A Kent-based housing charity paid its chief executive £1.2m in rent last year, because he personally owns much of the property leased by the charity to accommodate its service users.
Christopher Fitt is also one of just three trustees on the board of the Ashdown Medway Accommodation Trust, which supports over 300 people a year and gets most of its income from the local authority.
The Trust provides temporary and permanent housing and other services to people with drug problems, ex-offenders and women escaping domestic violence.
According to the news website Kentonline.co.uk, Fitt has been receiving rents from the Trust since 2006/07, pocketing more than £6m in that time.
There is no suggestion that the rent arrangement between Fitt and the charity is illegal and according to the accounts, “payments in respect of rent were made in accordance with property lease agreements and are considered to be on an open market value basis”.
The accounts also said: “Payments of rent to related parties are permitted by the Trust’s articles of association.”
The accounts also show that the charity employed 64 staff last year to manage an average of 318 residents in 107 properties. It had total income of £3.8m, 10 per cent more than the previous year, and posted a deficit of £77,694.
The highest-paid employee received no more than £60,000. One trustee – it doesn’t say which one - received “wages” during the year of £8,556 – a big increase from 2011 when one trustee was paid £1,932. The other two trustees were reimbursed for expenses totalling £3,504.
The accounts also reveal that Fitt has personally guaranteed an interest-only mortgage of £122,000 secured over the land and buildings owned by the Trust, which represents 54 per cent of the historical cost of the asset.
And they say: “The charity rents over 100 properties from its landlords. Most of the properties have no formal lease agreements. Total rent payments including those for which the Trust has signed a lease agreement are forecast to be £1.8m for the year ended 31 March 2013.”
Charity Commission: No evidence of serious concerns
Asked to comment on the case, a Charity Commission spokeswoman said: “The charity’s governing document does allow for the company to pay any director rent for property let to the company. In situations such as this, we expect the trustees to have properly considered all the relevant guidance, have a conflicts of interest policy and register and ensure that relevant decisions are properly recorded and reported. Trustees should also be mindful of the reputational implications of any decision they make.
“The Commission’s guidance on managing conflicts of interest makes clear that authorised conflicts of interest of itself is not necessarily of concern – but it is important they are managed carefully. For example, the trustee in question should not take part in decision-making that affects him and the remaining trustees should carefully consider whether any arrangement continues to be in the charity’s best interest.
“In light of this, there is currently no evidence of serious concerns that require the Commission’s involvement. However, if anyone has any evidence to suggest the charity has not been complying with the guidance and the law with regard to managing conflicts of interest and acting in the charity’s best interest, we would urge them to share that evidence with us.”
Trust response: Internal review is under way
When civilsociety.co.uk contacted the Trust to try to speak to Fitt, it sent a statement which said: “On 18 December 2012, Medway Council's 'Supported Accommodation Task Group' presented a report to cabinet.
“This report is of considerable significance to AMAT and, therefore, although we have not received any approach from the S.A.T.G, or from Medway Council cabinet, as a large provider of direct access and supported accommodation in Medway we are undertaking an internal review of our service, structure and governance.
“We have always sought guidance from legal and professional experts and we have always tried to work constructively with Medway Council departments such as housing, homelessness, revenues and benefits, HMO licensing etc. We will continue to do so.
“We have worked closely with both voluntary and statutory agencies such as Homeless Link, the probation service and the police. We will continue to do so.
“We are governed by the Charity Commission. We will proactively seek their guidance and follow any recommendations in light of the S.A.T.G report and the recent adverse local press coverage.
“We will make the findings of our internal review available for public examination. In the meantime we will not be responding to any further enquiries but we will endeavour to address any points raised within the review.”
