A Christian charity that transferred funds to a bakery that a trustee was a stakeholder of and accrued £1.2m of debt “repeatedly failed” in terms of its management, the Charity Commission has found.
In an inquiry report published yesterday, the regulator revealed that the trustees of Bethel United Church of Jesus Christ Apostolic UK were responsible for mismanagement of the charity following a number of regulatory failings.
The Commission found that the charity had loaned some £27,000 to a Birmingham-based bakery that a trustee owned a 60 per cent majority stake of. Due to this relationship, in 2014 the bakery owed the charity £23,000, yet the report said the charity still made transactions with them in 2015 and 2017. The report said that the charity had failed to manage this conflict of interest.
The charity also accumulated £1.2m in debt from bank loans. It said: “The charity had experienced financial difficulties and had problems servicing its debts,” adding that the £1.2m debt was akin to “substantial deficits and liabilities”.
The inquiry began in March 2017 after the charity failed to file its annual accounts in 2016, despite regulatory advice issued when the charity was included in a wider sector inquiry of charities failing to file accounts for five or more years in a row. Its accounts for 2014 and 2015 were also incomplete as the charity had not made all information available to auditors.
The charity had been subject to previous regulatory engagment. In 2014 the Commission publihsed a compliance case report when it was found that £190,000 funds were misappropriated by a then trustee of the charity.
The inquiry found that the charity also failed to follow its governing document; there were only 3 trustees on its board in September 2017 instead of the 5 it promised.
The report said that the trustees “repeatedly failed in their duties to administer and manage the charity”.
Harvey Grenville, head of investigations at the Charity Commission, said: “It is unacceptable that this charity has repeatedly found itself subject to regulatory scrutiny. The former trustees failed to meet the expectations of the public and the charity’s beneficiaries in terms of transparency, accountability and the careful stewardship of charitable funds.
“The public deserve to be able to understand how their donations are being spent, and see clearly that they go towards their intended causes. As a result of our inquiry significant charitable funds are now accounted for.”
New trustees
Since the start of the inquiry the charity has filed its complete annual accounts and the trustees have been replaced. The bakery has repaid funds to the charity. The report said that the charity is also in the process of agreeing a refinancing agreement with their bank to repay its debt.
The Commission has issued an action plan to monitor the charity’s progress.
“I expect the new board of trustees to continue making good progress, thereby returning the charity to a sounder footing,” Grenville added.
Bethel United Church of Jesus Christ Apostolic UK exists to advance Christianity. It runs a religious venue in Birmingham which is available to hire for religious purposes. Operating across England and Wales, the charity is run by seven trustees. Its annual income is £1.3m.
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