A charity with aims to promote the Sikh faith has been accused by the Charity Commission of serious financial mismanagement after it defaulted on its loans and faced enforcement action by the local council.

The regulator announced today it has opened a statutory inquiry into the education charity, Nanaksar Thath Isher Darbar, after it failed to file any accounts for the last two financial years. Annual reports for the year 2012-13 - filed in December 2015 - further revealed evidence of “weak and informal financial controls” and “unsatisfactory record keeping”, the regulator said.

The regulator said “serious concerns” have been raised about the financial management of the charity, its administration and the conduct of the trustees.

A primary concern resulted from the charity's actions over a football ground in Hayes, which was bought to build a school. But the trustees failed to obtain planning permission and subsequently decided to build a temporary car park on the land. However, they also failed to obtain planning permission for the car park, resulting in enforcement action by the London Borough of Hillingdon.

An appeal was lodged against the enforcement action but the Commission said the charity’s actions nonetheless raised concerns about the use of the site and failure to protect the charity’s assets.

Further concerns were raised about two nearby sites, which were used for school buildings, and used as securities against loans and mortgages. The trustees subsequently defaulted on those loans, resulting in a “significant risk to the charity’s property”, the regulator said.

The Commission said its investigation will centre around the  charity’s “administration, governance, management, financial controls and whether the trustees complied with and fulfilled their duties and responsibilities as trustees under charity law”.

Nanaksar Thath Isher Darbar aims to promote the Sikh religion by providing facilities for education, study and worship. It owns land which is used by its Guru Nanak Multi Academy Trust for an academy school and runs three Gudwaras, providing courses, events and multi-faith conferences.

According the the Charity Commission’s webite, its last recorded annual income was £2.1m for the year ending 31 March 2013, with a spend of £656,000 for the same year. It employs six staff members and 20 volunteers. 

A spokeswoman for the charity told Civil Society News the charity's trustees were "co-operating with the Commission in order to address the concerns that have been raised".

"The trustees recognise that there were historic weaknesses
in their governance structure and since their initial engagement with the Commission have already taken significant steps to strengthen their governance processes. They are continuing to improve their governance arrangements and striving to comply with best practice," she said.