Charity Business founder and CEO Mark Freeman was sacked by the board of the parent company in October following an auditors’ investigation into alleged financial irregularities, and has since lodged a claim for unfair dismissal.

Freeman filed the claim with Bristol Employment Tribunal on 22 December against the parent company CBusiness Holdings, which has since filed for creditors’ voluntary liquidation.

Bristol Employment Tribunal confirmed today that the hearing is scheduled to go ahead on 10 April.

In the claim, seen exclusively by civilsociety.co.uk, Freeman said the allegations made against him by two senior managers were never proved in the subsequent investigation; that the reason for the dismissal is unclear and that no proper dismissal process was followed.

But the investigation report from accountants Haines Watts, also seen by civilsociety.co.uk, contains evidence of missed VAT payments, early raising of invoices apparently to beat the VAT rise, and a failure to have a policy in place to keep all client monies separate from company funds, as good practice recommends.

It also details a transfer of £10,000 from a client account into the Charity Business company account and back again two days later, apparently to cover a cashflow shortfall.

The report was commissioned by the board of CBusiness Holdings, which comprised at the time chair Bruce Keith, Steve Round – who is also chair of the Big Issue Foundation – Freeman, and Freeman’s wife Val Austin.

However, the report does emphasise that in general, client money was paid out on a timely basis as agreed, that there was no actual loss to clients, and there was “no evidence of systematic misuse of client funds”.  Click here to read a fuller summary of the Haines Watts report.

Claim for compensation

In Freeman’s claim for unfair dismissal, he claims for lost salary, pension contributions, medical and other expenses, holiday pay and professional fees totalling £82,840.50. His annual salary at CBusiness Holdings was £67,500, he stated, and he worked 60 hours a week.

In the section regarding whether or not he has since secured another job, Freeman put “Yes” and explained: “Setting up my own consultancy business January 2012 though initial fees are not expected to be received until March 2012.”  He said he expected to earn £1,000 a month from this work.

A new website for Mark Freeman and Associates has now launched, offering management consultancy, investment consulting, change management and collaboration. 

Charity Business clients not told about dismissal

Charity Business clients contacted by civilsociety.co.uk were never told that Freeman had been dismissed.  In mid-November the company sent an email to customers advising them that he was stepping down from the CEO position because of ill health.  The email said: “As you may be aware, Mark Freeman, chief executive at Charity Business, has been off work for a protracted period of time whilst recovering from an illness. We would like to take this opportunity to update you on this situation.
 
“As a result of Mark’s illness he has decided, in consultation with the board of directors, to reduce his operational activities at Charity Business and is stepping down from his role as CEO, which will allow him to spend more time with his family.  Mark will continue to work closely with the business and concentrate on our investment advisory and collaborative consultancy services.”

Freeman responds

Invited to comment on the revelations, Freeman issued a statement that said: “As a director of Charity Business for 12 years until October 2011 I was sorry to hear that it had ceased trading.  My current venture has no connection to outsourcing activities.

“The board was aware that in respect of the VAT the business had a HMRC ruling as to how to operate under a shared services environment.  This would have allowed the sector to benefit from the European ruling and Charity Business was in the process of implementing that framework throughout 2011.

“In respect of the client funds the business was not required to be regulated and the funds were never at risk as set out in the report.

“The claim for unfair dismissal was not defended by Charity Business and the Tribunal is now rendering a summary judgement against the company.”