Nita Kinesiology owes the money to Opal Bay, whose directors are Mark and Anthony Rubin, the two trustees of the charityThe Charity Commission is investigating a charity that owes nearly £1.3m to a company run by its two trustees.
The Essex-based charity Nita Kinesiology was registered in 2006 and works to relieve sickness and protect and promote the health of people living in the UK.
The charity’s most recent accounts, for 2011, show that its income was more than £970,000 and that it paid £700 to charitable causes.
The accounts also show that the charity owes nearly £1.3m to a company called Opal Bay. According to the accounts, both of the charity’s two trustees, Mark and Anthony Rubin, are directors of Opal Bay.
A Charity Commission spokeswoman said the commission was carrying out an investigation into the charity to establish "whether the trustees can demonstrate that the charity is operating in furtherance of its object for the public benefit and whether transactions entered into by the charity were in the best interests of the charity".
A statement from Mark Rubin said the level of donations made by the charity, which is named after his late mother, had been low because it was struggling financially. He said that when Nita Kinesiology was established the trustees had invested more than £1m in property to create an income for the charity that it could then donate to good causes.
"The idea was to sell the property after two years and then have a substantial sum available to create legacies as and when," he said.
However, because the property market crashed the charity has used all of its resources "to pay the bank its due", which was why the level of donations made by the charity was so low, said Rubin.
He said that neither of the trustees were paid by the charity and no public money had been put at risk by the charity’s actions.
"The only potential loser is a family company that provided the original seed monies," said Rubin. "Sadly, the whole thing has become a disaster, far from for the original altruistic ideals that we had."
The commission spokeswoman said the investigation into Nita Kinesiology, which opened on 1 November 2011, was continuing.