The Welsh government has suspended funding to NSA Afan and the Charity Commission has opened a case, after complaints about fraud and misuse of public funds.
NSA Afan is a community regeneration charity with an annual income of £1.5m. It provides a number of community services such as adult learning, youth engagement and recycling projects in Sandfields, Port Talbot. The charity has called on the Welsh government to reinstate funding as it will force the charity to close with the loss of 30 jobs.
It was the lead delivery body for the Welsh government’s Communities First programme in Sandfields and Aberavon and had been contracted to do so until March 2017. It received £500,000 from the government last year.
The charity raised concerns about a former employee with police last year.
A police statement said: “We can confirm that South Wales Police has arrested a 35-year-old woman from the Port Talbot area on suspicion of theft on 11th August 2016 following a complaint received from NSA Afan. This person is currently on police bail while the police investigation continues.”
Charity Commission and Welsh government action
A Commission spokesman said: “The Charity Commission is aware of serious concerns regarding the financial management of the charity and an ongoing police investigation. The Commission has opened a case and is working closely with the Welsh Government to establish what regulatory action may be required.
“It would inappropriate to comment any further at this stage."
A Welsh government spokeswoman said: “Following initial investigations into allegations concerning possible misuse of public funds at NSA Afan, we have suspended funding whilst further investigations are undertaken.
“We are exploring ways to safeguard the provision of services but it is important that we exercise our duty to protect taxpayers’ money from potentially inappropriate use.”
Scale of the theft ‘unknown’
The scale of the fraud is unknown, but £50,000 has been recovered from a credit card company.
According to its accounts for the year ending March 2016, filed with Companies House, the charity had an income of £1.5m, with £1m connected to a regeneration project.
More than £500,000 was from the Welsh government’s Communities First programme. It also received a grant from the Big Lottery Fund for £80,000.
The auditor’s report says that the charity has been in touch with police about fraud by a former employee. It says the total level of fraud is “unknown”.
But that “£50,000 was refunded by the credit card company during the year, however the remainder of the theft is unlikely to be recovered”.
In the accounts the charity said it has introduced a “stricter form of controls as a consequence of fraudulent activities identified during the year which were carried out by a former employee”.
It employed 32 people. The highest paid employee earned between £70,000 and £80,000.
Statement from NSA Afans
In a statement the charity said: "Unless the suspension of funding is lifted then the organisation and the projects will close with a loss of over 30 jobs. They add that they believe the allegations of so called financial irregularities sent to Welsh government by a so called Whistle Blower just before Christmas, must only have originated from the former employee as a means of covering up the existing charges of theft and fraud made against her by NSA Afan her former Employer.
"NSA Afan believe that the inconclusive evidence presented to them should not be taken as proof of financial irregularities or fraud against itself as an organisation. It continues to deliver the Welsh government programmes of Communities first and Communities for work, helping unemployed and economically inactive people in the Sandfields and Aberavon communities."