Charity to launch legal action to reclaim £626,000 allegedly misspent by Lord Bhatia

The crossbench peer and former interim head of the Ethnic Minority Foundation stepped down in 2012 after he was challenged by trustees about his use of charitable resources

Lord Bhatia
Lord Bhatia

The Ethnic Minority Foundation has said it will launch legal action to reclaim £626,000 it says was misspent by its former interim chief executive, the crossbench peer Lord Bhatia.

Bhatia took over in 2009 as the interim chief executive of the foundation, which supports ethnic minorities and has a turnover of about £1m a year. But he stepped down in 2012 after he was confronted over his use of charitable resources by a group of trustees, according to Anil Bhanot, who was then treasurer of the charity and is now its chairman.

Bhatia is contesting the claims and counter-suing the charity for £250,000.

Bhanot said that Bhatia paid himself a salary of £100,000 a year, which was not properly agreed by the board. Bhanot also claimed that Bhatia paid his personal chauffeur £40,000 a year from charitable funds and then gave himself a further £12,000 pay rise and a £12,000 gift. Bhanot said Bhatia also moved the charity into his personal offices and charged it rent while its own premises were largely empty, and did not make £94,000 of contributions he promised to pay towards rent on his personal offices.

Bhatia, who was suspended from the House of Lords for eight months in 2010 over wrongly claimed expenses, is also accused of paying for private medical insurance and personal expenses using charitable funds, and hiring relatives and acquaintances to work on his personal affairs, but paying them out of charitable funds.

The charity will launch legal action later this month when forensic accountants complete a report. Bhanot said the charity’s interim report suggested Bhatia owed £625,961.

Bhatia is suing the charity in the High Court for £250,000 he says he loaned to the charity and has also launched a case for wrongful dismissal at the employment tribunal, the charity said.

"When we confronted Lord Bhatia about his spending at a meeting of the board on 5 December 2012, he immediately resigned," said Bhanot. "Since then we’ve gone through a period of consolidation, but we’re now back on track."

Bhatia did not return messages left by Third Sector on Thursday morning.

- Bhanot has asked for it to be made clear that the figures he quoted on the alleged expenses claimed by Bhatia were from the soon to be completed forensic accountants report.

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