The Charity Commission has launched a statutory inquiry into two independent school charities and appointed interim managers to take over their running, as well as issuing orders on their bank accounts.
It has opened inquiries into The Martin Foundation and the Collegiate Charitable Foundation, which have the same trustees.
The regulator has said that there were serious regulatory concerns relating to the running of the charities, including conflict of interest concerns and potential unauthorised trustee benefit.
It opened the inquiries into both independent school charities in January 2018, the Commission announced today. The interim managers were appointed, to the exclusion of the current trustees, on 13 August 2018.
The regulator said it engaged with the two charities after receiving a complaint from the public and after receiving information from other regulators in respect of a number of regulatory concerns.
There have been a number of controversies surrounding Queen Ethelburga's Collegiate in recent years.
‘Ongoing serious regulatory issues’
The Commission said: “Our engagement established that there were clear and ongoing serious regulatory issues relating to the administration of the charities by the trustees. These included the management of conflicts of interest, protecting and properly accounting for the charities’ assets, and potential unauthorised trustee benefit.”
The charities say that they provide bursaries to enable students to attend independent primary and secondary schools, and provide advertising, facilities and equipment for the schools, as well as assist the local community. The Martin Foundation is not currently carrying out any activity, with the Charity Commission’s register showing it had no income nor expenditure in the year ending August 2017.
The Collegiate Charitable Foundation financially supports Queen Ethelburga's College, which has been at the centre of numerous controversies. The contact details of the Foundation on the Charity Commission’s website go direct to the College’s website.
In a statement, the trustees said: “The Trustees are surprised and disappointed by the actions of the Charity Commission. The Commission appears to have acted disproportionately and without regard to the reputational damage which may be caused by their action or the possibility of working cooperatively with the Trustees. The Trustees have always dealt openly and constructively with inquiries from the Charity Commission and would hope to continue to engage in this way going forward.
"All expenditure by The Collegiate Charitable Foundation is directly in pursuit and accordance with its charitable objectives. The Martin Foundation has been inactive since January 2016 but equally all expenditure is demonstrably in line with its charitable objectives. The Trustees are confident that both charities operate appropriately and remain willing and ready to address concerns raised by the Charity Commission.”
Extent of inquiry
The inquiry is examining:
- The extent to which potential conflicts of interest and connected party transactions have been properly managed
- The extent to which there has been any unauthorised trustee benefit
- Whether the charities operated for exclusively charitable purposes
The regulator said that “due to the seriousness of its regulatory concerns” it had appointed Geoff Carton-Kelly and Tom McLennan of FRP Advisory as joint interim managers of the charities.
It said that the interim managers are appointed with “all the powers and duties of trustees and will act to the exclusion of the current charity trustees”. These are temporary appointments and will be reviewed on a regular basis in line with normal procedures.
The regulator said that in “order to protect the assets of the charities, the Commission has issued orders to the trustees and the charities’ bank under section 76(3) of the Charities Act 2011”. It said these are temporary orders and will be reviewed on a regular basis in line with normal procedures.
Brian Martin, former chair of governors at Queen Ethelburga's College, was cleared of a series of sexual offences against its pupils and other teenagers in July of this year. He was found not guilty of 21 offences. Prosecutors said they would be seeking a retrial on two counts of indecent assault and one of sexual assault.
Martin was replaced by his daughter Amy Martin as chair of governors in 2015. The Charity Commission website states that she is still a trustee of both The Collegiate Charitable Foundation and The Martin Foundation.
Related party transactions included on the Collegiate Charitable Foundation’s latest annual accounts include rents received from Queen Ethelburga’s Collge Limited of £2.7m, and rent of £3.2m from Faculty of Queen Ethelburga’s Ltd, it also received £10,573, down from £1.2m the year before, from the Martin Foundation.
In 2018, a former teacher at Queen Ethelburga's School was banned for life from teaching after having a sexual relationship with a pupil. Dr Howard Britton had taught at the school between 2001 and 2005, and started a sexual relationship with the pupil on the final day of her school exams.
The Guardian reported in 2016 that part of millions of dollars stolen in Moscow in one of the highest profile frauds in Russian history was spent at Queen Ethelburga’s college. It said that £14,350 was paid to the school in 2012, a similar figure to the school’s fees, but that it was unclear whose tuition was being paid for.
The Guardian also reported last year that in 2014 £29,800 was transferred to the school, with the money reportedly connected to the Azerbaijani Laundromat scandal, in which the Azerbaijani government is supposedly involved.