Charity Commission inquiry uncovers multiple failings at Islamic charity

Regulator gives Tariqa Burhaniya D'Suqiyya Shazuliyya nine months to review its governance

The Charity Commission has criticised an Islamic charity for a string of failings, including misusing restricted funds, submitting inaccurate financial information and giving its trustees unauthorised interest-free loans.

Tariqa Burhaniya D'Suqiyya Shazuliyya runs a mosque for the Sufi Muslim community in south-west London. It receives all its income from donations from its members.

A whistleblower warned the commission in May 2008 that the financial information its trustees had submitted in its 2006/07 annual update form was inaccurate.

According to the form, the charity's income and expenditure were both exactly £7,500.

But the commission opened a statutory inquiry in August 2008 after discovering a deposit and a cash withdrawal of £10,000 in the charity's bank statements for the period. The inquiry discovered further significant credits and debits in the charity's savings account that increased its balance by more than £40,000.

The trustees told the commission they had not realised they had to include the savings account as part of the charity's income and expenditure, but the commission's inquiry report says it was "unable to reconcile this explanation with the information obtained from the financial analysis of the charity's bank statements".

The trustees told the inquiry, which ended in May, that they now had an independent accountant to help them improve their accounts. However, in March they submitted further inaccurate information in their 2008 annual return form.

They told the commission their financial records were quite chaotic and they had thought it was better to submit inaccurate information than to miss the deadline.

The commission, which published its inquiry report on Friday, also found that the trustees operated a complex system of loans and donations to their members. A number of the trustees had benefited personally from interest-free loans, despite this being prohibited by the charity's constitution.

The trustees had made two cash payments of £34,000 and £12,500 out of restricted funds to a partner organisation in Sudan. The funds were intended to buy permanent premises for the charity.

The trustees said the larger figure had been a loan, but there was no documentation to confirm this. A total of £20,000 has since been repaid by the Sudanese organisation.

The inquiry found that restricted funds had also been used to pay rents and utility bills.

Other failings included:

  • Keeping signed blank cheques
  • Not having any procedures and policies in place to govern the charity's day-to-day activities
  • Not having terms of reference for trustees holding designated posts, setting out their responsibilities and powers
  • Lack of child protection procedures despite holding educational classes for children

The commission has given the trustees nine months to address their failings in a fundamental governance review. It will monitor the work and evaluate it when it is complete.

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