The Office of the Scottish Charity Regulator has frozen the bank account of an aid charity amid concerns about business rates claims and "significant payments" to companies connected to one or more of its trustees.
Scotia Aid Sierra Leone was registered with the OSCR in 2010 with purposes including the advancement of education and the relief of those in need because of their age, ill health, disability, financial hardship or other disadvantage.
The OSCR said in an interim report published this week that it began looking into the charity after it was contacted by a number of local authorities that had concerns about the charity’s use of business rates relief.
"The charity has been raising funds by entering into numerous leases with landlords, which relieve the landlords of the requirement to pay full business rates, in return for a donation from the landlords to the charity," says the OSCR report.
"Local authorities are concerned that a number of the commercial premises leased by the charity have not been used for charitable purposes but have been left empty and, should that be the case, the charity would have no entitlement to the rates relief claimed."
The report says the OSCR’s initial inquiries indicated that the trustees were not acting in the interests of the charity and with the care and diligence that it was reasonable to expect.
It said concerns had been raised with the regulator about a contract between Scotia Aid and the Italian charity FHM Italia Onlus for the construction of a hospital.
"FHM Italia Onlus transferred significant sums of money to Scotia Aid Sierra Leone, for which Scotia Aid Sierra Leone has failed to account properly to FHM Italia Onlus," the OSCR report says.
"In addition, we identified significant payments made by the charity to consultancy companies that were connected with one or more of the current and/or former charity trustees.
"There were no written contracts in place between each company and the charity for the services provided by the consultancy companies. These payments appear to be excessive and have not been sufficiently explained."
The OSCR said it had appointed Emma Porter of Aver Chartered Accountants to run the charity after being granted an order from the Court of Session.
It said the court had also granted an interim order preventing the charity from selling, leading or otherwise disposing of any of its property, interim suspension of the charity’s trustees from the management of the charity and an order to temporarily freeze the charity’s bank account.
Scotia Aid had an income of £137,004 in the year to end of March 2011, which rose to slightly more than £1m three years later.