The Andrew Lloyd Webber Art Foundation has been criticised by the Charity Commission for failing to appoint independent trustees and not doing enough to avoid the impression that Sir Andrew Lloyd Webber was personally benefiting from it.
The charity was founded by the composer in 1992 to advance public understanding of art by buying paintings and lending them to public galleries. Lloyd Webber has made donations of more than £28m to the charity and the value of its unrestricted funds in 2008 was more than £32m, although its expenditure was only £3.3m.
Lloyd Webber has bought a number of paintings from the charity and pays it a fee when he rents its paintings for his own use. But the commission opened a formal inquiry last July when HM Revenue & Customs raised concerns about the amount Lloyd Webber had paid to rent one of the charity's paintings.
The inquiry dismissed concerns that the charity was not operating for the public benefit. It accepted that its paintings had been displayed in a number of public galleries, including the Tate Gallery and the National Gallery, for a "sufficient" amount of time.
It also noted that information about them was also contained on the charity's website, although it said this could have been more comprehensive.
It accepted that the trustees took the advice of an independent art consultant about the purchase, sale and display of its three paintings and obtained independent valuations before selling them or renting them to Lloyd Webber. It agreed that renting the paintings to the composer was a "practical and cost-effective alternative to paying for the artwork to be privately stored and insured when they could not be publicly displayed".
But it concluded that the frequency and exclusivity of such arrangements created a perception that Lloyd Webber was personally benefiting from the charity. It was particularly critical of an arrangement that saw one of the charity's paintings hanging in the lobby of the Palace Theatre in London during its production of the composer's Woman in White musical.
It also criticised the charity for not acting on its earlier advice to appoint a majority of trustees unconnected with Lloyd Webber, even though professional legal advice the charity took at the time indicated it was unnecessary.
Before the inquiry the only trustees were Lloyd Webber himself, his wife and a partner in a law firm that provided advice to both him and the charity. Since the inquiry, another four trustees have been appointed, three of whom are independent of Lloyd Webber. The composer himself has stepped down.
In a statement the foundation said it had accepted and implemented all the commission's recommendations and welcomed the regulator's conclusion that no further action was required. "The foundation would like to thank the commission for its help and advice," it added.