period 30 January 2014 to 6 September 2017

• trustee B, for the period 30 January 2014 to 20 December 2014

• trustee C, for the period 30 January 2014 to 20 December 2014

• trustee D, from 14 October 2014

• trustee E, for the period to 20 December 2014 to 28 June 2016

Trustees have ultimate responsibility for directing the affairs of a charity, and ensuring that it is solvent, well-run, and delivering the charitable outcomes for the benefit of the public for which it has been set up. The commission’s guidance The essential trustee: what you need to know, what you need to do (CC3) explains that as part of their core duties trustee must:

• act in the charity’s best interests

• apply the charity’s income and property only for the purposes set out in the governing document

• ensure that the charity does not breach any of the requirements or rules set out in its governing document and that it remains true to the charitable purposes and objects set out there

• comply with the requirements of other legislation and other regulations (if any) which govern the activities of the charity

• use reasonable care and skill, making use of their skills and experience and taking advice when necessary

Issues under Investigation

Initial case

Following the registration of the charity in January 2014, the charity was proactively identified for a visit by the Charity Commission (‘the commission’) because it stated that it was involved in programmes of work delivering aid overseas, including Syria, a high risk country. Charities which operate internationally can be more vulnerable to abuse or harm as a result of where and how they operate. As a newly registered charity, the commission sought to ensure that the charity’s trustees understood their legal duties and responsibilities and that they were discharging them.

Two of the charity’s trustees, Trustee A and Trustee B, had also been trustees for another charity where the commission had identified regulatory concerns (these are currently subject to an ongoing statutory inquiry).

The commission was also aware that the charity had provided a platform for public speaking to an individual about whom there are various media reports suggesting that they may have expressed controversial or extremist views. The commission sought to examine how the charity managed any associated risks from providing speakers with such a platform.

On 15 July 2014, the commission undertook a monitoring visit (‘the visit’) at the charity’s premises. The visit was attended by Trustees A, B and C.

Following the visit, and a review of the charity’s records, the commission identified regulatory concerns relating to the charity’s financial controls, due diligence and governance. Consequently, regulatory advice and guidance was given by the commission on 6 December 2014 in respect of:

• participation in aid convoys to Syria

• documenting the charity’s activities in the UK

• due diligence and monitoring

• risk management

• documenting a formal policy relating to monitoring the charity’s website and social media sites

• documenting of a formal finance policy including considerations relating to financial controls, donations policy and fundraising policy

• governance considerations

The trustees were made aware that the commission would re-engage with them in the future to ensure the trustees were acting on the regulatory advice and guidance issued in order to improve the administration of the charity and demonstrate that the trustees were and continued to comply with their legal duties and responsibilities.

Following the issuing of the above advice and guidance, on 20 December 2014 Trustees B and C resigned. Consequently, Trustee A was the only trustee who remained in post who had met with the commission in July 2014 and received regulatory advice and guidance issued in December 2014.

Follow-up case

On 30 October 2015, the commission sent an email to the trustees to arrange a follow up visit to the charity in order to assess its compliance with the advice and guidance issued in December 2014. At that time the trustees were in default of their legal obligation to submit the charity’s accounts and annual returns to the commission and this was clearly shown on its entry on the register.

Between 30 October 2015 and 26 May 2016 the commission corresponded with one of the charity’s trustees, Trustee A, and other individuals on her behalf, a total of eight times. The commission arranged follow up visits on two occasions, and each was cancelled by Trustee A at short notice, citing health reasons for the cancellations.

During this period the commission received further information from Trustee A, Trustee D and Trustee E and as a result of that information the commission identified the following additional regulatory concerns:

• the financial management of the charity by the trustees, including that the charity had not had a bank account since 9 February 2015

• apparent poor governance including that the charity has been operating outside of its governing document (‘GD’) as the trustees had not been holding trustee meetings

• the risk to the charity’s property as a result of inadequate financial controls and governance

On 30 June 2016, as a result of those concerns, a statutory inquiry (‘the inquiry’) into the charity was opened under section 46 of the act.

The scope of the inquiry was to examine a number of issues including:

• the administration, governance and management of the charity by the trustees

• the financial controls and management of the charity, and

• the conduct of the trustees, and

• whether or not the trustees have complied with and fulfilled their duties and responsibilities as trustees under charity law

Following the opening of the inquiry, the inquiry exercised its legal powers and made a number of orders and directions, using powers under various sections of the act. Further information is provided under ‘regulatory action taken’.

The inquiry was closed on 21 December 2017 with the publication of this report.

Findings

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

The charity’s trustees are jointly and severally responsible for its management and administration.

On 30 March 2016 the commission served an order under section 52 of the act requiring the trustees to provide information and two of the trustees (Trustee D and Trustee E) replied informing the commission that they had previously resigned from their positions as trustees by telling Trustee A of their resignations. This information had not been updated on the register.

Clause 9(1) of the charity’s governing document stated:

“There must be at least 3 trustees”,

and clause 17(1) of the governing document stated:

“Subject to the following provision of this clause, no business shall be conducted at a meeting of the trustees unless at least one-third of the total number of trustees at the time, or two trustees (whichever is the greater) are present throughout the meeting”.

It was therefore not possible for the charity to have fewer than two trustees, so the commission only accepted the first resignation (Trustee E), and determined that Trustee D remained a trustee in order for the charity to meet its quorum.

Clause 13 of the charity’s governing document required the trustees to hold at least two ordinary meetings each year. Charity trustees have a duty to comply with the charity’s governing document and information provided by Trustees D and E evidences that the trustees had not complied with the charity’s governing document in this regard. This is a breach of duty and misconduct/ mismanagement in the administration of the charity by Trustees A, D and E.

On 13 January 2017 the commission received an email from an unknown individual attaching what appeared to be accounts for the charity for the period 1 January 2014 to 31 December 2014. These accounts stated that the charity’s income for that period was £24,798.01. However, the commission’s analysis of the charity’s bank account between 14 January 2014 and 22 October 2014 shows an income of £46,995.01. If these accounts were submitted in an effort to comply with the trustees’ legal duties they were not compliant as they are inaccurate.

The financial controls and management of the charity

Charity trustees must apply their charity’s funds and assets only in furtherance of the charity’s purposes. In practice, this means that to meet their legal duty to protect charity assets with the necessary care they must avoid undertaking activities that might place the charity’s funds, assets or reputation at undue risk.

Throughout the inquiry the commission had attempted to obtain evidence, from the trustees, of the end use of the charity’s funds, however they have failed to provide complete records. The trustees were under a legal duty to maintain these records and provide them to the commission, in line with their duties under sections 130-131 of the act.

Section 130 of the act states:

“ (1) The charity trustees of a charity must ensure that accounting records are kept in respect of the charity which are sufficient to show and explain all the charity’s transactions, and which are such as to -

(a) disclose at any time, with reasonable accuracy, the financial position of the charity at that time, and

(b) enable the trustees to ensure that, where any statements of accounts are prepared by them under section 132(1), those statements of accounts comply with the requirements of regulations under section 132(1).

(2) The accounting records must in particular contain -

(a) entries showing from day to day all sums of money received and expended by the charity, and the matters in respect of which the receipt and expenditure takes place, and

(b) a record of the assets and liabilities of the charity.”

From the charity’s bank statement, the inquiry was able to identify that between 27 August 2014 and 30 January 2015 several payments had been made to a private company (‘company A’).

As the trustees were unable to provide evidence of the expenditure to the inquiry, on 7 November 2016 the commission contacted company A to verify that payments made to it were for charitable purposes.

Company A complied with the commission’s legal direction and provided records relating to £26,135.84; based on this information the inquiry was satisfied that these funds were expended on activities which furthered the charity’s stated objects.

However, the inquiry found that the trustees had not maintained and preserved accounting records relating to the charity’s income and expenditure and this was a breach of duty and misconduct and/or mismanagement in the administration of the charity.

The commission identified £2,000 of charitable funds being paid directly (in two separate £1,000 cheques on 6 May 2014 and 30 December 2014) to Trustee A. Trustee A stated that these funds were to cover costs she had incurred on buckets, bibs, hoodies, Facebook advertising and other administrative costs associated with the charity, however she was unable to produce any evidence of these costs being incurred or of their ultimate end use.

Trustees have a legal duty to account for how they have used their charity’s funds and this failure to provide evidence of this expenditure is a breach of this duty and misconduct and/or mismanagement in the administration of the charity.

The charity previously leased premises (‘the premises’) from another charity (‘the landlord charity’). This lease was a valuable asset of the charity as it entitled them to use large premises for a peppercorn rent (£1 per month).

The lease had been signed by Trustee B, in their capacity as a trustee of the charity, on 9 December 2013. Trustee B ceased to be a trustee of the charity on 20 December 2014.

The inquiry established that the charity used these premises and in fact the trustees met with the commission at those premises on 15 July 2014. The commission understands that Trustee B has at all times had in their possession the keys to the premises.

The inquiry corresponded with the landlord charity between July 2016 and November 2016 and, from that information, gathered that Trustee B was using the premises for their own purposes. At Trustee B’s request, the landlord charity had assigned the premises to a separate company run by Trustee B. The landlord charity has confirmed to the inquiry that it considered the company was a not for profit organisation.

In an email to the commission in October 2016 Trustee A stated that “We the trustees [Trustee A] and [Trustee D] have never had a lease with [the landlord charity]. It has been such a long time since I/we have visited the premises that we cannot remember the date. There are no items that belong to the charity at the premises or anywhere else. We have not given consent to anyone to access the premises.”

This clearly indicates that the charity had, at some point, used the premises and the commission would therefore expect all charity trustees to know the legal basis upon which the charity occupied its premises. Trustee A’s failure to understand the terms on which the charity had occupied the premises meant that she did not realise this was a valuable asset and thereby contributed to its loss from the charity.

Trustee B was in possession of the premises and began to use it for his own purposes without the consent of the charity’s trustees or the landlord. If Trustee B had sourced alternative premises on the open market this is likely to have had a cost implication, and therefore Trustee B’s actions caused a loss to the charity and a gain to themselves.

The trustees did not act in the best interests of the charity in respect of the premises. Trustee A was a trustee of the charity at the commencement of the lease and she should have been aware of it, and its value to the charity, and her failure to protect this charitable asset from the conduct of the former trustee is misconduct and/or mismanagement in the administration of the charity.

The conduct of the trustees

Trustees D and E both informed the commission that they had limited information and knowledge about the management of the charity and have had little to no involvement in the charity, its activities and management. Trustees D and E stated that they deferred all decision making to Trustee A, and it is clear from their responses to the commission that they were unaware of their legal duties as trustees.

Trustees are jointly and severally responsible for the management of their charity and must not leave all the management, control and decision making to one of their number. This lack of knowledge and involvement by trustees D and E is a breach of duty and misconduct and/or mismanagement on their parts.

Trustee A failed to comply with the commission as the regulator by not responding (fully or in part) to its directions and orders requiring the production of answers to questions and copy documents. These included:

• complete failure to comply with an Order issued under section 52 of the act dated 30 March 2016

• complete failure to comply with an Order issued under section 52 of the act dated 26 May 2016

• complete failure to comply with a Direction issued under section 47 of the act dated 1 July 2016

• partial failure to comply with a Direction issued under section 47 of the act dated 4 January 2017

• complete failure to comply with a direction issued under section 47 of the act dated 2 February 2017

Trustees are expected to cooperate with the commission and its requests for information. Failure to comply with directions and orders is misconduct and/or mismanagement on Trustee A’s part.

Additionally, the trustees informed the commission that the charity had ceased to operate, however they had not dissolved the charity in accordance with its governing document. As the trustees had informed the commission that it no longer operated the commission has removed the charity from the register.

As a result, the inquiry found that the trustees had not complied with or fulfilled their duties as trustees under charity law.

Conclusions

The inquiry concluded that there was evidence of poor financial management and governance in the charity. There was evidence of misconduct and/or mismanagement in the charity’s administration by the trustees, on Trustee D and E’s parts by being unaware of their legal duties as trustees, and on Trustee A’s part by failing to comply with her legal duties as a trustee. In particular the trustees:

• did not keep sufficient accounting records to explain the charity’s transactions and activities

• did not submit accounts and annual returns to the commission as required by their governing document and the act

• failed to comply with the terms of the charity’s governing document in respect of holding trustee meetings and keeping accounting records

• did not properly discharge their legal duties as trustees under charity law – they failed to act in the best interests of the charity or with reasonable care and skill

Additionally, Trustee A:

• did not follow the regulatory advice and guidance provided by the commission during, and following, its visit in July 2014

• received £2,000 of charitable funds but was unable to evidence this expenditure

• did not cooperate with the commission during the course of the inquiry

Regulatory Action Taken

Prior to opening the inquiry, the commission issued orders under section 52 of the act to obtain copies of the charity’s bank statements. When the inquiry had been opened the commission used its powers under section 47(2)(a) and (b) of the act to direct the recipients to provide information and documents.

On 14 February 2017, the commission issued an order directing the charity’s independent examiner to comply with previous section 47 direction dated 26 January 2017. This was not complied with and the commission has had no further communication from the charity’s independent examiner.

On 19 June 2017 the commission notified Trustee A that it intended to disqualify her from acting as a trustee of a charity or being a charity trustee, or holding a senior management position within a charity, for four years pursuant to section 181A of the act. The commission was satisfied that the relevant criteria was met, namely:

i) that one of the seven conditions for disqualification, as set out in section 181A of the act, was met. Trustee A was a trustee of the charity at a time when there was misconduct or mismanagement in the administration of the charity, and she was responsible for the misconduct or mismanagement

ii) trustee A is unfit to be a charity trustee and/or trustee for any and all charities generally

iii) it is desirable and in the public interest to make a disqualification order to protect public trust and confidence in charities generally.

The disqualification was the result of Trustee A’s misconduct and mismanagement, as outlined above. On 6 September 2017 the disqualification came into effect, and the commission issued an Order under section 79A of the act to remove Trustee A from her position as a trustee of the charity. This was because the disqualification of Trustee A did not remove her as a trustee of the charity. Trustee A did not resign and there was no provision in the charity’s GD which meant that she would cease to be a trustee of the charity.

The commission considered taking regulatory action against the other trustees and former trustees, however it considered that there were distinguishing factors in Trustee A’s conduct. Relevant factors included the longer period of trusteeship (which covered the advice and guidance given to the charity in 2014), lack of cooperation with the commission, the lack of control exercised over the premises (an asset of the charity first obtained when she was a trustee) and her inability to evidence the charitable end use of funds paid to her.

It is a criminal offence under 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. Trustee A has been added to the commission’s register of disqualified trustees.

On 10 October 2017 the commission removed the charity from the register, under section 34 of the act, as it considered, based on information provided by the trustees and information obtained during the inquiry that the charity was no longer operating.

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.

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.

Further guidance about the obligations and responsibilities of trustees can be found in the The Essential Trustee: What you need to know (CC3).

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.

All registered charities are required by law to provide annual returns and accounts to the commission and to keep their information on the public register up to date. The duty to file annual accounts and the Trustees’ Annual Report with the commission applies to all registered charities whose gross income exceeds £25,000 per year. The way in which each charity must maintain, prepare and report its annual accounts depends on its income and expenditure, gross assets and constitution. Further information about the accounting and filing requirements can be found on the commission’s website.

The courts have held that charity trustees have a duty to cooperate with the commission. Whether they do so or not is a relevant factor in assessing whether misconduct or mismanagement has occurred in the administration of a charity. The level of cooperation the commission receives from charity trustees may be a relevant factor in the commission’s consideration of whether regulatory action is proportionate. This is particularly relevant where the commission has opened a statutory inquiry.