Inquiry opened into charity that made almost £2m in loans to connected company

11 Aug 2021 News

The Charity Commission has opened a statutory inquiry into a charity, after finding it had sent four loans to a connected company totalling over £1.7m.

The MB Foundation, also known as the Mossad Horav Aryeh Halevy, lists its activities as providing financial support to help relieve sickness and poverty.

Data on the Commission website for the financial year ending 31 March 2020 puts its total income at £941,235 and total expenditure at £884,222.

The charity accounts report that it received £334,847 in donations during the year and £866,996 was paid out by way of grants and support costs. 

The free reserves stand at more than £2.5m.

The MB Foundation was previously part of the Commission’s “double defaulters” inquiry for failing to submit annual accounts for the financial years ending 31 March 2014 and 31 March 2015. 

Concerns around the handling of conflicts of interest

Subsequent scrutiny of the accounts and information received from the trustees raised several concerns about the charity’s governance, “in particular, the trustees’ handling of conflicts of interest”.

All the trustees are brothers and carried out several transactions with companies and individuals directly connected to the trustees or the trustees’ family members.  

This included a total of four loans to a connected company totalling over £1.7m.

“The trustees have so far failed to provide the Commission with any formal documentation in relation to these loans,” a statement from the regulator says.

It added: “Furthermore, the trustees did not provide information to demonstrate they had adequately identified or managed conflicts of interest.” 

The accounts show that during the year the charity received aggregate donations totalling £292,593 from trustees and related parties. 

Included in other debtors is £581,891 due from a brother of one of the trustees at the charity.  

“This loan is interest-free and repayable on demand,” the accounts say.

The inquiry will focus on a number of areas, including the trustees’ decision making regarding loans and investments and whether there has been any unauthorised or indirect private benefit.

There is no contact email for the charity listed on the Commission website.

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