Newham Charity Trustee Disqualified

Just one of the many dubious charities in the UK. Is it time for all charities (with turnover above 50K) to be run as limited companies with directors vetted before being appointed, also held personally liable for fraud? Surely, annual third party audited accounts should be submitted on time, every year, without fail and immediate action taken by HMRC, such as the freezing of accounts, when financial irregularities are reported or compliance rules breached? We also need a new regulatory regime which does more than check 10% of submitted accounts. Urgently.

Here’s the latest press update from the Charity Commission;

The Charity Commission has published the report of its second statutory inquiry into Newham Community Leisure Trust, finding “serious misconduct and/or mismanagement in the administration of the charity over a sustained period of time”. One trustee has been disqualified from acting as a trustee for 12 years after being found particularly responsible for the charity’s poor governance and management.

The inquiry found that conflicts of interest between the charity and a local football club, of which this trustee was chief executive and which used the ground owned by the charity, were not appropriately identified or managed. The trustees could not provide evidence that the arrangements between the charity and the club were in the charity’s best interests.

The charity received loans for the purposes of maintaining and developing the ground for over a decade, which indicates insufficient funding to undertake its activities over that period. Before entering liquidation in 2017, the charity had debts due to long term loans of over £200,000. Minutes of meetings where the trustees accepted loans do not show that the trustees considered whether the loans were in the charity’s best interests or how they would be repaid .

The charity was set up in 1992 to benefit the inhabitants of the London Borough of Newham with a sports centre and ancillary facilities. It previously leased the ‘Old Spotted Dog’ football ground in Forest Gate. The Commission held a previous inquiry into the charity, which concluded in 2003.

INVESTIGATED 20 YEARS AGO, NO ACTION TAKEN

The first inquiry found that little to no charitable activity was being undertaken, and highlighted the potential for unmanaged conflicts of interest as two trustees were also directors of the local football club. The Commission advised that the relationship between the two parties should be formalised and any transactions should be at arms length. The second inquiry has found that despite the advice given in the first inquiry, there was still no clear distinction between the charity and the football club.

The misconduct and/or mismanagement in the administration of the charity and the accrual of long-term debts led to the winding up of the charity. The charity was removed from the register in February 2023 as it no longer operates. The charity’s liquidation is ongoing.

Amy Spiller, Head of Investigations at the Commission, said:

The public rightly expects that trustees make decisions that are in the best interests of their charity and further its charitable aims. Where conflicts of interest are present, it is imperative that they are identified and managed so that the Commission and the public can be sure that the charity only pursues its aims.

The trustees of Newham Community Leisure Trust allowed the charity to accumulate debts for activities which they could not evidence as being in the charity’s best interests, and which led to its financial collapse.

It is right that one of the trustees has been disqualified from acting as a charity trustee or senior manager for a period of 12 years for their part in the mismanagement of Newham Community Leisure Trust.