The Charity Tribunal has upheld the Charity Commission’s decision to remove a trustee after charity funds were forfeited when he was stopped from leaving the country under terrorism laws.
In September 2015 the Commission had carried out an inspection visit at Save the Needy Worldwide because the charity was newly registered and operating in high-risk areas. Oguz had also previously been the chair of another charity, Worldwide Ummah Aid, that had been the subject of a statutory inquiry.
After the inspection visit the Commission identified regulatory concerns over due diligence about partner agencies, poor financial management, lack of records and general poor governance. It issued the charity with an action plan, later opening a statutory inquiry and ordering the removal of founding trustee Yusuf Kenan Oguz.
Oguz had appealed the decision, but the Tribunal decided in favour of the Commission and has now published its ruling.
The decision means that Oguz is disqualified from being a trustee and holding a senior management position at a charity without obtaining a waiver from the Commission.
Stopped by police in 2016
In July 2016 Oguz was stopped by police on his way to Turkey and questioned under schedule 7 of the Terrorism Act 2000. Some £3,260 in cash that he described as charitable funds intended for a Syrian refugee school in Turkey were seized under the Proceeds of Crime Act 2002 because the investigator was not satisfied.
In January 2018 this sum was forfeited under the Proceeds of Crime Act after a hearing at Bedfordshire Magistrates Court.
Oguz told the Charity Tribunal hearing that the charity was not able to make electronic payments and needed cash to pay contractors.
But the Tribunal decision said that this led to the “permanent loss of the money” and noted that the charity had made an electronic payment a few days later.
“Mr Oguz has not offered a credible explanation as to why the initial payment could not have been transferred in the same way,” the decision said.
It added that Oguz should have been aware this could be a problem as when he was a trustee of WUA he had £12,000 was seized when he was stopped in similar circumstances.
The tribunal described him as taking “unjustified risks” with the charity’s money.
It also heard that between January 2015 and September 2016 almost £44,000 was withdrawn from the charity’s accounts without the knowledge of other trustees.
The Commission was notified by police in October prompting it to open a statutory inquiry and take action to prevent the trustees. In January 2017 the Commission ordered trustees to explain how they had complied with the action plan and explain why they had not filed their annual return. In February the regulator met with trustees.
In November the Commission suspended Oguz as a trustee and issued a removal order in December.
He lodged an appeal with the Charity Tribunal and the case was heard in June. Judgment was reserved and was published by the court this week.
The Commission told the tribunal hearing that it believed the charity’s failure to comply with its requests, the attempt to take money to Turkey, lack of financial controls within the charity and its inability to file its annual return meant it was correct to remove Oguz as a trustee.
Oguz told the hearing that he disputes that wrongdoing and mismanagement took place. He also told the hearing that the charity had complied with the action plan, but the judge said there was no documentary evidence of this.
“Mr Oguz’s assertion that the charity was ‘still in its infancy’ provides no justification for this failure, particularly given the nature of the Charity Commission’s concerns about the management of the charity’s finances (which had previously been communicated to the trustees). We do not agree that the charity was still in its infancy anyway, and we observe that charity trustees are not excused from the duty to abide by basic principles of good governance just because a charity is newly established,” the ruling said.
Michelle Russell, director of investigations, monitoring and enforcement at the Commission said: “We welcome this important decision which supports our work to safeguard charitable assets and to take action to prevent and remedy the abuse of charity”.
The Commission’s inquiry is ongoing and it will publish a report once it has concluded.
‘Spent substantial sums on good causes’
The tribunal said that there was evidence of money being spent on good causes, but it had not been accounted for properly.
“We accept that the charity has spent substantial sums on good causes – and Mr Oguz offered photographic evidence of examples of the charity’s work. Nevertheless, the maintenance of adequate and transparent accounting records to show what has become of the charity’s money is a fundamental plank of good governance and it goes to the heart of the functions of a charity trustee,” it said.
But it concluded that the need to protect the charity outweighed the personal impact on Oguz.
“Mr Oguz’s continuing apparent failure to recognise the risks to which his favoured ways of working expose the Charity is such that, notwithstanding his many years of involvement in the charity sector, he should not be permitted to act as a trustee of the Charity or to hold another senior position of responsibility in relation to it,” it said.