Trustees mistakenly sold building for £15m less than it was worth

30 Mar 2017 News

Fergus Burnett

The Charity Commission has said trustees at a spiritualist charity had failed in their duties after selling a building for a fraction of its value.

In an inquiry report published today, the Commission said the Spiritualist Association of Great Britain had sold its Belgrave Square head offices for £6m to a private company, which had sold it on shortly afterwards for £21m.

The Commission said the trustees had failed to fulfil their legal duties and responsibilities towards the charity, by not following specialist advice, and that “those failures amounted to "basic and serious mismanagement”.

The regulator said trustees did not act on independent advice about what would happen if a change of use for the property could be secured, as happened on this occasion. It also said the charity failed to take proper account of concerns raised by its solicitor, and failed to carry out due diligence on the purchaser – a shell company registered in the British Virgin Islands.

However the Commission “did not find evidence that the trustees, or anyone associated with the charity, derived unauthorised private benefit from the sale or any indication of bad faith on the part of the buyer, and the main person who authorised the disposal is now deceased”.

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Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: “One of the purposes of publishing inquiry reports is to ensure other charities have the opportunity to learn the wider lessons.

“This case highlights that disposing of charity land can involve complex arrangements, which charities need to be careful about and obtain proper professional advice on.”

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