Regulator opens inquiry into charity which made £900,000 in unsecured loans

27 Sep 2021 News

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Civil Society Media

The Charity Commission has opened a statutory inquiry into Citygate Christian Outreach Centre, over concerns about its financial conduct.

The charity runs the Citygate Church in Beckenham, south London. 

The regulator will look at payments and other financial benefits received by trustees and other people connected to the charity, including the decision to give one individual almost £900,000 in unsecured loans.

Independent auditors believe that the loan “may cast significant doubt” on the charity’s ability to continue its work, according to the 2019-20 accounts.

The Commission inquiry will also look at whether the charity has faced financial losses, any potential conflicts of interest, whether trustees have enjoyed unauthorised private benefit, and whether the board has met its legal responsibilities.

A series of unsecured loans

Citygate Christian Outreach Centre has already been subject to a joint inquiry this year, as one of several charities which failed to file its accounts on time for two years in a row.

The accounts for 2019-20, which were eventually sent to the Commission 113 days late, show that trustees have agreed a series of personal loans since 2019 worth a total of £875,450, made to an unnamed individual so that “he may build a home for disabled children” in the United Arab Emirates.

Accounts for the previous year list the recipient as Stephen Flint.

Most of that money was transferred via two of the charity’s three trustees, the accounts say, and some was given to him directly.

The loans bear 10% annual interest and should be repaid within two months of being given notice. However, the auditors note that they were “advanced without being secured on any assets owned by the individual. There is some doubt as to whether the funds can be extracted from the United Arab Emirates or that the individual is in a position to repay these funds from assets available in the UK”.

The accounts warn that trustees may have to “make full provision for loss on these funds in the account”. The board told auditors that they believe the money can be recovered but the accounts say that trustees have “been unable to provide any evidence that this is the case”.

‘Material uncertainty’ to charity's future

They conclude that “a material uncertainty exists that may cast significant doubt on the group's or the parent charitable company's ability to continue as a going concern”.

Citygate Christian Outreach Centre had an income of £1.37m in 2019-20, with expenditure of just over £1m, although these figures assume that the loans can be recovered.

The charity did not respond to a request for comment.

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