A Charity Commission investigation into the activities of disaster relief charity Crescent Relief (London) has found no evidence of deliberate misuse of funds by the trustees but could not find where all the money had ended up.

As a result, it has ordered the trustees to conduct a review of the charity's management and administration and implement the outcomes of that review, within the next year.

The Commission opened a statutory inquiry into Crescent Relief five years ago after the charity became embroiled in a police investigation into an alleged terrorist conspiracy.  However, nobody connected to the charity was ever convicted of terrorist offences.

The Commission’s inquiry examined whether the charity’s funds had been used unlawfully and also looked at the charity’s financial management and governance and its oversight of its overseas activities.  Crescent Relief’s work was mainly concerned with building an orphanage in Indonesia after the 2004 tsunami and providing relief and reconstruction in Pakistan after the 2005 earthquake.

The inquiry took longer than usual because the Commission did not want to prejudice the criminal investigation, and because it took time to obtain evidence from overseas.

The inquiry concluded that there was no evidence to indicate that the trustees had diverted charitable funds for unlawful or non-charitable purposes.  However, the trustees were unable to satisfactorily verify the end use of charitable funds in both Indonesia and Pakistan.

“Measures to control, monitor and document the use of charitable funds by third parties overseas were insufficient,” the Commission said.

The regulator advised other charities that work overseas to ensure they have adequate safeguards in place to mitigate the risk of charitable funds being used unlawfully.