Share

Help! Our chief executive is charged with fraud

Help! Our chief executive is charged with fraud
Blogs

Help! Our chief executive is charged with fraud

Governance | 12 Jan 2011

A chief executive appears to have been involved in a major fraud case and the charity faces losing their leader. Lizzie Jones advises the board how to redeem the situation. 

Dear editor,

A week after I read the November postbag question in Governance, our board was faced with the possible sudden loss of our chief executive (CE) but for completely different reasons. On Monday, as chair of trustees I received a telephone call from another charity on which our CE serves as treasurer to say that the police had been called in to investigate major fraud at that charity and that it appears our CE is involved. Yesterday we heard that he has been charged but his wife assures me that he is blameless and that he will be able to prove his innocence. The chair of the other charity informs me that the evidence against our CE is very strong.

We have to act to minimise any potential damage to our charity (the press haven’t got hold of the story yet) but at the same time we feel we must also support our CE who surely is innocent until proven guilty? What should we do in this difficult situation?

Yours sincerely

A board in a nightmare situation

Dear board,

Finding out a person in a position of trust may not merit that trust is normally very shocking. In these circumstances, it is important to act quickly.

Below are the suggested key steps. The steps in sections 1-3 will be very urgent.

1. The charity and the fraud

Consider if any steps (such as suspension) need to be taken at this stage against the CE. Consult your HR consultants or an employment lawyer beforehand.

Conduct an internal investigation to assess whether there is any loss to your charity resulting from actions by the CE. You may need assistance from an accountant.

If the CE has defrauded your charity as well, take steps against the CE to recover losses. These steps may include negotiating with the CE or as a last resort pursuing the CE in the courts.

2. Dealing with regulators

Report this to the Charity Commission as a serious incident.

Notify HMRC of the possibility that the charity has been run by a person who is not a ‘fit and proper person’ and inform HMRC an investigation is underway. At a later stage it may be necessary to request that HMRC deem the charity met the ‘management condition’ throughout the period the CE worked at the charity, to ensure the charity’s tax status is not jeopardised.

3. Reputational risk

  • Have a PR strategy and press release that are regularly updated in case of media enquiries.
  • Develop a strategy for communicating with key stakeholders, as necessary.

4. Check your own policies and controls

  • Review HR policies to assess whether any improvements could be made to hiring policies – including in relation to the ‘fit and proper person’ test.
  • Annually review internal financial controls to check these comply with the Charity Commission’s recommendations.
  • Review whether the levels of authority delegated to the senior management team by the trustees are appropriate.

Yours sincerely

Lizzie Jones

Trustee, Share Community Solicitor, Farrer & Co

 

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Tesse Akpeki (55) Martin Farrell (46) Robert Ashton (38) Tania Mason (23) Andrew Chaggar (23) David Ainsworth (20) David Philpott (14) Making Good: The Future of the Voluntary Sector (13) Vibeka Mair (11) Ian Allsop (11)
Niki May Young (11) Dorothy Dalton (10) Kirsty Weakley (10) Leon Ward (10) Celina Ribeiro (9) Gordon Hunter (9) David Davison (8) John Tate (8) Neal Green (5) Jeremy Swain (5) Rowena Lewis (5) Andrew Hind CB (4) Daniel Phelan (4) Belinda Pratten (4) Suzi Leather (3) Stephen Lloyd (3) Pauline Broomhead (3) Rosie Chapman (3) Andrew Purkis (3) Ingrid Marson (3) Alexander Swallow (3) Alice Sharman (3) Sir Stuart Etherington (2) Adrian Beney (2) Joe Saxton (2) Jesper Christensen (2) Paul Gibson (2) Andrew Scadding (2) Anne Moynihan (2) Rosamund McCarthy (2) Kevin Carey (2) Garreth Spillane (2) June O'Sullivan (2) Dan Corry (2) Paul Emery (2) Simon Steeden (2) Andrew O'Brien (2) Lesley-Anne Alexander CBE (1) Victoria Cook (1) Claris D'cruz (1) Peter Gotham (1) Sir Thomas Hughes-Hallett (1) Justin Davis Smith (1) Kate Sayer (1) Alison McKenna (1) Paul Palmer (1) Anne-Marie Piper (1) Jo Swinhoe (1) Karl Wilding (1) Richard Williams (1) Mike Hudson (1) Sir Christopher Kelly (1) Martin Brookes (1) Simon Hebditch (1) Lindsay Driscoll (1) Jo Coleman (1) Cedric Frederick (1) Jonathan Lewis (1) Dame Mary Marsh (1) Jill Pitkeathley (1) Nick Brooks (1) Linda Laurance (1) Suzie Who (1) James Thompson (1) Stephen Hammersley (1) John May (1) Julian Blake (1) Malcolm Hurlston (1) Andy Gregg (1) Beth Yorath (1) Paul Amadi (1) Caroline Beaumont (1) Judith Davey (1) Diane Lightfoot (1) Douglas Rouse (1) Jackie Turpin (1) Lynda Thomas (1) Tom Flood (1) Dan Sutch (1) Jenni Cahill (1) Jonathan Crown (1) Ruchir Shah (1) Katy Wing (1) George Ames (1) Jenny North (1) Sir David Varney (1) Liam Barrington-Bush (1) Mairéad O'Reilly (1) Tobin Aldrich (1) Michael O'Toole (1) Lisa Clavering (1) Jamie Ward-Smith (1) Ian Joseph (1) Sarah Atkinson (1) Jonathan Bruck (1) Rachel Short (1) Dr Debra Beck (1) Andy Rich (1) Ian Leggett (1) Leigh Daynes (1) Tim Willis (1) Richard Caulfield (1) Emma Callagher (1)
Less +++ More +++

The long and unhappy saga of the Local Sustainability Fund

29 Jun 2015

Last week the government announced a £20m pot of funding for charities. This sounds like good news, says...

Government can't ask charities to compete for contracts while savaging council spending

15 Jun 2015

The government cannot tell charities they must compete for contracts in a market while slashing the spending...

'Northern Powerhouse'? Almost as clearly defined as the big society

4 Jun 2015

Ian Allsop talks tomatoes and why charities should look north for income growth opportunities under the...

Join the discussion

Twitter
 
Training

Attending our one day courses is a highly effective way of ensuring new and existing trustees fully understand their role, responsibilities and liabilities.

>> Find out more <<