An Orthodox Jewish charity in Salford has been issued with an official warning after the Charity Commission used its statutory powers to obtain its bank statements.
The watchdog acted after Chesed Leyisruel Trust failed to file its returns for more than two years then failed to respond to the Commission’s requests.
Auditors found “serious concerns” regarding two loans the trustees had entered into.
The first required the charity to obtain a 100 percent mortgage on a property it had bought with the money, yet no mortgage application had been made and the property was transferred to a third party.
The second was made on the basis that the charity would buy a property and sell it at a profit within six months before repaying the loan in full. That loan is still outstanding, with no Plan B if the plan goes awry.
“Borrowing is a big decision for a charity, so it is concerning that no independent professional advice was obtained,” said the Commission.
“It was also unclear whether trustees considered all relevant factors in making these significant decisions that put their charity at risk.”
To make matters worse, three of the trustees were related, which led the Commission to declare “likely shared conflicts of interest”.
Record-keeping at the charity was classed as “poor… trustees clearly failed to act on previous regulatory advice regarding the submission of financial information”.
The Commission announced this week that it had issued the trustees with an official warning setting out steps that must be taken in order to rectify the “misconduct and/or mismanagement” uncovered by the inquiry.
“The public rightly hold charities to high standards, which these trustees have unfortunately failed to live up to,” said Amy Spiller, head of investigations at the Commission. “That’s why we’ve issued this warning, which sets out clear steps trustees must take to put things right.”
She added that the trustees “have demonstrated a willingness to address our concerns… The Commission will continue to monitor the charity’s progress, and expects to see evidence of the action taken within six months”.