The Charity Commission has accused two trustees of misconduct and mismanagement for using charity money – including a £3m donation – to fund a hotel business.
An inquiry report published yesterday said the former trustees of health charity Odyssey Tendercare Limited breached conflict of interest guidelines and "had no understanding of what a conflict of interest was or its impact on decision making".
The regulator said it was forced to investigate the trustees’ “decision making and the complex legal structures they created to run the charity" – which consisted of two trading subsidiaries, including the hotel business and a social enterprise.
The report found that while the charity provided some valuable services to people with cancer “the primary focus of the trustees was running and maintaining the hotel business”.
“The charity’s income, including a donation of around £3m, was used to fund the hotel business with little to no return to the charity. The structure chosen by the founding trustees to fund and manage the charity was not a viable business model,” the report said.
But the regulator did not remove the trustees from their posts as it would have left the charity with no trustees.
“Finding new trustees was unlikely and there were insufficient funds in the charity to appoint an interim manager,” the report said.
The charity has since gone into liquidation and the trustees have been banned from taking on any further trustee positions.
Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said the trustees had “failed in their duties”.
“Not only did they fail to make decisions in the charity’s best interests, they also acted at times without the knowledge of other trustees and in breach of directions from the commission,” she said.
“The two trustees were also less than open and transparent in their dealings with us,” she said.
Russell said it was a “complex inquiry, involving other agencies and varying levels of cooperation from the trustees”.
“Various orders against the trustees in the inquiry were not complied with. The inquiry’s initial approach was to work consensually with the trustees to try and put the charity back on a secure footing, but later changed its approach and sought to petition for the charity to be wound up, all of which resulted in an unusually long running case.”
The report concludes a six year inquiry into the charity which was opened in 2009.
But Russell said the inquiry would be “much quicker” under the Commission’s “current, more robust regulatory approach” which favours “decisive regulatory action”.
“The case highlights the importance of a more effective power for the Commission itself to direct the winding up of a charity, which we have asked for in the Protection of Charities and Social Investment Bill, currently in Parliament,” she said.
