A group of trustees of a liquidated charity have been forced to repay £700,000 after transferring a fostering agency to a trustee's company for ‘nil consideration’ and paying a trustee's husband’s company hundreds of thousands in administration fees.

The Charity Commission has today published a report into the Greenfinch Charitable Trust, a Kent-based charity with an income of around £850,000 a year, which ran fostering services until 2004, and later provided support for families subject to care proceedings.

The Commission opened an inquiry into the charity in January 2013, and found that there was substantial “unauthorised private benefit”.

The Commission said in its inquiry report, published today, that the self-described "directors" of the charity disputed their status as trustees. However the Commission found that they were trustees.

“The charity maintained that directors of the charity were not also trustees under charity law,” the Commission said in a statement today. “But the Commission concluded they were trustees and that any benefits should have been authorised in accordance with the provisions in  the charity’s governing document or by the Commission, neither of which was the case.”

The Commission found a fostering agency run by the charity had been transferred to one of the trustees’ companies for “nil consideration”.

It also found that the charity had outsourced administration to a company owned by a trustee’s husband.

And it found that the manager of the charity had earned a salary of £70,000 a year while listed as a director.

High Court action

The Commission said it “determined that action should be taken to recover the loss” and in April 2013 “issued proceedings in the High Court against four individuals in relation to the outsourcing arrangement”.

The Commission’s settlement is confidential, and it is not known whether the individuals involved were the trustees, although it said that just over £181,000 was passed to another charity with similar objects.

It is also not known whether the liquidator took legal action over the transfer of the fostering agency and the unauthorised remuneration.

However the liquidator’s statement of “receipts and payments” show that the charity received a £700,000 settlement from the trustees in the year to July 2015.