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Over £2.1m recovered to trust following Charity Commission inquiry

A charitable trust has had more than £2.1 million recovered after a Charity Commission inquiry exposed and addressed misconduct and mismanagement in its administration.
The Charity Commission found that despite lending £2 million, The Reb Moishe Foundation could not provide evidence to show it had made adequate attempts to protect its assets or recover the loan. The Commission opened a statutory inquiry in May 2015 by which point the total due to the charity had risen to £2,236,401 as a result of interest accrued.
The Commission had first engaged with The Reb Moishe Foundation in 2014 over a loan it had made to private commercial company Gladstar Ltd, which was connected to one of the trustees. The inquiry found that poor decision-making regarding the loan had placed the charity’s funds at serious risk. The charity had taken no external investment advice before entering into the loan, and with Gladstar Ltd also based in Gibraltar, recovery of the funds was challenging.
The Commission’s inquiry also identified concerns over unmanaged conflicts of interest. A charity trustee was secretary of the company at the time the loan was made, and subsequently became a Director. As a result of the Commission’s intervention, the surviving trustee agreed to transfer the proceeds of the sale of six properties owned by Gladstar Ltd to the charity, which resulted in £2,137,368.50 being vested in the bank account of the Official Custodian for Charities (the OCC).
The surviving trustee resigned from the charity and agreed not to take on any other charity trusteeships. Two new trustees were appointed by the settlor, and have opened a new bank account and adopted policies for grant making, investment and conflicts of interest. In October last year, the Commission directed the OCC to transfer the recovered funds to the charity which, including interest, totalled £2,137,736.39.
The inquiry closed on 27 February with the publication of the Commission’s report, however the Commission will continue to monitor the new trustees’ application of the new policies and charitable funds.
Harvey Grenville, Head of Investigations and Enforcement at the Charity Commission said:

“Failings of governance and financial management unfortunately put this charity’s assets on the line. The good news is that, following our intervention, over £2 million can now be put towards important charitable causes.
“This inquiry demonstrates that if not properly managed, conflicts of interest can seriously hamper trustees from acting in the best interests of their charity.”

Last month, the Charity Commission secured another £1m of funds following an inquiry into an unnamed grant-making charity. Solicitors for the charity had sought trustees’ relief from liability for unauthorised payments totalling approximately £650,000 to three trustees who had been acting as consultants for the charity’s wholly owned subsidiary limited company, and had also sought permission to sell 99% of its shares in the subsidiary limited company.


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