Military charity reconstructed after CEO faced trial for fraud and theft

11 Sep 2018 News

A charity that was subject to a statutory inquiry and whose chief executive was under investigation for fraud has been reconstructed.

The Commission opened a formal inquiry into The Veterans Charity in April 2015, which provides support to former members of the armed forces, after chief executive Danny Greeno, a former trustee and two voluntary fundraisers, were arrested by British Transport Police over concerns about the charity’s fundraising practices.

These concerns included collectors operating alone, failures to maintain accurate records, allowing public fundraising collections to occur in unsealed and un-numbered buckets and the banking of collected funds into the personal bank account of the former trustee, following the issuing of a cheque to the charity.

The Commission liaised with a charity law firm in 2015 to secure volunteers from the charity sector who would be willing to assist in the reconstruction of charities, as a potential alternative to an interim manager, and where there were limited charity funds available to support reconstruction.

It appointed Vaughan Kent-Payne, a director of another military charity, and Iain Henderson, who is an armed forces veteran.

Both remain trustees, with Kent-Payne now chair.

Trial

In April 2018, Greeno stood trial with charges of theft and fraud by abuse of position against the charity at Blackfriars Crown Court but that trial ended when the judge ordered the jury to find him not guilty due to a lack of evidence.

The Commission is satisfied that its original regulatory concerns have been addressed following a further inspection of records and meeting with the original trustees.

Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: “The charity’s work prior to this reconstruction was undermined by poor management on the part of the charity’s trustees at the time.

“This was a charity without adequate systems and controls in place, and limited oversight of the chief executive by the trustees.

“This is unacceptable, and we are critical of the trustees at that time for their failings.

“When the public give to charity, they have a right to expect that their donations will be carefully managed, and be applied solely in furtherance of the charity’s aims.

“Trustees may hand day-to-day operations to staff – but they must retain oversight, and ultimately, they are always responsible for everything that happens in their charity.

“I am grateful, especially to the new trustees, for their hard work in turning the charity around, and ensuring its processes and systems are strengthened so that the charity’s work can continue.”

Inquiry

The Commission froze the charity’s bank accounts when it opened its inquiry into the bank accounts in 2015.

During the inquiry, the Commission found that the charity’s finances were under the sole control of the chief executive, with limited oversight by the trustees.

For a significant period of time the chief executive had sole control of the charity’s bank accounts, including its cheque book, debit card and online banking facility.

The inquiry found that nearly £38,000 of the charity’s expenditure had been withdrawn as cash during the period between January 2010 and May 2015, equating to over £500 each month.

The charity told the inquiry that the invoices for expenditure before 2013 were lost as a result of an office move.

It told the inquiry that cash withdrawals were used to repay subsistence claims for expenditure on charity business including accommodation, fuel, event costs such as the purchase of stocks, and support for beneficiaries.

However there was very little supporting evidence to confirm how these charitable funds had been applied.

'Trustees responsible for mismanagement'

The regulator concluded that the trustees of the charity at the time the inquiry opened were responsible for mismanagement in the administration of the charity.

It said they failed to properly oversee the charity’s chief executive, implement effective financial controls or maintain adequate financial records.

The inquiry sought volunteers from the charity sector to assist in the charity’s reconstruction. Three people stepped forward to help – two of whom remain as trustees today.

The Commission revoked its protective measures in early 2016 following the strengthening of the charity’s governance and financial controls.

Kent-Payne said: "The intervention by the Charities Commission has been successfully concluded.

"Charities Commission investigators inspected the VC accounts and reviewed new procedures and documentation in August 2016 and found them to be entirely satisfactory. There has been no further regulatory contact since this time.

"Since then, The Veterans Charity has handled almost 850 cases providing vital, immediate, assistance to vulnerable veterans, many of whom are homeless.

"This is an area which, as acknowledged by the Commission, is not covered by the other major charities such as the Royal British Legion and SSAFA.

"The trustees would like to thank the Commission for their assistance in the satisfactory conclusion of their intervention."

The Commission's full inquiry report can be found here.

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