Rhema Church London has been dissolved and removed from the charity register after a seven-year inquiry found it spent thousands on personal expenses.
The Charity Commission’s statutory inquiry into the charity, which opened in 2015, found evidence that approximately £95,000 had been spent on trips overseas which did not further the charity’s purposes.
It also found that incorrect filing meant the charity had to pay over £500,000 in extra taxes.
The trips were led by former pastor Martin Phelps to locations including Austria, Italy and Greece.
Day-to-day living expenses such as food, medical and vets bills, and gym memberships had also been paid for by the charity.
The Commission ruled there had been an absence of any expense policy or proper financial controls.
Phelps has been disqualified from acting as a trustee or holding a senior role in a charity for 10 years.
Funds put at significant risk
Rhema Church London was established in 1999 to advance the Christian religion and help the elderly and people experiencing poverty. It operated an evangelical church in Croydon.
The regulator opened a statutory inquiry into the charity in 2015 and took control of its assets and froze its bank accounts in November that year after determining its finances to be at risk.
It also appointed interim managers at the charity to the exclusion of trustees in the same year.
The inquiry found cheques to the total of £300,000 had been paid to Phelps' personal bank account between 2014 and 2015. Some £225,000 had been transferred from the charity’s account to his personal bank account to reduce monthly mortgage interest rates before being transferred back to the charity.
No guarantee or security measures had been put in place to safeguard the funds, which put them at significant risk, the Commission ruled.
Charity paid over £500,000 in extra taxes
Most of the charity’s spending had been incorrectly categorised and lacked sufficient information to prove it was furthering charitable purposes. This resulted in the charity being liable to pay more than £543,000 in additional taxes.
Rhema Church London also failed to submit its accounts to the Commission on time for five consecutive years.
The inquiry concluded there had been significant failures in charity’s governance and financial management.
Appointed interim managers concluded that the most appropriate course of action was to wind down the charity. They were able to recover £137,000 in surplus funds which was split equally and given to three nearby charities with similar purposes.
Rhema Church London was dissolved in May 2022 and removed from the register a month later.
Steps to wind down the charity took longer than anticipated, regulator says
The process of winding down the charity “took considerably longer than anticipated” which contributed to the inquiry taking eight years to close, the regulator said.
The work of the interim managers at the charity took considerable time to complete due to the lack of cooperation from trustees and members of the charity, the report reads.
Further delays were caused by the eviction of Phelps from one of the charity’s properties and when selling the organisation's three properties.
Charity Commission: ‘Significant misuse of funds’
Amy Spiller, head of investigations at the Commission, said: “Trustees must use their charity’s funds to further the charity’s purposes and ensure there are robust financial controls in place to stop the abuse of these funds.
“From our investigation it was clear that trustees at Rhema Church London had failed to meet this obligation, leading to significant misuse of funds by a former senior employee. These expenses did not appear to serve any charitable purpose or benefit to the charity’s beneficiaries.
“The interim managers worked at length to settle the charity’s accounts and I am pleased they were able to recover over £136,000 which could be put to good use at charities with similar purposes.”
Civil Society News was unable to contact Rhema Church London for comment.
