The Charity Commission has issued an official warning to the trustees of a Jewish Orthodox charity in Salford over 49 undocumented loans totalling almost £2 million.
The Bersam Trust, which owns a building used by a Jewish school, had its accounts frozen two years ago after “significant discrepancies” were found between “the financial activity recorded in its accounts and the values of funds entering and leaving the charity’s bank accounts”.
The Commission said this “raised serious concern”, exacerbated after “figures in the accounts did not match those in the previous year’s accounts” and “differences were not supported by explanation”.
Citing “concerns about financial arrangements and governance”, the Commission said trustees “oversaw the borrowing of £1.9 million, via 49 separate loans, not documented within loan agreements”. These loans were “taken from various sources such as individuals and other charities”.
Many were agreed orally and whilst there is no evidence money was lost by the charity in this way, the Commission said the trustees “exposed the charity to significant and unnecessary risk by their actions”.
The Commission also found the charity was administrated in a way that “failed to reflect that the school and charity were separate organisations”.
One loan was secured on the basis that the school achieved a satisfactory Ofsted rating, a matter the charity had no control over. This could have led to “significant financial loss to the charity” were the school to perform poorly.
The inquiry concluded that three of the charity’s trustees were guilty of “misconduct and/or mismanagement” and ordered that changes be made, including measures to avoid conflicts of interest.
Three of the charity’s five trustees were appointed in 2018 and so “were not in office when most of the mismanagement and/or misconduct occurred”. The other two, Jehudah and Joshua Waldman, were appointed in 2013 and 2011 respectively.
“Good governance is not a bureaucratic detail, it’s essential in ensuring a charity delivers on its charitable purpose and isn’t exposed to unnecessary risk,” said Amy Spiller, the Commission’s head of investigations.
“Bersam trustees failed to ensure this and instead, through their lack of financial management and basic governance, agreed a significant number of undocumented loans that risked their charity’s future.
“Our inquiry exposed these failures and it’s right the trustees have been issued with an Official Warning requiring them to act to protect their charity. We expect the trustees to comply with these actions.”
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